DENVER (AP) — Colorado could lose $2.1 billion in revenue and federal funds if Congress can't agree on budget cuts by the end of the year, according to estimates from the governor's office, business groups and defense contractors.
The Denver Post reports (http://bit.ly/UfSPzc ) if Republicans and Democrats can't reach a compromise, automatic budget cuts — including a $109 billion chop to domestic and military spending — could hurt Colorado defense contractors, elderly-community centers, local governments and education programs. The failure to strike a deal also would mean the end of Bush-era tax cuts for all income brackets.
"The most logical expectations in the present political climate don't hold true right now," Gov. John Hickenlooper said. "So we have to be prepared if somehow these forces get so crosswise that they can't reach a compromise. ... We obviously have to have a plan in place in case."
For state programs alone, Colorado could lose $67.9 million in federal money that funds services like education and human services. That figure reflects only the state programs that rely on federal money from the discretionary budget and does not take into account how Colorado-based military installations such as Fort Carson, Buckley Air Force Base and the Air Force Academy will fare with defense budget cuts.
The $109 billion in potential federal cuts is a result of legislation passed last year after a "super committee" composed of members of Congress couldn't strike a deal on ways to cut the federal budget. The cuts would be evenly distributed between military and domestic spending.
"Americans are telling us that they want a resolution," said Sen. Mark Udall, D-Colo. "'Compromise' isn't a dirty word, but we still have a number of members of Congress who would rather sink the economy than compromise."
Meanwhile, it remains unclear how Coloradans will fare with the income-tax changes.
People in the state are slightly more dependent than elsewhere when it comes to investment income, where taxes are expected to rise. And the state has a higher share of households above the $250,000 income threshold proposed for the biggest tax increases.
But a study from the Tax Foundation, a nonprofit based in Washington, estimates Colorado taxpayers will have one of the smallest increases in taxes as a share of income of any state, ranking it 48th, assuming an expiration of all the Bush-era tax cuts. Because of a broad middle-class tax base in Colorado, the overall tax impact will be less than in richer states such as New York and New Jersey.
Information from: The Denver Post, http://www.denverpost.com