Gov. Jared Polis is proposing a $1.3 billion stimulus package that he says will jump-start the Colorado economy – but it’s not clear the money exists to cover the cost.
The stimulus package is a key part of the $31 billion budget proposal the Democrat issued Monday, and it includes the previously announced $375 checks to unemployed workers, as well as a temporary state sales tax break for small businesses pinched by COVID-19 public health orders and $220 million in spending on shovel-ready infrastructure projects.
The budget plan – for the fiscal year starting July 1 – includes $2 billion more in discretionary spending than the current year, a 20% increase.
“This budget isn’t about just getting back to where we used to be – that wasn’t good enough,” Polis said in a budget presentation. “It’s about taking this challenging time, this difficult time, to utilize lessons learned and boldly forge a path that positions our state for the future in a more equitable way by making key strategic investments.”
The governor’s budget proposal is the first step in a six-month process that Colorado lawmakers undertake to write the annual spending plan. But Polis is pressing the Democratic-led state legislature to act quickly and approve major spending when it returns in January.
“If they can get an increase in funds for this fiscal year, those can create jobs and dollars in the economy right away,” said Lauren Larson, the governor’s budget director.
So far lawmakers are expressing caution amid significant questions surrounding the state’s fiscal outlook. The Polis administration built its 2021-22 fiscal year spending plan on rosy economic predictions that anticipate $1 billion more in state revenue than legislative economists are forecasting.
In addition, four measures on the 2020 ballot will impact the state’s revenue picture and complicate the budget plan.
The governor noted the “historic uncertainty” and put aside a $1.26 billion reserve – the highest since at least 1985 at 10% – to cover a potential deficit. It’s not clear if lawmakers will take the gamble.
“These are all things we are exploring. Obviously the governor’s budget request is just his recommendations for what he thinks should be done,” said state Sen. Dominick Moreno, a lead Democratic budget writer.
Moreno said lawmakers are having “a lot of conversations … about whether this is the right type of relief, the right amount of relief” to address the pandemic-crippled economy. “Those are really policy questions for the legislature,” he said.
Polis started his budget presentation with a warning about the rising rates of coronavirus infections in the state, saying “Colorado’s economic strength depends on our strength in preventing the COVID virus.”
He is asking lawmakers for an additional $200 million from discretionary spending in the general fund to combat the virus in the current fiscal year.
His spending plan also would restore some of the $3 billion in spending cuts lawmakers made earlier this year after the pandemic lockdown reduced state revenues. Polis wants to add money back to K-12 education and higher education to restore them to the 2019-20 spending levels – a move that would still leave them short of recent increases in cost and growth.
Polis also identified dozens of spending cuts across state departments totaling $422 million, including $272 million in discretionary spending.
The governor put the price tag for his budget at $35 billion, but it includes $4 billion in double-counted dollars shifted between state agencies, bringing the true price tag closer to $31 billion.
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