Plan for rainy day fund resurfaces in Legislature

By ED SEALOVER THE GAZETTE

DENVER – The long-discussed idea of Colorado setting aside a rainy-day fund is somewhat akin to a family on a tight budget deciding to save for leaner times.

With a big difference: The General Assembly of Colorado is on a $17.8 billion budget. Since former Rep. Daphne Greenwood first proposed the idea in 1991, the state’s financial shape has ranged from riproaring to threadbare, and still no one has done it.

Sen. John Morse, D-Colorado Springs, is the latest legislator taking a shot at building up the state’s savings account, and his bill goes before the Senate Finance Committee this afternoon. Monday, Morse estimated its chances of survival at no better than 50-50.

The controversy is not over where the $71 million in next year’s budget would go to start the process of doubling the general fund reserve from 4 percent to 8 percent. Rather, it is over where the funds would come from — the pot of money that pays for roads and capital construction.

“Everybody understands we need to save. Nobody wants to pony up the money to save,” Morse said.

“We’re supposed to be leaders, and this is what leaders have to do.”

House Bill 1302, co-sponsored by Grand Junction Democrat Rep. Bernie Buescher, would take one-half of 1 percent of the general fund budget and put it to the reserve fund, as well as taking another 0.5 percent if it is available after a certain amount is allotted to roads yearly.

Opponents have estimated this would take $225 million from transportation funding over the

next four years because any money left over goes to roads and buildings. So, Morse will offer an amendment that reduces the take to one-quarter of 1 percent each year, meaning the rainy day fund wouldn’t be filled for at least eight years.

The money could be accessed during economic downturns to provide funding for services that otherwise would be cut. In doing so, Buescher and Morse hope to avoid another situation like the recession of 2002 and 2003, when the state laid off many workers.

Building a savings fund is a bipartisan idea, as evidenced by GOP support this year for three failed budget amendments in the House that would have created a similar fund. But with pressure coming from local officials and Gov. Bill Ritter not to cut road funding, even Senate President Joan Fitz-Gerald, D-Coal Creek Canyon, questions “robbing Peter to pay Peter.”

“It’s raining now, as it relates to transportation and capital needs,” said Tamra Ward, a vice president for the Denver Metro Chamber of Commerce, an opponent.

Greenwood, now an economics professor at the University of Colorado at Colorado Springs, proposed a slightly different idea — setting aside a percentage of state revenue in good years and accessing it only in bad years. That was killed in committee.

The Taxpayer’s Bill of Rights already mandates a 3 percent reserve for disasters and emergencies, but that money is hard to access, and anything that is taken out must be repaid by June 30 of each year. Sen. Chris Romer, D-Denver, has talked about combining the TABOR reserve with the current statutory 4 percent reserve, but that would require voter approval because TABOR is in the state constitution.

With so many questions swirling, Morse said he has no idea whether the fund could wash away once again at the committee hearing or whether it might advance to the Senate floor.

CONTACT THE WRITER:(303) 837-0613 or ed.sealover@gazette.com