Once again, lawmakers' attention turns to a rainy-day fund

DENVER - After spending last week fighting over budget issues, House Democrats and Republicans are beginning to agree on one thing: the need to create a rainy-day fund.

Because the law requires the General Assembly to set aside 4 percent of its general fund budget - or $283.5 million - but mandates quick repayment of anything tapped from that reserve, legislators have batted around the idea of an additional fund for 15 years.

The thought is to put a percentage of the state's budget into a hard-to-access account during years of economic growth so that it can be tapped during tough times when services and construction projects otherwise would be frozen or cut.

Most times the plan has been brought up - including last year - legislators chose to fund programs that could be financed immediately rather than store up cash. The idea seemed to be dormant again this session until a March 20 economic forecast predicted reduced revenue projections of $700 million over the next four years.

House Speaker Andrew Romanoff, D-Denver, then began circulating the idea of a rainy-day fund, and Republicans proposed 10 budget amendments to reserve anywhere from token cash to 3 percent of most departments' budgets - about $133.6 million - in the 2008-09 fiscal plan.

Each amendment was rejected after Democratic leaders claimed that none of the money in the budget could be spared, halting the conversations on a familiar note.

Even Republicans who proposed the savings admitted it is hard to talk about rainy-day funds when it's already starting to drizzle. In that case, though, the state's current situation may be the best justification for putting money aside this year, they said.

"It is raining out there, and it could turn into a downpour. I don't see it leading in any other direction," said Rep. Kevin Lundberg, R-Berthoud. "That means, more than any other time, we need to prudently put the brakes on this year."

But Romanoff said the solution may not be loading up a fund this year as much as just putting a structure into place to start saving. He is discussing a possible bill to do that with Rep. Bernie Buescher, a Grand Junction Democrat and chairman of the Joint Budget Committee.

While most past proposals have suggested diverting money that otherwise would go to transportation and construction projects, Romanoff said he also is looking elsewhere. Money could come from an increase in the dollars generated by federal mineral leases or from the multistate tobacco settlement, he suggested.

"We'd all be much more comfortable going into potentially tough times if we put some money away," Buescher said.

But even the senator who co-sponsored last year's rainy-day fund effort, Democrat John Morse of Colorado Springs, said the idea would be hard to justify now.

It would have been a good idea in past years, when the state had extra money, Morse said. But construction funds and state services that might be cut back to contribute to the fund need new money more now than ever because of fears their funding pipeline will run dry during a coming recession, he said.

"I was exactly afraid of what's happening now," Morse said. "It's a train wreck. The question is: When and where does it burrow into the ground?"