Pfiffner Explains Colorado’s Budget Cut

The Colorado media are filled with claims that the state budget faces around a $600 million shortfall. Penn Pfiffner explains the details in an Independence Institute podcast.

Pfiffner explains: “Really the bottom line that we need to talk about when we talk about that $600 million, is that about two-thirds of that is a lower amount in the increase. Now there will be some real cuts in the general fund operating budget from last year to this year because of the recession.”

Jon Caldara, who interviews Pfiffner, summarizes, “Out of this $600 million that we’re hearing… about $400 million of it is just scheduled increases in the budget.”

Pfiffner continues: “Let’s talk about the real amount of dollars that won’t show up in the general fund: it’s $234 million. So when people say we’re cutting the budget, they’re accurate in saying $234 million. How much of that is the total budget we’re talking about? It’s three percent — 3.1 percent.” Pfiffner argues that the state “can endure that.”

Pfiffner and Caldara then discuss Amendment 23, which forces increases in education spending even at the expense of other programs. Pfiffner points out that this will put “an additional $408 million going into that state education fund.”

Pfiffner points out that a “reduction in revenues… is happening across the nation; after all, the nation’s in a recession, not just Colorado, and every state is dealing with it.”

“Because we have TABOR [the Taxpayer’s Bill of Rights], because we have restrictions, because we have a mandated balanced budget requirement, Colorado is nowhere near in as bad as trouble as, say, New York or California,” Pfiffner added.

Pfiffner argues that the current pain was exacerbated by Democratic profligacy. He says:

At the beginning of this last budget cycle, conservatives within the house and the senate said, Governor Ritter, don’t spend so much. Don’t let your budget grow so quickly. We don’t know if we’re going to be able to afford all of this. And furthermore, don’t increase the size of the staffing that you’ve done at the state level. And Governor Ritter was kind of willing to overlook any possibility like that. The staff grew by a large amount, as you see the budget grew by a large amount, and now they’re having to retract back…

The general fund is but a portion of the total budget. Pfiffner explains, “The overall budget, this is the total budget, is set at $18 billion, $366 million — $18.4 billion… You certainly can adjust $234 million within that.”

Pfiffner also explained that the predicted increase in spending from Referendum C has been scaled back from the highest estimates to “more like $4 billion for those five years,” still considerably higher than the estimates provided when it was passed.

Under Referendum C, the state keeps money that under TABOR it otherwise would have to refund. “The additional amount of new taxes coming in… this year is $363 million. Let’s compare that: $363 million of new Referendum C dollars is more than the $234 million they’re saying they have to cut.” In other words, over the last few years spending is up considerably, only now there will be a modest overall decline in the general fund.

Pfiffner summarizes, “The large numbers thrown around by the state leaders is really not a true cut in the budget. The true cut in the budget is about a third of what they’re saying… The legislators have a job to do, but it’s not an undoable job, it’s well within the means of what they can change.”