Colorado facesa $630 million budget shortfall and stark options now that half of the fiscalyear is past and so much money is already spent.
Balancing abudget during a recession is a difficult, thankless job. But balancing this year's budget didn't needto be this hard if only the leaders at the Capitol had learned from the lastrecession — or listened to those who experienced it.
Last spring asthe economic storm clouds gathered, Gov. Bill Ritter and legislative leadershad opportunities to take precautions.
One worthwhileprecaution was proposed by Treasurer Cary Kennedy, my erstwhile political foe,and then-Rep. Bernie Buescher. At a timewhen revenues under Referendum C were surging, their proposal reasonably soughtto double the state's reserve fund by saving, rather than spending, some $250million.
After all,everyone who experienced the austere budgets of 2001-2003 agreed that the stateneeded a "rainy day fund."
Unfortunately,that proposal died on the altar of the spending lobby.
Then aslawmakers debated the state budget, headlines warned of a looming recessionforecast by Federal Reserve chairman Ben Bernanke. Again, prudence dictated that leaders put thebrakes on spending money that might never materialize.
Unfortunately,legislators passed and Gov. Ritter signed a budget that spent every"available" dime, making promises that now cannot be kept.
Even moreremarkable than the legislature's habitual failure to save is the day-late-and-dollar-shortresponse of Gov. Ritter and his budget office.
Upon signingthe full-throttle state budget, Ritter said: "This is a budget we shouldcelebrate. This is a budget that issmart, fiscally responsible and effective."
In September,when the legislature's economists sounded warnings about an economic downturnand a budget deficit, Ritter's Office of State Planning and Budget keptwhistling a happy tune.
"One of(the forecasts) is pretty significantly wrong," Ritter told the DenverPost, which noted that Ritter "made it clear" that his forecastwasn't wrong.
Ironically,President Bush apparently changed Ritter's mind a few days later by remarkingin a televised speech, "the entire economy is in danger." Ritter responded by putting a partial freezeon hiring and new construction and asking his department heads to"identify other money-saving ideas and strategies."
In November,the governor unveiled his budget for the fiscal year starting next July. He called for growing the budget at only 5 percent and setting aside"an unprecedented $77 million" in a new reserve fund.
Again, this wastoo little, too late.
His"unprecedented" proposal was just one-fourth the size of the earlierKennedy-Buescher plan — which received no support from Ritter.
The hypocrisy,as surely even Ritter knows, is that the time to save is when revenues aregrowing — not when they're already in retreat. That's because when revenues are increasing, saving requires simplysetting aside a portion of the increase. But when revenues are declining, every dollar saved must be cut fromexisting programs.
In December,the legislature's economists sounded a full-throated alarm, projecting a $631million deficit for 2008-09 and revenue growth at less than 1% for nextyear. This time, Ritter & Co. issuedmixed messages.
Ritter said,"We're experiencing a historic and a global economic crisis." But his budget office forecast a mere $70million deficit.
Two weekslater, Ritter's budget office asked for a mulligan, telling the Post it had"used outdated information" and now forecast a $230 million deficit —still barely one-third that projected by the legislature's economists.
Ritter's budgetdata isn't the only thing that's outdated. His fiscal strategies amount to closing the barn door after the horseshave already left.
It's not as ifRitter is the first governor to experience these challenges. Just seven years ago in the wake of 9/11 andthe tech bubble burst, Colorado lawmakers faced similar challenges.
Unfortunately,it seems the only lesson learned by Ritter is to ask taxpayers for more moneyto spend — but never to save for the next rainy day.
Don'tlook now, Governor, but it's raining again.
Mark Hillman served as Senate Majority Leader and State Treasurer. To read more or comment, go to www.MarkHillman.com.
