In November 2005, Colorado voters passed Referendum C, giving the state a five-year “time-out” from the revenue limits established by the Taxpayer’s Bill of Rights (TABOR).

The current Colorado state budget (July 2007 through June 2008) is the third of five budgets to operate under that time-out, and the legislative Joint Budget Committee is working on the fourth.

Many Coloradans are starting to ask what should happen next.

Where did Referendum C get us as a state? Where are we headed looking forward, and is that actually where we want to go?

We believe the best way forward is to first make sure we have good information so Coloradans can make good decisions. The purpose of this report is to provide that information. Looking Forward projects state revenues and expenditures through 2013, a six-year period that includes the last three years of the Referendum C time-out and the first three years of the new Ref C revenue cap.

Looking Forward is a collaborative project by a team of eight analysts from the Colorado Fiscal Policy Institute, the Bell Policy Center, and the Colorado Children's Campaign.

Our findings drive four key observations about where we are headed as a state:

1. Colorado state services have only partially recovered from the economic downturn. Referendum C has allowed the state to retain more than $1 billion in revenues each year. Even so, most major state programs have not returned to the levels of service attained immediately prior to the 2001-03 downturn.
   
2. Nevertheless, 2007 is probably as good as it gets. There will be no further recovery of service levels under Referendum C. In fact, it will be a challenge for the state to maintain 2007 levels of service into the future, and we project there will not be enough left over to maintain the state’s roads, bridges and buildings in their current conditions.
   
3. It is the Arveschoug-Bird formula that will mostly determine how revenues are allocated in the future. This formula largely dictates how General Funds are allocated between the state’s operating budgets (e.g., Education, Medicaid, Corrections, etc.) and capital budgets (e.g., Transportation and Capital Construction), and it will continue to do so throughout the study period.
   
4. Budgets for the major areas of state government are interrelated. Because all General Fund revenues are fully allocated, any further increases in state services can come only through new revenues or at the expense of service cuts elsewhere. The departments of Education, Higher Education, Health Care Policy and Financing (largely for Medicaid), Human Services, Corrections and Transportation, which together account for more than 80 percent of total state spending, all depend on state General Fund revenues for significant portions of their funding.

Press coverage:

Denver Business Journal, Dec. 18, 2007
Study says state needs more money, by Bob Mook

The Daily Sentinel, Dec. 18, 2007
Report: State services to be static, by Mike Saccone

Denver Post, Dec. 19, 2007
Budget options slim after TABOR timeout, by Jennifer Brown

Rocky Mountain News, Dec. 19, 2007
Colorado has exhausted Ref C's financial bounce, group says, by Chris Barge

Pueblo Chieftain, Dec. 19, 2007
Tax hike needed to fix state's fiscal woes, by Charles Ashby

Durango Herald, Dec. 19, 2007
Report: State needs more tax money, by Joe Hanel

Denver Daily News, Dec. 19, 2007
Ref. C is not enough? Opponents: taxes are not the answer, by Peter Marcus

SquareState.net, Dec. 18, 2007
A December blizzard of studies from the Bell, by Luis