Budget Shortfall - Fact or Fiction?

From December to March, Colorado’s budget forecast for the general fund increased by over half a billion dollars, substantially shrinking that $1.2 billion budget shortfall we’ve all heard so much about. That’s good news.  But here’s the dirty little secret:  The budget shortfall is a fiction. 

The budget for the current year (2010-11) is $7.1 billion.  We’re told that the legislature closed a $350 million shortfall.  Yet the budget for 2009-10 was $6.3 billion. That’s an increase of $800 million.

The budget forecast for next year as of last December was $7.1 billion, the same as the current year. Does that sound like a $1.2 billion shortfall?  And the updated forecast, released yesterday, predicts less than half of that shortfall.  Total budget forecast: $7.1 billion, the same amount that predicted the $1.2 billion shortfall. Huh?

Let’s do the math.  If the budget in the current year is $7.1 billion, and we anticipate a $600 million shortfall next year, what is the anticipated budget for next year? $6.5 billion, right?  Not in the world of government budgetary mathematics.

Now it may be that I don’t understand the budget. As far as I can tell, neither do the legislators.  They haven’t been able to explain how the shortfall number is calculated, and have only raised more questions when they tried.  I’ve talked to Henry Sobanet, Governor Hickenlooper’s budget director and one of the foremost experts regarding the state budget.  He provided far more insight than anyone I’ve talked to about the state budget.  Yet he could not explain the budget shortfall in a way that mere mortals could comprehend.

And therein lies the danger.  Despite the good news about the budget, the steady drumbeat about the shortfall will continue and get louder. And we’ll be asked to approve new taxes. What do you suppose are the chances that anyone will tell us how they arrived at that number? Don’t you think they should be able to prove the numbers before they ask us to satisfy the rapacious government appetite for that which does not belong to them?

Even if there are real numbers behind what appears to be fiction, shouldn’t we all be on the same page? If “shortfall” means something entirely different to you and me than it does to the general assembly, shouldn’t we reconcile terms before we hand over more money?

Unemployment is at a record high in Colorado.  People are struggling to keep food on the table, heat their homes, and put gas in their cars.  There are families that can’t afford to pay 30 cents a day to have schools feed breakfast to their children. Raising sales taxes will hurt those families the most.  Raising income taxes will hinder job creation by diverting more money from the productive private sector to the unproductive government sector.

We understand the harm that will come from raising taxes.  Shouldn’t we have a similar understanding of the supposed harm of not raising taxes?  Show us how a shortfall number is calculated!