Bell, CFI Urge Legislators to Oppose SB-1
In a letter to Colorado legislative leadership, the Bell Policy Center and Colorado Fiscal Institute urged state leaders to oppose SB 1 as it would lock the state into debt payments without new revenue sources and severely restrict future budgetary choices.
Dear Speaker Duran, President Grantham, Majority Leader Becker, Majority Leader Holbert, Minority Leader Neville and Minority Leader Garcia:
Colorado’s strong economy has created a FY 2017-18 and FY 2018-19 budget environment that is different from the last few years. Anticipated revenue growth means that the state can make vital public investments in communities throughout the state. Transportation funding is certainly among those funding needs, and while we support one-time funds that are being appropriated, we urge caution in taking on additional debt without a new dedicated revenue source for repayment.
It is tempting to believe this new level of tax collections is the new normal. However, our state’s history reminds us that is not the case. Expansion periods are typically followed by contractions that result in reduced revenue and reduced ability to fund ongoing commitments.
The use of responsible debt is a tried and true way to finance long-term investments, but we oppose the state taking on more responsibility from current revenue. This is why:
If the state were to experience a recession two years from now that represented half of the average revenue reduction of the last two recessions, FY 2020 revenue would fall by 6.5 percent. If a debt payment of $250 million was subtracted from the available revenue, expenditures for the hypothetical FY 2020 budget, including K-12 education, higher education, health care, prisons, courts, child care, and other commitments, would have to decrease by $1.02 billion below current estimates for FY 2018-19.
Debt without a new revenue source does not create parity for transportation spending, rather it prioritizes paying for transportation obligations over all other state commitments. When we bond, we go into debt, and the debt holders are the first to be paid. That’s why bonding without a dedicated revenue stream is so dangerous. It means Colorado is giving up its freedom to make financial choices that fit the moment. It means taking out a credit line that we cannot afford.
Our transportation needs are great. Every Coloradan struggles with the nightmares of congested highways or potholed roads. That’s why we need to make funding transportation a priority and you have taken prudent steps toward addressing those needs. Last year, the General Assembly authorized $150 million in COPs and this year, there is bipartisan support for a $500 million infusion of funding into transportation needs. That’s the most to be spent from the General Fund on transportation in the post-TABOR era.
These actions, combined with the promise of new voter-approved revenue streams this fall, are exactly what we need. But SB-1 takes us in a dangerous direction. Without knowing what next year will look like, SB-1 takes $250 million off the table for FY 2019-20 budget discussions – and that’s before bonding is even authorized. SB-1 also prematurely ends last year’s COPs and pre-programs debt payments into our state budget without knowing what revenue changes lies ahead.
Revenue collections for 2018 are the source of the new money available for this year’s budget cycle. Neither the Office of State Planning and Budgeting nor Legislative Council projects that growth continuing even in 2019. Moving forward with currently authorized COPs, the one-time $500 million transfer to transportation and infrastructure needs and strong support for a citizen-initiated revenue source are the most appropriate next steps toward addressing Colorado’s transportation needs. The proposal in SB-1 would unnecessarily bind future legislatures and restrict our choices in the years ahead.
The path forward is for Coloradans to vote for a new investment in our roads that does not jeopardize all the other things that brighten Coloradan’s future.
Scott Wasserman Carol Hedges
President Executive Director
The Bell Policy Center Colorado Fiscal Institute