Hickenlooper Budget Proposed Against Uncertain National Backdrop

November 2, 2012

The outcome of Tuesday’s election may influence how much of the governor’s proposal will ultimately be incorporated into the state budget

DENVER – Colorado Gov. John Hickenlooper proposed a $21.9 billion state budget for FY 2013-14 that would boost funding for K-12 and higher education, give a 1.5 percent raise to state employees and increase Medicaid reimbursements by 1.5 percent to doctors and healthcare providers.

The outcome of the presidential and legislative elections on Tuesday may influence how much of the governor’s proposal will be incorporated in the Long Bill – the state budget ultimately crafted by the legislature’s Joint Budget Committee (JBC).

If Republicans lose their one-seat majority in the state House and fail to win control of the Senate, Democrats will seize leadership of the JBC and every committee. Though some elements of the governor’s budget proposal may be palatable, his increases of $201.6 million for K-12 and $37.5 million for higher education have already been criticized as too low by some Democrats.

After Hickenlooper presents his proposal to the JBC on Nov. 14, the committee members will begin the arduous 6-month process of reviewing more than 20 binders of proposed departmental budgets. The JBC will also consider economic reports and revenue forecasts in crafting the budget for the fiscal year that begins July 2013, which will be subject to approval by the state legislature.

“Our plan reflects cautious optimism for Colorado’s economy and a prudent, sustainable approach to managing the state’s budget,” said Hickenlooper in a statement to the JBC

“We are mindful of a still-uncertain economic environment,” said Hickenlooper. “The economy faces serious challenges with continuing fiscal and economic distress in Europe, debate over fiscal policy here in the United States, and the resulting uncertainty in the business community and among households.”

Hickenlooper, who recently endorsed President Obama’s reelection bid, did not discuss the looming impact of the national healthcare program, dubbed ObamaCare, on small businesses as well as physicians who have been under compensated for providing medical care to Medicaid patients.

JBC member state Sen. Kent Lambert (R-Colorado Springs) said that some doctors can no longer accept new Medicaid patients and others are retiring early because their medical practices are no longer economically feasible.

Republican presidential candidate Gov. Mitt Romney has vowed to scrap ObamaCare, and aims to create a new healthcare insurance reform plan.

National polls indicate that small businesses, which create most jobs, have put the brakes on hiring next year because of economic uncertainty, particularly unknown tax rates, government regulations and costs of ObamaCare.

The U.S. Chamber of Commerce reported this month that only 17 percent of small business executives surveyed by Harris Interactive Inc. in late September said they plan to add staff in 2013.

Of the 1, 391 businesses surveyed, 76 percent said the “(federal) healthcare bill makes it harder to hire more employees.”

Though Hickenlooper cited the uncertain economic climate in Europe, Lambert said the United States may be even more unstable.

“We’re the problem,” Lambert said emphatically.

In addition to escalating budget deficits and the soaring national debt, Lambert cited the nearly $1 trillion cut in federal spending in January when sequestration takes effect.

Unless Congress devises a solution, half of the cut will be made in defense and the remaining spread across other departments.

Defense contractors, such as Lockheed Martin, considered issuing notices of potential layoffs in the months before the election, but the Washington Post reported they were advised that it wasn’t necessary by the Labor Department.

As acting director off the Office of Management and Budget, Jeffrey Zients urged Congress to take action to avoid sequestration.

“No amount of planning will mitigate the damaging effects of sequestration,” said Zients. “The right course is not to spend time moving around the rocks at the bottom of the cliff to make for a less painful landing. The right course is to avoid driving off the cliff altogether.”

Yet, Congress recessed early this year – and left sequestration on the table.

Democrats rebuffed Republicans who opposed the massive defense spending cut. After the terrorist attack on the U.S. diplomatic mission in Libya that killed four people, the impending cuts to national security spending will likely be revisited and fiercely debated.

If not, the cuts could be felt in Colorado, home to major defense contractors and military installations, most in the Denver metro area and Colorado Springs.

On the campaign trail, Romney criticized the imminent defense cuts; Obama advised voters not to worry about sequestration, saying it will be resolved.


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