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I Can See Clearly Now (But the Rain is Still Coming)

Tags: Forum for Civic Advancement

Amidst positive economic data, decreasing unemployment rates, and a flurry of optimism from Wall Street, an elephant is sitting quietly in the room. With a growing sense that the Great Recession might finally be over, gloom and doom has taken a backseat to cautious hope for our economic future.

Not so fast, say today’s policy experts.

El Pomar Foundation’s Forum for Civic Advancement recently hosted Dr. Phyllis Resnick from the University of Denver’s Center for Colorado’s Economic Future. Commissioned by Colorado’s State Legislature and funded with private dollars, the Center’s research highlights structural problems that threaten to wreak havoc with the state’s budget in the next several years.

And the problems are not just the result of macroeconomic trends.

“Even though it’s been the worse recession we’ve had in 70 years, we don’t think it’s our worse problem,” said Resnick. “The problem, we think, is structural.”

Here’s the long and short of it: Due to constitutional constraints treasured by both political parties (TABOR, Amendment 23, Gallagher) combined with the rising medical costs associated with an aging population, by 2025 all state revenues will only be enough to cover three programs—Medicaid, K-12 education, and corrections.

What does this mean for the nonprofit sector? It means zero money in the budget for health and human services, public safety, higher education, natural resources, public health, agriculture, military and veterans affairs, or any other program outside of the “big three.”

But don’t worry, it gets worse.

Rick Cohen at the Nonprofit Quarterly recently wrote about how, despite today’s optimism, states across the country (not just in Colorado) face budgetary crises that will massively impact the nonprofit sector nationwide. As he bluntly states, “If you’re not worried, you’re not paying attention.”

Cohen summarizes the truth about state budgets in three points:

  1. The cuts state budgets have endured over the past few years will not be undone by a somewhat strengthening economy;
  2. Stimulus money and budget gimmicks have both run their course, leading to unavoidable future budget difficulties; and
  3. Though nonprofits have already made large program and service cuts already, additional cuts are almost certainly in the cards.

Taken as a terribly glum package, Dr. Resnick’s presentation and Cohen’s article point to tough times ahead for the nonprofit sector, even if the economy continues to improve. For society, it means we may have to finally eat our Brussels sprouts, as Barry Noreen notes at The Gazette, and address the structural issues that threaten to undermine substantive economic recovery for years to come.

Whether you believe in spending cuts, revenue increases, or some combination of both, what is clear is that big questions still persist.

PS: Need more doom and gloom? Check out our earlier blog post on the national budget crisis.