Senate OKs budget, replaces cuts to higher ed

DENVER - The Colorado Senate approved a new budget on Thursday night that keeps the $300 million in cuts to higher education, but then takes money from elsewhere to offset that number.
- Budget committee sent back to drawing board

The newly revised budget keeps $300 million in cuts to higher education. However, the Senate also passed two amendments that take $500 million in surplus money from the state-created Pinnacol Assurance. Of that money, $300 million is being sent towards higher education. The other $200 million will go into the state's reserves.

Pinnacol is a state-created worker's compensation insurance company.

Lawmakers backed few additional cuts to ease the potential hit to state colleges and universities should the Pinnacol plan fall through.

Lawmakers agreed to cut metal detecters and security officers at public entrances to the state Capitol to save about $850,000. That security was added after an armed man was shot and killed outside the governor's office in 2007. They also backed reducing payments to private prisons that house state inmates by $2.4 million.

Democrats rejected a Republican plan asking all state departments to find ways to cut 2.9 percent on top of a 12 percent cut previously backed by the Joint Budget Committee. They also rejected a GOP proposal to cut lawmaker salaries and eliminate $3 million in vocational training for inmates to help raise more money for higher education.

Republicans objected to the plan to take $500 million from Pinnacol Assurance, the state's dominant workers' compensation insurer, which they called a socialist and "banana republic" maneuver.

Pinnacol Assurance is fighting the legislative move to take money from its surplus to make up for the higher ed cuts. At the same time, company officials have been quietly talking to the governor's staff about a possible way the insurer could voluntarily use some of its $2 billion in assets to help the state out of its budget crunch.

No details have been released. Sen. Chris Romer, D-Denver, said there might be a way for the company to loan the state money.

He said the money could be repaid with revenue raised by undoing many of the state's long-standing tax breaks and credits, something being considered by some Democrats.
Senate Minority Leader Josh Penry said schools could end up closing by the time the Pinnacol fight is resolved.

"The reality is there are places to make cuts if there's a will to make tough choices," he said.

But Sen. Moe Keller, the budget committee chairwoman, said there really was no "fluff" left to cut in the budget. She said the committee backed closing a prison in Canon City to save $6 million a year, and closing six more wouldn't even eliminate the budget shortfall.

Democratic Senate President Peter Groff said he was still concerned about higher education but thinks there will be other possible solutions to come during the legislative session.
Lawmakers need to cut money out of the state budget for this year and next because tax revenue is expected to drop a combined $900 million because of the recession.

Higher education is a frequent target for cuts during downturns because it's the only large state operation that isn't protected by constitutional spending limits, like public schools, or by federal mandates and funding, like Medicaid.

Other parts of the budget-balancing package rely on taking money from other sources to prop up the budget for the next fiscal year, which starts July 1. That includes taking $15 million from a fund supported by fees on all landline and cell phones that is supposed to be used to subsidize the building of telephone lines in rural areas. The package would also take $20 million from the tobacco tax approved by voters through Amendment 35, which is supposed to pay for smoking prevention and health programs.

The package would also eliminate a $91 million property tax break for senior citizens.