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<br />In FY 1996-97, the state collected $139 million
<br />more than it was allowed under TABOR. These excess
<br />revenues will be returned to ta.'qlayers in FY 1997-98.
<br />We estimate that state revenues will continue to exceed
<br />the TABOR limit for the foreseeable future. FY
<br />1997-98 state revenues, for example, are expected to be
<br />. nearly $325 million more than the TABOR revenue limit
<br />of $6,867 million.
<br />
<br />Arveschoug-Bird is a Statutory Limit on General
<br />FundAppropriations. Unlike TABOR, which limits all
<br />state revenues, Arveschoug-Bird applies only to General
<br />Fund appropriations. Arveschoug-Bird limits state
<br />General Fund appropriations to an annual increase of six
<br />percent over the prior year or, in total, five percent of
<br />state personal income. In FY 1998-99, Arveschoug-
<br />Bird allows the General Assembly to increase General
<br />Fund appropriations by $265 million over the prior year,
<br />or up to Ii total of $4,689 million.
<br />
<br />Also in contrast to TABOR, Arveschoug-Bird
<br />allows broader exemptions for items considered outside
<br />of the General Assembly's control, such as court orders,
<br />federal mandates, and Medicaid overexpenditures. In
<br />addition, certain transfers are not considered
<br />appropriations and are not subject to the limit The
<br />largest such transfers are for capital construction and
<br />controlled maintenance, totaling up to $230 million in
<br />FY 1997-98.
<br />
<br />The State Must Keep Some Money in Reserve.
<br />Colorado operates under two separate reserve
<br />requirements which obligate the state to set aside
<br />monC\'s. First, the statutory reserve requires that four
<br />percent of General Fund appropriations be set aside for
<br />revenue shortfalls. In FY 1998-99, the statutory reserve
<br />will be roughly $188 million, however, there will be
<br />roughly $653 million on hand to meet this obligation.
<br />The remaining $465 million in reserve funds are
<br />available as one-time moneys for other purposes,
<br />including a transfer of up to $41 million for controlled
<br />maintenance of state facilities.
<br />
<br />Second. the constitutional reserve requirement
<br />contained in TABOR effectively obligates the state to
<br />withhold three percent of its annual revenues. This
<br />constitutional reserve can only be used for declared
<br />emergencies other than those caused by economic
<br />conditions, revenue shortfalls, or salary or benefit
<br />increases. CUITently, the principal balance in the state' s
<br />Controlled Maintenance Trust Fund (CMTF) is
<br />designated as the constitutional reserve. In FY 1998-99,
<br />the constitutional reserve requirement is expected to be '
<br />
<br />..
<br />
<br />$217 million, while the CMTF may have as much as
<br />$339 million earmarked for this requirement.
<br />
<br />The Limits are Applied Differently. TABOR
<br />applies retroactively after the end of the fiscal vear
<br />when all revenues have been counted. Arveschoug-Bird
<br />and the reserve requirements, on the other hand, apply
<br />proactively, when the General Assembly is budgeting
<br />for the upcoming year. Thus, the General Assembly
<br />must comply with the Arveschoug-Bird appropriations
<br />limit and meet the reserve requirements for the
<br />upcoming year, while also refunding excess T ABO R
<br />revenue from a previous year.
<br />
<br />.
<br />
<br />Money Is Transferred Out Of The General Fund
<br />For Special Purposes
<br />
<br />Each year, the General Assembly transfers moneys
<br />from the General Fund to various other funds for
<br />special purposes. Usually, these other purposes are
<br />capital- or infrastructure-related. The largest such
<br />transfer in FY 1997-98 was $182 million for capital
<br />and prison construction. The statutes allow the General
<br />Assembly to transfer an additional $50 million to the
<br />CMTF in FY 1997-98 during the 1998 session. In the
<br />past, General Fund transfers have also been used for
<br />highway construction and technology grants. Given the
<br />forecast for state revenues, the General Assembly may
<br />transfer an estimated $ 1,364 million between now and
<br />FY 2002-03 and still maintain the four percent
<br />statutory reserve and six percent annual General Fund
<br />appropriations growth. However, using these one-time
<br />moneys for some purposes may create a future ongoing
<br />need for state operating funds, which are limited by
<br />Arveschoug-Bird.
<br />
<br />.
<br />
<br />Conclusion
<br />
<br />Colorado's fiscal pcoliC)' functionz within four
<br />specific constraints - TABOR, Arveschoug-Bird,
<br />and two separate reserve requirements. TABOR limits
<br />the total amount of money that the state may collect in
<br />ta.'Ces and fee revenue each year, In contrast,
<br />Arveschoug-Bird makes no reference to revenues, but
<br />directly limits the General Fund moneys available to
<br />operate state programs. Some of the General Fund
<br />revenues which cannot be appropriated under
<br />Arveschoug-Bird are kept in reserve, as required by
<br />state law, willie others are available as one-time moneys
<br />for specific purposes. However, using one-time moneys
<br />for capital construction projects may create a future
<br />ongoing need for General Fund operating moneys.
<br />
<br />.
<br />
<br />Room U29, Stale Capitol, Denver. CO 8U203-\784. (303) 866-352\ . FAX; 866-3855. roo 866-3472
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