Speaker of the House Frank McNulty, R-Highlands Ranch, today offered a new approach to the state budget. The new strategy will include a responsible budgeting process that will account for the margin of error made in previous economic forecasts. State revenues were sizably lower than predicted the past few years by the nonpartisan Office of Legislative Council.

“Making the decision now to spend less will allow us to craft a responsible state budget in a more thoughtful and elegant way,” Speaker McNulty said. “This type of proper planning is not just necessary, it also allows the Governor and the Legislature to avoid the harmful last minute cuts experienced over the last several years because of a lack of planning.”

McNulty’s plan will reduce the budget target by 2.75%, or approximately $195 million from December’s economic projections, with the goal of preventing irresponsible budgeting and last minute budget cuts. The Joint Budget Committee will also address the merits of each spending program throughout the legislative session to build a state budget.

“The time has come to set our budget around a responsible estimate that more accurately reflects the realities of our economy,” McNulty said. “We are going to meet the challenge of balancing our budget together, in collaboration with the Senate and the Governor, over the coming 100 days.”

Note: Please see the following remarks delivered by Speaker McNulty at a press conference earlier this afternoon

Two weeks ago, Governor Hickenlooper invited all Coloradans to partner with him to move Colorado's economy forward; to focus on job creation; and to get our fiscal house in order. The Governor's invitation was one made in a spirit of good faith and bipartisanship.

We accept the Governor's invitation to work together to help Colorado's economy get back on track and bring honesty and responsibility to our state budget process.

The first step in this process begins tomorrow morning when the House Finance Committee considers the annual revenue resolution which will give direction and guidance to our Joint Budget Committee as they develop the FY 2011-2012 budget.

It's imperative that we take this first step in the process with all prudence and with our eyes wide open knowing that sacrifice today will make for a better tomorrow.

For the last several years, this figure has been set by adopting the revenue projection made by the nonpartisan Office of Legislative Council. And while we all know that these projections are complicated and difficult, by any measure, the fact is that they are overly optimistic during times of recession. The Legislature has budgeted to a figure that has been consistently, and sometimes dramatically, higher than the revenues that have subsequently materialized.

It's time to be honest about this problem within our budgeting process. For several years now, the Legislature has planned and budgeted based on overly optimistic tax revenue projections, only to force the Governor to go back and make rushed cuts to the budget when state coffers take in less money than anticipated.

The time has come to set our budget around a responsible estimate that more accurately reflects the realities of our economy. Doing so is not only prudent, it is necessary in order to craft a budget that allows us, as the Governor said in his State of the State address, to "engage in very direct, very pragmatic conversations about what we can and cannot afford to do as a state government." In my opening day speech, I commented that the bill for kicking the can down the road has come due. Today is the first step to paying that bill.

I have proposed to my colleagues a budget figure that, based on recent history, I believe more accurately reflects what we as a state can expect to see in tax revenues. Instead of simply adopting the figure based on the last projection, I believe we must look at the margin of error in recent years and responsibly reduce that amount from our figure.

In 2008-2009, actual revenues were 17% lower than projected the previous December; in 2009-2010, actual revenues were 11% lower than projected the previous December. Even this year, we find ourselves in a similar predicament because of overspending from the year before.

Making the decision now to spend less will allow us to craft a responsible state budget in a more thoughtful and elegant way. This type of proper planning is not just necessary, but it also allows the Governor and the Legislature to avoid the harmful last minute cuts experienced over the last several years because of a lack of planning.

If we make a commitment now and have the courage to spend less today, Colorado will be better positioned to avoid these harmful last minute cuts. Any working family or small business will tell you that it is easier and far more responsible to reduce spending over 12 months than to budget the way it has been done over the last 3 years which forced a year’s worth of harmful cuts into the last 4 months of the State's fiscal year.

Waiting until the last minute, as has been done the last several years, lacks compassion and is just not responsible to those Coloradans who are deeply affected by the harmful cuts forced by irresponsible budgeting practices.

We will be bold by setting course on a more responsible and reasonable approach to setting Colorado’s budget.

We will propose that we subtract a reasonable margin (2.75%), which equates to $195.1 million, from the December forecast, placing the proposed general fund figure at $6.9 billion for the coming fiscal year. Given that our economists anticipate a long, slow recovery, I believe it is more prudent to base next year’s budget on a more conservative estimate.

This step, necessary and prudent as it is, will make the challenge we face in balancing the budget all the more difficult. We all know this to be true. And to think that this challenge will somehow be less difficult if we budget to a figure that is, once again, overly optimistic simply ignores the realities of balancing our budget.

Now, to those who will no doubt begin demanding to know how we will balance our budget under this proposal, my answer is simple.

We are going to meet the challenge of balancing our budget together, in collaboration with the Senate and the Governor, over the coming 100 days.

We will let the Joint Budget Committee do its work and address the substance of each program and each agency on its own merit. In short, we will do the work we must do; a process that will no doubt be marked by words of the Denver Post on Sunday: "For now, however, frugality should carry the day."

In the coming weeks and months, we will have to carefully consider all of the needs seeking funding from Colorado's general fund. It is my sincere hope that we do so thoughtfully, with a vision toward economic recovery and protecting those neediest among us.

We look forward to continuing to work closely with our colleagues on both sides of the aisle, and in both chambers, as well as Governor Hickenlooper, to accomplish this.