Gov. John Hickenlooper today delivered the FY 2013-14 proposed budget to the Joint Budget Committee (JBC) that makes targeted increases and restores funding in many critical areas.
The proposed budget includes new and continuing resources for: protecting the last and the least in Colorado, restoring and even improving K-12 education funding, enhancing economic development efforts, investing in infrastructure and local communities, enhancing public safety, improving State government performance and saving for the future.
"Colorado's economy is outperforming other states," Hickenlooper said. "This gives us the ability to restore some cuts and modestly increase funding in critical areas of the state's budget. But we still have a long way to go to fully recover from this recession."
The FY 2013-14 proposed budget is $21.9 billion, of which $8.1 billion is from the General Fund. Relative to the FY 2012-13 appropriation, these amounts represent increases of $1.1 billion (5.4 percent) in total funds and 5 percent ($387 million) in the General Fund.
The rebound in revenue in the General Fund finally exceeds the pre-Great Recession peak this year (FY 2012-13). But when inflation and population growth are accounted for, expected revenue is still $1.1 billion, or 14.4 percent, below the FY 2007-08 level.
"When you have this big of an economic downturn, it takes time to dig your way out," Hickenlooper said. "That is why we've been so focused on finding efficiencies, pursuing statewide efforts to streamline a wide range of processes and consolidating government functions wherever appropriate. At the same time we have taken bold steps to increase the State's reserve fund to help protect against the inevitable next economic slowdown."
The proposed budget for FY 2013-14 includes these major policy changes and initiatives:
PROTECTING THE LAST AND THE LEAST
The administration places a very high priority on protecting the most vulnerable in our state. Some requests from the Departments of Human Services and Health Care Policy and Financing include:
$13.1 million Total Fund (TF) dollars -- $6.5 million from the General Fund (GF)-- to provide services to 809 additional people with developmental disabilities. This amount includes an increase of 576 funded waiver slots to eliminate the Children's Extensive Services Waiver Program waiting list. Unfortunately, numerous other waiting lists exist for the developmentally disabled and other populations that are not fully eliminated in this request.
$1.8 million TF ($1 million net GF) for early intervention services for children from birth to 2 years of age.
A 1.5 percent provider rate increase for community providers including Colorado's county departments of human services. This equates to $56.5 million total funds, $25.8 million GF. In addition, this will apply to providers of services in the Departments of Corrections and Public Safety.
$5 million GF as a legislative set aside for the estimated costs of the recommendations of the Elder Abuse Task Force to increase protections for vulnerable seniors. These costs will fund a system of mandatory reporting of instances of exploitation or mistreatment of seniors.
$2 million GF for programs funded by the Older Coloradans Act.
FUNDING FOR K-12 AND HIGHER EDUCATION
The recovery in revenue allows for increased funding for both K-12 and Higher Education:
In K-12 Education, the budget includes an increase of $201.6 million in State ($189.1 million) and local funds ($12.5 million) for total program funding, which allows for $31.7 million above what the inflation and enrollment calculation over the current year would require. In this way, the "negative factor" will decline to 15.5 percent from 16.05 percent.
With this increased funding, the administration proposes that Colorado's school districts focus $23.9 million to enhance full day Kindergarten and pre-school opportunities and to improve teacher quality in hard to fill areas of the state.
The state expects 8,592 new students in the K-12 system at an average cost of $6,659 compared with $6,474 in the current year ($185 per student more).
In the State Education Fund, the budget targets an ending balance of $435.5 million at the end of FY 2013-14. It is essential that a meaningful balance remain in the SEF for stability and protection of education funding levels.
In Higher Education, $30 million GF for operations at the Governing Boards, Local District Junior Colleges, and Area Vocational Schools; separately, the budget includes $5.3 million for need-based financial aid.
The budget request includes $250,000 for higher education tuition assistance for National Guard members.
ENHANCING ECONOMIC DEVELOPMENT EFFORTS
To help sustain Colorado's economic momentum, the budget sets aside money for several programs aimed at attracting and retaining job-creating employers. The plan also invests in efforts to ensure that people around the country look at Colorado as a great place to visit and work. Notable requests include:
$3 million to bring the annual appropriation for the Strategic Fund in the Office of Economic Development and International Trade. This funding is expected to spur the recruitment of 1,230 new jobs to Colorado.
$2 million additional GF for tourism promotion and the establishment of a unified branding platform for the State.
$600,000 to retain existing jobs here in Colorado.
An additional $1 million for the existing film incentive rebate and loan guarantee program.
INVESTING IN OUR INFRASTRUCTURE AND LOCAL COMMUNITIES
The vast array of assets owned by Colorado's State and local governments require ongoing investments in maintenance and repair. Because much of the state's revenue is one-time in nature, the budget request includes a dramatic increase in efforts to sustain and improve many of our most important assets. Meanwhile, some of Colorado's most important government services are delivered locally with State support. The administration believes strongly that enhancing these partnerships is integral for the quality of life and economic vitality of the State. Requests in this area include:
$102.8 million transfer to the Capital Construction Fund, including $15 million for local water projects to deal with new standards related to "nutrients" such as phosphorous and nitrogen in wastewater.
$44.9 million GF for controlled maintenance of State buildings, including $25.4 million at institutions of Higher Education.
$23.1 million to continue building up the balance in the Controlled Maintenance Trust Fund;
$3.0 million in the Department of Local Affairs for a grant program to assist communities with diversifying their economic development portfolios.
A multi-agency effort to repurpose the Fort Lyon correctional facility into a key component of a drug treatment and homelessness prevention program.
$2.0 million to the Department of Local Affairs for affordable housing support. These funds will leverage the construction of 1,200 units, 800 of which will be affordable.
ENHANCING PUBLIC SAFETY AND ADDRESSING UNMET MENTAL HEALTH NEEDS
Public Safety is a shared priority and responsibility at all levels of government in Colorado. The budget request for FY 2013-14 reflects the continuing needs in the Departments of Corrections, Public Safety and Human Services. The request this year is unique because it includes a comprehensive request for improvements in mental health services:
For expansions and improvements related to mental health issues, in the Departments of Health Care Policy and Financing and Human Services, $17.1 million GF comprised of: $10.3 million GF for expansions of the behavioral health crisis response system, $4.8 million GF for improving behavioral health community capacity, and $2.1 million General Fund for increasing access to civil beds for those defendants determined incompetent to proceed with their trials.
In the Department of Corrections, the incarcerated population is expected to decline, but the number of parolees to increase. Thus, the request reflects an overall decline of 137 FTE at the Department, though the budget includes an additional 25.1 FTE and $2.1 million GF for the increase in parole.
Also in DOC, the budget includes $2.1 million GF for an expansion of the Sex Offender Treatment Program, though the final recommendation is dependent on a forthcoming study.
IMPROVING STATE GOVERNMENT
The administration is focused on making State government more efficient, effective and elegant. The budget proposal continues this important work through investment in critical IT systems and other assets, an enhanced focus on across-the-board improvements in the processes that serve the customers and taxpayers of Colorado, and pursuing thoughtful personnel and compensation policies. Selected initiatives in this area include:
The information technology system that supports the Medicaid program is called the Medicaid Management Information System (MMIS). The time has come to replace this antiquated system. With a 9 to 1 federal match, the budget includes $15.6 million TF and $1.4 million GF to begin the multi-year procurement of this replacement.
$372,000 in the Department of Personnel and Administration to restore and protect critical legislative and other historical archives.
In the Office of State Planning and Budgeting, just under $1 million to continue the implementation and expansion of Lean management and process improvement initiatives. To date, 2,100 employees have received training and departments have completed 55 projects, with more than 30 more expected by March 2013.
After four fiscal years without a raise, it is time for State employees to receive a modest cost of living adjustment of 1.5 percent and to reward top performers from a pool of funds equivalent to 1.5 percent of payroll. In total, these items require $57.8 million TF and $27.4 million GF. These totals include funding for the Judicial and Legislative branches as well as the Departments of Law, Treasury and State
The proposed budget also includes 5 percent general fund reserve starting in FY 2012-13. Some may call this a rainy day fund. The state's current 4 percent reserve represents only two weeks of operating expenses in the event of a downturn. The last two recessions each caused roughly 16 percent reductions in General Fund revenue.
A reserve of 5 percent ($387.3 million) would represent 18 days of operating expenses and would help protect existing state expenditures and buffer the State against slower out-year growth and volatility outside of the State's control.