People simply cannot say that they were not warned. From the Independence Institute to Gunny Bob the warning was sent out loud and clear.
Gov. Bill Ritter’s office now says its economists used outdated information and underestimated the size of the budget shortfall that Colorado is facing this year.
The new forecast from Ritter’s budget office puts the shortfall in the current fiscal year ending in June at $230 million — more than three times the $70.2 million the governor’s office forecast on Dec. 19. A forecast from legislative staff put the shortfall at $604 million, and the two offices agreed to sit down and go over their calculations together.
Evan Dreyer, a spokesman for the Democratic governor, said a major difference in the forecasts from the two offices was in how they projected revenue from capital-gains taxes levied on the sale of securities or property.
“They (legislative staff) were utilizing a more current data source for their capital-gains projections,” Dreyer said, saying that information came from the Internal Revenue Service while Ritter’s office was relying on older information from the Colorado Department of Revenue.
“We adjusted accordingly,” Dreyer said. “That said, we are going to make every contingency necessary to achieve even deeper cuts if we need to.”
Ritter now is asking state agencies to submit proposals to cut their budgets by 10 percent in the next fiscal year, which starts in July. He had already asked departments to show how they could cut 2.5 percent from their budgets in the current fiscal year.
Even after the revisions from Ritter’s office, there is still a nearly $400 million difference between the executive and legislative branches in their visions of how bad the current year will be.
Dreyer said there are still differences between the offices in how they project revenue from sales tax as well as corporate and personal income taxes.
“Forecasting is an extremely difficult job, even in the best of times, and this is an unprecedented bad time,” Dreyer said, adding that economists had not done anything wrong.
“For the past several months, we have been adjusting the budget and creating the necessary flexibility to keep the budget balanced,” he said. “Regardless of the differing forecasts, we will work together with the legislature to continue prudently managing the budget.”
For members of the legislature’s Joint Budget Committee, whose job it will be to slash spending, the difference in the forecasts is unsettling.
“From a budgeting standpoint, it leaves us as a legislative body the difficult task of deciding which scenario — and we’ll probably be cautious and use the worst scenario — to balance our budget for the current year,” said Sen. Moe Keller, D-Wheat Ridge.
Rep. Al White, R-Hayden, another member of the panel, agreed.
“We are tasked with picking a lane here, and we’ve got two different road maps that have drastically different destinations,” White said. “We can only take the most conservative one because therein lies the least danger.