How proposed budget cuts would affect state programs

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Tough decisions impacting Colorado’s budget, as proposed by Governor Bill Ritter during a meeting before the Joint Budget Committee Aug. 18, modify the timeline and potentially funds available through the Energy and Mineral Impact Assistance Fund (EIAF).
Funding for EIAF grants are derived from severance tax and federal mineral lease revenues. Proposed cuts to the program will impact the severance tax portion of the fund. The variable nature of the Impact fund combined with revenue declines means some projects will not get funded. However, the EIAF program will continue and DOLA anticipates grant making long into the future.
The following outlines the proposed cuts that will impact the grant program:
n Transfer of $5 million from the program to the General Fund:
This will permanently reduce the fund by $5 million and will be used to backfill the state’s General Fund.
n Suspending the award of $25 million in grants until Jan. 31, 2009:
This is a request to hold $25 million in severance tax receipts that had been planned for grants to local governments in late 2009. These funds will be held until Jan. 31, 2010, in case the state’s revenue picture continues to deteriorate. Grant applications that had been received on Aug. 1, 2009, have been tabled for the time being. DOLA will then make award recommendations after the Jan. 31, 2010. DOLA anticipated having $45 million from severance tax for grants in FY2009/2010, and expects to have grant rounds later this fiscal year.
n Transfer of $14,305,697 from the Local Government Permanent Fund:
This will result in the transfer of $14,305,697 from the Local Government Permanent Fund, which was created from a bonus payment received from leases on the Roan Plateau in 2008. This Permanent Fund was intended to backfill direct distribution dollars that DOLA sends to cities and counties each year to address impacts associated with energy and mineral development.
Municipalities and counties were not expecting this money at any particular time so the effect on them today is minimal. This transfer will deplete the Local Government Permanent Fund. However, a DOLA program to distribute $17 million in large grants to Federal Mineral Lease Counties will continue as planned for this fiscal year. The department has received 10 applications for the $17 million and will move forward with awarding grants from this allocation in 2010.
n Refinance of the Department’s Field Services program, located in the Division of Local Government:
This will result in a $900,000 General Fund savings. This refinance reflects the fact that the Impact Program has grown 10-fold over the past 15 years. Even with this change, the administrative cost to run the Impact program is 2.7 percent, a very low administrative cost, especially given the quality and value that communities receive from DOLA’s field staff.
n Additional, proposed cuts affecting the Department, unrelated to the EIAF include:
Elimination of Waste Tire Recycling Fund grants for FY09-10 – $3,600,000.
Elimination of Local Government Limited Gaming Impact Fund grants for FY09-10 – $5,100,000.
Program cuts are difficult but given our options, I believe the approach the governor has taken makes sense. Municipalities and counties will still receive checks from DOLA for energy and mineral impacts through a direct distribution formula. These checks will come in September, an important time for local governments whose budgets tend to be calendar year budgets.
DOLA expects to distribute about $80 million to municipalities and towns this year from this program. We will continue to make housing and local government grants using other funds and we will continue to provide high quality technical assistance to our partners at the local level to assure equitable and consistent implementation of property tax laws, improvements in the ability of local governments to plan for, respond to and recover from disasters along with other technical assistance services to local communities.

Special to the Herald Times

Susan Kirkpatrick is the executive director of the Colorado Department of Local Affairs (DOLA).