As the General Assembly convenes today, most Coloradans are probably glad to not be in the shoes of their state lawmakers, with a $1.5 billion budget shortfall to address for the coming fiscal year that begins July 1. Some believe it’s time to cut more services and spend less money, but a growing number, including Governor Bill Ritter, say the state can find ways to generate more revenue.
Mark Neuman-Lee, policy fellow with the Colorado Fiscal Policy Institute, says lawmakers have dozens of options — if they can agree to use them.
“For a long time, people have thought that Colorado can’t raise additional revenue—- that it can only cut — but that’s not the case anymore. The legislature now has the flexibility to adjust tax policy and avoid some of these drastic cuts to the state.”
Colorado doesn’t collect sales tax for Internet purchases, or for energy used in manufacturing. That could change. Neuman-Lee says there’s also no reason the state has to automatically accept the same income tax deductions as the federal government, which opens up another list of potential revenue sources some people haven’t even heard of.
“Colorado could disallow the Domestic Production Activity Deduction, which is a corporate deduction that the federal government passed in 2004. Twenty other states have already disallowed this deduction, and the State of Colorado could gain around $20 million annually by disallowing this deduction.”
Neuman-Lee says Colorado has seen tough budget years before. The difference this time is that so many people are in need of the safety net services government provides, that there might be more political will at the Capitol to find new ways to pay for them.
Listen to the Colorado News Connection podcast by Chris Thomas.
