Press Release - Budget Fix, Rainy Day Fund Statement
 |
| Find Gov. Ritter on: |
  |
OFFICE OF GOVERNOR BILL RITTER, JR
FOR IMMEDIATE RELEASE
WEDNESDAY, APRIL 22, 2009
CONTACT:
Evan Dreyer, 720.350.8370, evan.dreyer@state.co.us
GOV. RITTER STATEMENT ON BUDGET FIX, RAINY DAY FUND
Audio - Gov. Ritter Briefs Media
Gov. Bill Ritter issued the following statement today on a new proposal to amend Senate Bill 228. The proposal would set the state on a path to increase its rainy day reserve fund, allow for key investments in transportation and infrastructure projects, and begin to ease the state's conflicting and restricting fiscal mandates.
"About three weeks ago, I asked people from various perspectives on this issue to sit down and work on a resolution," Gov. Ritter said. "Hours of discussion, creativity and commitment on the part of many have led us to today's proposal, which is an important step forward.
"This proposal will finally begin to loosen the conflicting and restrictive fiscal handcuffs that prevent us from crafting a modern budget that reflects the values and needs of Colorado's citizens," Gov. Ritter said. "This proposal will take us from the 20th century and lead us forward into the 21st century. In this economic downturn, this is more important than ever.
"We're doing everything we can to position Colorado for a strong recovery, but those fiscal restraints are holding us back. Under this plan, we won't spend any additional revenue. But we will spend the revenue we do have more effectively and wisely."
The proposal is a modification of Senate Bill 228, which was introduced earlier this legislative session by Rep. Don Marostica and Sen. John Morse. The proposal:
- Implements a plan to build the state's rainy day reserve fund from the current 4 percent to 10 percent to protect critical state services during the next economic downturn. This is critical because this downturn, along with the prior one in 2001-02, has squeezed nearly every savings account out of the budget.
- Eliminates the risk of massive year-to-year funding fluctuations for transportation by dedicating a specific percentage of future budgets to transportation. It ensures that 2 percent of the General Fund will be dedicated to transportation for five years beginning in FY12-13 if personal income growth from 2011-2012 is greater than 5 percent.
- Replaces the existing 6 percent allocation formula with a new 5 percent personal income limit, which is tied to the economy so that when the economy recovers from a downturn state services can recover as well. This eliminates the current 6 percent ratchet effect. This does not increase state revenues as dictated by the Taxpayers Bill of Rights (TABOR) and has no impact on taxes. It simply allows more flexibility with the dollars the state receives so that budget cuts can be restored over time.
"This proposal is a fiscally responsible approach to creating a rainy day fund and ensuring that we are adequately funding transportation and capital construction," Rep. Marostica said. "More importantly, the proposal accomplishes those goals without raising taxes."
"Removing the 6 percent arbitrary allocation formula is in the best interest of every Coloradan," Sen. Morse said. "I am pleased that the Governor and House members were able to bring together business leaders and competing community groups to make these hard decisions for the benefit of Colorado."
"After years of effort, this agreement will finally allow Colorado to build a meaningful rainy-day fund," State Treasurer Cary Kennedy said. "We will replace a mandate to spend with a mandate to save and keep an important cap on government spending. This is fiscally responsible reform for Colorado that is long overdue."
"Business leaders have long been concerned about the conflicting budget requirements that leave the General Assembly without the ability to make critical decisions regarding our most important Colorado priorities, such as higher education and transportation," said Dan Ritchie from the Colorado Forum, an organization of business and civic leaders. "Bringing groups together to agree on the next step forward is good for business and good for Colorado."