For the past two weeks, state lawmakers along with policy leaders and concerned citizens have been focused on finalizing Colorado’s 2023-24 budget.

The proposed budget represents state spending totaling $41.1 billion. It’s a number larger than the GDP of Libya, Bolivia, Uganda, Iceland and dozens of other countries. $41.1 billion also represents a 4.2% increase over last year and the largest budget in Colorado history. It warrants scrutiny.

A budget represents a blueprint. A vision for the future. It’s where the governor lays out his priorities for Colorado, and it is where the Legislature decides if it agrees with the governor and determines the specific allocation of limited public dollars.

Common Sense Institute is a nonpartisan research organization with a mission to promote and protect Colorado’s economy. As we contemplate the budget and the policy priorities it represents, we are asking the questions Coloradans should pose. In fact, they are the same questions Gov. Jared Polis asked in his annual State of the State address:

Who do we as Coloradans want to be in our 150th year?

How can our work now and over the next couple of years to make that Colorado possible?

And, finally, how can Colorado’s example shine a bright light for the nation?

In other words, does the proposed 2023-2024 budget address the issues that matter most to Coloradans?

There are six members of the Legislature’s Joint Budget Committee, three from the House and three from the Senate. These individuals, whether you agree with them, are deserving of our gratitude for their work on this voluminous undertaking. The JBC meets year around to determine budget needs, available resources and ultimately develop a massive measure for their colleagues’ and the governor’s consideration.

Also known as the Long Bill, the budget has cleared the Senate and is being finalized by the House. As the House considers the budget, there are a few trends Colorado has experienced in the past two decades that are worth noting.

Shifting priorities

In December, the Common Sense Institute issued The Colorado Budget Then & Now. The annual report details a comparison of state budgets over the past 20 years and provides a guideline for examining the 2023-2024 budget. The trends in appropriations reflect the shifting priorities that are a direct result of laws and budgets passed each legislative session.

State appropriations per Coloradan, adjusted for inflation, has increased by 28% over the last 20 years, from $4,955 to $6,333 in FY2023.

In recent years, the increase is largely due to federal funds, but population-and-inflation-adjusted spending from the General Fund and cash funds have also increased. Policymakers need a plan for this significant growth to ensure smart allocation of resources.

One of the most significant trends year over year is the growth of the Department of Health Care Policy and Financing. The department has experienced a substantial increase in its budget. The department has grown by 459% over the last 20 years, according to the Common Sense Institute’s Budget Then and Now.

Fast forward to March. When the Joint Budget Committee finalized and closed the 2023-2024 budget on March 20 for consideration by the Legislature, the committee decided it would appropriate or transfer $41.1 billion. The most notable expenditures in the budget include a 5% state employee across-the-board salary increase, a 3% community provider rate increase, $322 million for universal preschool implementation, a 16% General Fund increase for public institutions of higher education, $456.5 million for capital construction projects, and $441.9 million to the Department of Health Care Policy and Financing to undo the Enhanced Federal Medicaid Match.

Even though there have been more General Fund funds allocated to Medicaid this year because of the loss of FMAP, the significant increase to the Department of Health Care Policy and the Financing over the last 20 years is worth prioritizing and taking note of.

Spending the windfall

The budget also included significant “one-time” General Fund expenditures and about half of the $315 million unobligated American Rescue Plan Act dollars. These dollars are a one-time windfall, like a bonus check in the family budget. In other words, one-time dollars should be used for one-time purchases rather than ongoing obligations.

Again, thinking of the family budget, you would not want to use one-time dollars to put a down payment on a car without a way to pay the note in the future. Limited resources might create budget deficits in future years if not used on one-time obligations or saved for future downturns.

In keeping with the trend, the Department of Health Care Policy and Financing’s budget has increased from $2.5 billion to $14.2 billion, and its share of the budget has increased from 19% to 36%. In comparison, the Department of Education’s budget has grown by 130%, from $3.1 billion to $7.2 billion, but its share of the budget has decreased from 24% to 18%.

It is also worth noting that the Department of Health Care Policy and Financing accounted for 61% of the General Fund appropriation increase in FY23 and is 43% of the proposed FY24 increase. On the other hand, the Department of Education’s share of the General Fund declined from 42% to 32% over the past 20 years. If the Department of Education had maintained the same share, its FY23 appropriation would have increased by $1.3 billion.

Overall, these trends suggest that Colorado has prioritized health care spending over education, water, housing and crime, among many other priorities. The state should examine why health care spending is a majority of the budget and prioritize plans that ensure stronger competition of high-quality providers, protect rural Colorado health providers from state policies that limit choice, and limit fees and restrictions on the marketplace that hinder the ability of providers to offer the highest quality of patient care.

Common Sense Institute is dedicated to delivering data-driven analysis. With more than $41 billion on the line, the budget is one of most important focuses. The budget will not be fully closed until the conference committee meets this week to negotiate and finalize differences between the House and Senate. We will continue to analyze the trends and examine the spending in the coming months.

Kelly Caufield is executive director of the Common Sense Institute Colorado.

Kelly Caufield