Colorado’s Fiscal Problems Have Been Severe and Are Likely to Continue

Publication Date: March 2004

Publisher: Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Jim Zelenski; Carol Hedges; Nicholas Johnson

Research Area: Economics

Keywords: State budgets; Fiscal future; Economic projections; Health insurance

Type: Report

Coverage: Colorado

Abstract:

In a time of great fiscal stress for states, Colorado has been depicted in some quarters as an oasis of sound budgeting and fiscal stability. In a recent nationally broadcast radio interview, White House advisor Karl Rove said: “Take the state of Colorado, for example. Its finances are in good shape.” Columnist George Will recently described Colorado’s fiscal problems as “much milder than most.” The Wall Street Journal’s editorial pages have repeatedly praised Colorado and cited it as a good model for other states and for the federal government.

In fact, Colorado’s economy and its finances over the last two years have been at least as rocky — often more so — than those in other states. Colorado lost more jobs and income than virtually any other state in this recession, and the state suffered one of the nation’s steepest declines in tax revenue. By 2003, Colorado reported the nation’s second-largest budget shortfall relative to its budget. The fiscal problems have cost some 15,000 children their state-financed health care coverage and some 100,000 senior citizens their property tax exemptions, and led to reductions in expenditures on everything from health to higher education to highways, among other areas. The legislature is now planning another $194 million in spending cuts for the coming fiscal year.