Balancing the state’s budget required steep cuts in nearly every area of the budget — many of which went into effect this week, leaving people out of work and some programs without the grant money they rely on to operate.
Total reductions to the general fund are about $320 million, or 8.1 percent. Departments from agriculture to the treasury are affected — and more cuts are expected next year when federal stimulus money ends.
“You have to look at this in the complete context,” said Evan Dreyer, spokesman for the governor’s office. “We knew this was coming, it’s a result of the economy — a painful, unfortunate result of the global recession. It’s the same thing that’s happening to families, businesses, nonprofits — less income equals less revenue. We have to keep the budget balanced.”
The Department of Health Policy and Financing took a big hit, as did the Department of Health and Human Services. Overall, 300 positions were eliminated.
“The governor was very careful how he approached these cuts,” he said. “The reductions were thoughtful and he was involved in every part of the process, cut things item by item. There are more than 100 separate actions included.”
The decisions were meant to “minimize pain” by selecting items across the board.
“We worked to maintain our investment in education, economic development, infrastructure,” Dreyer said. “It’s the way we wanted to do this so that we would still be able to attract jobs.”
The cuts were necessary as the government forecasted job losses between 52,000 and 85,000 during 2009. Personal income is expected to decrease by 0.3 percent this year, instead of the decade average of a 5.9 percent increase. Retail trade was projected to decline 7.8 percent during the year and the Case-Shiller Housing index showed Denver metro prices declining by 9 percent, while the composite 20-city index declined by an average of 23 percent.
But the knowledge that the cuts are a necessary part of balancing the state budget doesn’t make it easier for nonprofits that rely on government money to meet operating expenses for programs.
The Boys & Girls Clubs of Colorado depend on state money from tobacco settlements to pay for prevention programs for young children and teenagers. While some urban programs are resilient, many rural programs will be hit hard by the budget cuts, said Julie Mordecai of the state office for the nonprofit organization.
The program will see 13.8 positions cut as a result of the loss of money, and some programs could see their budget cut by as much as 20 percent, she said. A total of 73 staff positions are affected.
“But there is a higher cost,” she said. “Our programs are designed to keep kids off the street, prevent juvenile delinquency. Without these programs, kids are at risk.”
Still, she understands the needs for the cuts.
“We have to take our lumps just like everyone else,” Mordecai said. “The governor has to balance the budget. But it’s very hard to restore prevention programs — so it’s very important we get money from somewhere else. We have to lower the risk factors for these kids.”
Some clubs will be able to make up for the shortfall with private or corporate donations — but in most areas, that source of money also is drying up.
The solution to periodic budget cuts during recessions can be found in other states, said Daphne Greenwood, a professor of economics at the University of Colorado at Colorado Springs.
“We need a rainy day fund,” she said. “Some legislation that says when economic standards are above average, we put money away for recessions. We have these downturns every five to seven years — it makes sense to prepare for them.”
Greenwood is a former state legislator who introduced such a requirement 18 years ago. But it never passed.
“Instead, when times are really good, and revenue is above expectations, we spend that money on things we couldn’t afford before,” she said. “And then it gets cut when the economy cycles.”
Cuts this time around are even deeper than during the past, Greenwood said, because the recession is worse.
“They’re calling this the ‘Great Recession,’” she said. “It’s as bad as it’s been in 70 years, so the cuts have to match.”
Without money from the American Reinvestment and Recovery Act, the cuts could have been worse, she said. That’s one reason she supports the federal government running deficits when there is a recession.
“About 45 percent of the deficit will go away when we pull out of this recession,” Greenwood said. “People don’t understand that — the federal government spends money because states have to cut. It protects so many programs that way.”
While there are signs of recovery, she said it could be 2011 before the job sector recovers.
“And what about next year?” Greenwood asked. “We only can backfill half the year — referendum C expires, and the state will no longer have that additional money. Will people renew it in a recession? Another stimulus could protect jobs and programs from further cuts.”
Cuts by department:
Agriculture: $680,000. But refinanced with money from the Agriculture management fund, which would have been used for additional conservation district grants.
Corrections: $25 million and 34 full time positions.
Governor’s office: $1 million and 11 full time positions
Health Care Policy and Financing: $115 million, including $4.7 million in the Department of Human Services
Higher Education: $80.9 million (backfilled with federal stimulus money)
Human Services: $25.5 million and 129 full time positions
Local Affairs: $900,000
Military and Veterans Affairs: $400,000
Natural resources: $2.7 million and 5.3 full-time jobs
Personnel and administration and statewide common policy: $3.1 million and 3.9 full time positions
Public Health and Environment: $1.5 million
Public Safety: $2 million and four jobs
Regulatory agencies: $190,000 and one job
Revenue: $2 million and 20 jobs
Source: Governor’s office