Economy improving, but budget battle still looms

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DENVER — Colorado Gov. John Hickenlooper and Republicans at the Capitol drew clear lines in the looming battle over next year’s state budget, even as economic forecasters announced that the state has more money to spend than it had been anticipating.

The March revenue forecasts, presented to lawmakers Monday afternoon by Hickenlooper’s budget office and the state’s official economist, both show the economy slowly regaining strength as the job market improves.

As a result, Colorado has $602 million more to spend next year than what was budgeted for the current fiscal year — and about $149 million more for next year than expected by the Office of State Planning and Budgeting when it put together its initial package of budget-balancing measures for Fiscal Year 2012-13.

Republicans who received that news questioned OSPB Director Henry Sobanet, himself a Republican, on why his amended budget proposal still doesn’t include restoring a property tax exemption for senior homeowners, which lawmakers have voted to suspend the last two years.

“It looks like you guys still want to take away the senior homestead exemption,” asked Sen. Greg Brophy, R-Wray, who doesn’t sit on the Joint Budget Committee but still decided to attend Monday’s presentation by Sobanet. “Is that correct?”

“That is correct,” Sobanet said, explaining that restoring funding for education is the governor’s top priority.

The Senior Homestead Exemption exempts half of the first $200,000 of a home’s assessed value for all seniors over the age of 65 years who have lived in their home for the last 10 years.

Instead of fully restoring the exemption, Hickenlooper is proposing to put most of the extra revenue back into education, which has seen its funding slashed in the past several years as revenues have dwindled.

Although the real negotiating has yet to begin, Hickenlooper is proposing to put another $38.1 million into the State Education Fund and an additional $28.3 million into higher education.

Hickenlooper also wants to spend the money the state does have on its poorest seniors by adding $9.5 million to an existing program that rebates property taxes paid, either directly or through rent, and heating costs for some lower income seniors.

So far, that’s not enough to appease Republicans.

“The numbers released today show that we are on the right track as we prepare the state budget,” said Rep. Cheri Gerou, R-Evergreen, who chairs the Joint Budget Committee. “It’s our hope that we’ll be able to use the increased funds for education and ease the tax burden on Colorado’s senior citizens who have been hit hardest by the recession.”

Following the presentation to the JBC, Hickenlooper called an impromptu press conference to explain his budget proposal and responded to the obvious first question about the fight over the senior homestead exemption with a laugh.

“This is so cinematic,” Hickenlooper said, even as he expressed optimism that, eventually, both sides would work together.

“We can’t quite get all the way there when it comes to restoring the entire senior homestead exemption. We can get 85 or 90 percent of the way there — that’s a pretty good step,” Hickenlooper continued. “We may not get to the really biggest mansions in Cherry Hills, the largest homes in Aspen, but the vast majority of senior homes will get their exemption back.

“But I do think it’s important to try and restore some of the cuts to local counties for the severance we took, and I think it’s important to restore some of the money we took from higher education and from K-12 education.”