Worried about slowing Colorado economy, Democrats look to delay Polis pledge for full-day kindergarten

A slowing economy coupled with a backlog of unmet needs have left top Democratic lawmakers hesitant to fully fund all-day kindergarten, setting the stage for a possible budget fight with Colorado Gov. Jared Polis over one of his signature campaign promises.

The disconnect between Polis and legislative Democrats reflects the difficulty of adding public programs in a state with tight restrictions on public spending — even popular ones that helped Polis win election by a landslide. And it’s yet another sign that the governor’s ambitious agenda will face strong political headwinds, even with lawmakers in his own party in control of the purse strings.

On one thing all sides agree: There’s enough money available in next year’s budget to afford the $227 million tab for full-day kindergarten, plus an additional $25.7 million to help implement it. The concern among budget writers is how to sustain that funding every year in a state that is still trying to restore public services slashed during the last recession 10 years ago, while simultaneously setting aside money for the next one.

Against that backdrop, state Sen. Dominick Moreno, who chairs the Joint Budget Committee, told The Colorado Sun that legislators are in talks with the governor’s office to phase in kindergarten funding over time, which would buy some budgetary breathing room for a host of unmet needs.

“I think it’s feasible within existing resources. The problem is that it comes at the expense of other areas of the budget,” Moreno said. “There are so many competing demands. The transportation backlog, the dismal funding of higher ed, the debt we owe to schools. … (Full-day kindergarten) just jumps to the top of the list ahead of all those other things that we’ve been dealing with for years.”

But governor’s office officials insist the state can afford it now and into the future, thanks to booming property values at the local level, which have shifted some of the costs of K-12 education off the state. And oppose “phasing in” funding, as lawmakers are now considering.

“Colorado kids can’t wait, which is why we are focused on providing funding for every district to offer full-day kindergarten by 2019,” said Laurie Cipriano, the governor’s spokeswoman, in a statement. And, in a nod to concerns about the state’s long-term finances, she noted that the governor’s budget request already calls for increasing the general fund reserves to 8 percent, or $955 million, up from 7.25 percent level now.

The initial disagreement could set the stage for a tense budget negotiation in the coming weeks — or it could amount to nothing.

Moreno says it’s too early to say whether the JBC will push for partial kindergarten funding next year or support the governor’s request. Budget writers will know more Friday, when the governor’s office and Colorado Legislative Council release a pivotal quarterly revenue forecast that serves as the foundation for the annual state budget.

But there are reasons for concern after years of booming revenue.

It’s not “as simple as ‘we can’t afford it.’ ”

Lawmakers like Moreno who are preaching fiscal restraint are in an awkward position: The state operating budget ballooned to a record $28.9 billion this fiscal year, allowing for massive investments in schools, colleges, roads and the public pension. And continued growth is expected for the foreseeable future.

But while the recent numbers are eye-popping — the general fund grew by a whopping 14 percent last fiscal year — they obscure how badly the state’s coffers had been hit at the depths of the recession. According to a governor’s budget office analysis, when you adjust for population growth and inflation, the state’s revenue didn’t bounce back to 2009 levels until last year. And the drop in the intervening years was devastating.

School districts across the state cut back to four-day weeks. College tuition skyrocketed as public support fell. The state’s highways are more and more congested, as years of disinvestment have collided with booming population growth.

Gov. Polis wants a truce.

That’s left even liberal advocates who support kindergarten funding concerned about what the next recession may bring.

“It’s like everything in our budget,” said Scott Wasserman, president of the left-leaning Bell Policy Center. “It’s something that’s really critical — it’s a critical investment in kids’ brains and in the future, and it will just be one more thing that when we hit the next recession, policymakers will be faced with the choice of cutting or keeping at the expense of something else.

“I don’t think it’s quite as simple as ‘we can’t afford it,’ ” he added. “It’s a question of do we need it and are we willing to put this investment in front of other investments when it’s time to cut?”

The last economic forecast in December predicted that economic growth would slow in the coming years, as the stimulating effects of the recent federal tax cut wear off and the trade war between the U.S. and China wears on. The Federal Reserve shares that assessment, backing off its recent regime of interest rate hikes. And Moreno said tax revenue has been coming in lower than expected to start the year.

“That’s why we’re being very cautious,” Moreno said, and “building a fairly baseline budget to work from until we get that March forecast.”

Here’s what the state budget stood at last outlook:

Next year’s general fund budget was expected to grow by between 3.6 and 5.9 percent, or at least $443 million over this year. But after that growth was expected to slow to as low as 2.1 percent in 2021-22.

Some of that growth is needed to pay for typical year-to-year inflation and caseload growth for programs like Medicaid. And $250 million a year could be earmarked to pay off a transportation bonds, if voters approve a referred measure scheduled for the November ballot.

Add $227 million a year for kindergarten, and there’s not much left to increase funding for anything else lawmakers may want to do. The state underfunds K-12 by $627 million annually, according to constitutional spending requirements. Colorado ranks 47th in higher education funding, leading public universities increasingly to turn to out-of-state students for revenue. And the state’s highways face $9 billion in needs over the next decade.

Democratic lawmakers look at other ways to find new money

But Bill Jaeger, the vice president of early childhood and policy initiatives for the Colorado Children’s Campaign, sees a disconnect between this year’s debate over kindergarten funding, and the spending spree the state went on the past two years. Some of the money spent was one-time money on transportation, but many were ongoing expenses, like buying down the so-called “negative factor” owed to K-12 schools. Long-term sustainability, he noted, wasn’t a deal-breaker in those discussions.

And, Jaeger said, kindergarten has “tremendous spillover effects,” like freeing up preschool slots that are currently supplementing kindergarten budgets, and increasing student success rates, which can translate into economic benefits down the road.

Currently, the state provides funding for half-day kindergarten, and many school districts allow parents to pay tuition to opt in to full-day attendance. About 78 percent of Colorado students are enrolled in full-day kindergarten programs now.

“(Parents) are making it work, and the state should probably think about those (household) budgets as well,” Jaeger said.

For lawmakers, there could be other advantages to a phased-in approach. For one thing, it would buy time for Democrats to try to raise revenue for kindergarten and other public services.

What you need to know about TABOR, Gallagher, Amendment 23 and the hidden forces that constrain spending in Colorado.

House Speaker KC Becker is planning a ballot push to ask voters to essentially eliminate the state’s revenue cap, allowing the state to forgo taxpayer refunds as many already cities do. That measure would free up as much as $960 million in additional dollars that could be spent in the next three fiscal years.

Another option Moreno said Democrats are still considering is raising the cap by $200 million by repealing a portion of a 2017 bill that lowered it. (Such a maneuver would be moot if Becker’s ballot effort succeeds, but it could serve as a backup plan.)

Democratic state Sens. Dominick Moreno, left, and Rachel Zenzinger speaker to reporters on Tuesday, Jan. 15, 2019. (Jesse Paul, The Colorado Sun)

Neither effort is expected to generate much bipartisan support. Republicans have long balked at the idea that the state doesn’t have enough money, saying lawmakers just need to prioritize better.

Polis, however, has found some GOP support for his push for all-day kindergarten. State Rep. Jim Wilson, R-Salida, has long been an advocate. And state Sen. Bob Rankin, a budget writer, told the Sun that he thinks the JBC will find a way to fund it this year.

“I think we will find a way to afford full-day kindergarten, and I would like to move toward pre-K,” Rankin said. “Kids needs to be prepared to go to school.”

Rising Sun

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