Almost our entire budget is spent by arbitrary allocation formulas that are in the constitution, and therefore can’t be changed. Fortunately, there is a burdensome allocation formula that we can change.
It’s a quirky Colorado statute referred to as the Arveschoug-Bird limit, or the 6% provision, which limits the growth of our operating budget to 6% more than the previous year. It passed in 1991 and fits nicely with the Grover Norquist philosophy of drowning government in a bathtub.
In the current economic environment, the Arveschoug-Bird provision will ultimately contribute to a prolonged recession in our state. It will inhibit our ability to bounce back even when economies in the rest of the world have bounced back, and it also threatens to make permanent cuts to higher education, K-12 education, and health care. Below is a graph showing how the 6% limit will ratchet down the state’s operating budget in the future.
When the economy recovers and our revenues increase by more than 6%, all of the money above the 6% limit is allocated through laws passed in 1997 (SB97-001) and 2002 (HB02-1310) for transportation and capital construction projects. In this way, the 6% limit has become an allocation device, not a growth limit. Unfortunately, this presents an unstable mechanism for funding transportation and capital construction projects because the funding is tied to fluctuations in the economy. We absolutely must fund transportation, but we need to do so with a stable source of revenue.
My colleague from Colorado Springs, Senator John Morse, has introduced a plan that will begin to untie Colorado’s fiscal knot by eliminating the Arveschoug-Bird provision. This will allow us to develop a stable stream of revenue for transportation and capital construction projects. It will also allow us to fairly fund state services according to our values instead of by adhering to arbitrary formulas. I applaud him for taking action, and for having the courage to do the right thing for our state. I will keep you posted as his measure moves through the legislative process.