BOARD00303

• Board Meeting Date: 3/10/1998
• Description: 1998 Legislative Issues - Tabor Issues
• Board Meetings - Doc Type: Memo

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Colorado
Legislative
Council
Staff

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KSSUE BRIEF

Number 98-4

January 30, 1998

A Legislative Council Publication

THE BIG PICTURE.- AN OVERVIEW OF STATE FINANCES
by Chris Ward

Colorado is expected to collect nearly $7.2 billion
during the fiscal year ending June 30, 1998. This
money is appropriated for ongoing state obligations like
education, transportation, human services, and ta.'\:payer
refunds, as well as capital construction needs. This
Issue Brief overviews the most recent forecast of state
revenues and expenditures and describes how these
moneys are governed by state law.

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The General Fund Is The Source For Most
Revenues And Expenditures

Accounting for nearly $5,8 billion in IT 1998-99,
General Fund revenue dominates state finances.
Graph I illustrates sources and uses of General Fund
moneys.

Graph 1: FY 1998-99 General Fund Revenue

lNCt:lM~ TAX
,$J.J 11l.l.laNI

ULUIUSE TAlC ,UTER 11.1
DISTRIBUTION ISU BILUON)

QTHEIt u.ns ,us. M
'iT

GENERAL FUND

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11112.tcl

n "".IS G!N!!IAL FUND
ItEV!NUES . UNSPENT IItESEJl.VE
lSU aILl.ION)

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P'OUIt
"e:r~ceNT
STATUTOIllV
RESERVE
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The State Functions Within Certain Fiscal
Constraints

Arguably, state finances are governed most by the
constitutional requirement for a balanced budget.
However, state finances are also directly governed by
the following other provisions:

$ the Taxpayer's Bill of Rights (TABOR), which
effectively restricts state revenues;

$ Arveschoug-Bird, which limits state General
Fund appropriations; and

$ two separate reserve requirements, one statutory
and one constitutional.

TABOR Effective(v Limits Revenues. Adopted
by Colorado voters as Amendment No.1 in 1992,
TABOR imposes a constitutional limit on government
spending, However, TABOR's broad definition of
"spending" is effectively equal to revenue, including
state tax collections and fee revenue. Federal moneys
are not included in TABOR's definition of spending.
So, with a few exceptions, TABOR effectively limits
how much total revenue the state can collect.

Growth in state revenues is limited to the Denver-
Boulder inflation rate plus the percentage change in
population from the prior year. Thus, the 5.5 percent
limit on revenue growth for FY 1997-98 is based on
an inflation rate 00.5 percent and population gro\\th
of 2.0 percent for 1996. Anv revenues in excess of
this limit must be refunded in the following year,
unless voters agree to let the state keep the excess.

OTHER I
CU'UI:!NT UOW
N!!DS. INCL.
I115M TUQIIt
~EFUND
IS..I."I

AVAILABI.E
MONns
(S4"U)

The Leg.islali\'~ Counet! is th<<: research arm of the Colorado G1:neroll Assc:mblv.
The Council providc:s non.partisan intorrnation services anu stalrsuppon to the Colorad~ Le2islature.