The Economy

The State Budget

On August 18, 2009, Governor Ritter announced $318 million in budget cuts to the Colorado state budget to account for the growing shortfall in this year's state budget for fiscal year 2009-2010.  Colorado has been experiencing declining revenues and there has been much concern over the impact these cuts will make to our local communities.  Colorado now ranks as 47th in the country in key areas of investment:  like healthcare, education, transportation and higher education.  This is sobering news for our state and its citizens, as we see programs and services disappear due to the budget crisis.

An Issue Brief, put out by the Colorado Center on Law And Policy (CCLP) and its project the Colorado Fiscal Policy Institute(COFPI) have provided analysis on the budget cuts in the Departments of Health Care Policy and Financing, Human Services, Public Health and Environment, Higher Education and Revenue.  Here's the Issue Brief: The High Cost of Cutting Services: A detailed look at selected stat budget cuts, September 2, 2009

The Federal Budget

On May 7, President Obama’s administration released its 1,380-page detailed budget and accompanying 131-page book called "Terminations, Reductions, and Savings," making the case that President Barack Obama is focused on deficit reduction and fiscal responsibility at a time when he is calling for huge investments as part of his economic recovery plans.

The book's introduction explains: "In the days since unveiling the Budget overview, the President has announced a procurement reform effort that will greatly reduce no-bid contracts and save $40 billion, and at the Cabinet’s first meeting, he directed agency heads to identify at least $100 million in administrative savings. Secretary of Defense Gates, in consultation with our Nation’s military leadership, unveiled an unprecedented effort to reform defense contracting, saving billions. And the Administration has been going through the Budget line by line so that taxpayer dollars are used wisely on programs that work. This volume is the first report of that effort."

The 121 cuts, totaling $17 billion, are divided into "terminations," "reductions," and "other savings."   Please see the attached link for the 131 page document itself here.

Around that same time, the Administration announced that they were going after US taxpayers that are using tax loopholes and foreign tax havens in which the government is losing billions of dollars in tax revenues every year.  On May 11, the Administration released a “green book” detailing 23 international tax proposals estimated to raise $210 billion over 10 years. In addition to further explanations of its proposals on deferral, the foreign tax credit, the check-the-box regime, and a tougher qualified intermediary regime, the administration proposes limiting earnings stripping by expatriated entities, limiting income shifting under the transfer pricing rules, and cutting back the ability of foreign portfolio investors to avoid withholding taxes through equity swaps, among a range of other proposals. Treasury officials stress the administration remains concerned about potential abuses associated with foreign reinsurance.  Read through the complete "green book" here.

Todd Mata, ACT Chair, says "I know that these are provisions only a tax wonk would care about, but I can assure you this is nothing short of earth shaking for the Fortune 500 companies, most of which have significant operations overseas."