The Colorado House Transportation and Energy Committee approved a proposal by Gov. Bill Ritter and Democrats to remove a 6 percent spending limit on general fund growth and replace it with limits based on personal income growth.
Supporters said the current limits won't allow the state to recover when the economy rebounds after the recession.
John Straayer, who wrote a book on the history of the Colorado Legislature, said lawmakers who approved the 6 percent limit, known as the Arveschoug (AR'-ve-scow)-Bird limit, were trying to persuade voters not to approve stronger limits. He said they never intended to hamstring the Legislature's ability to deal with budget problems.
He said lawmakers have the right to fix the problem by removing the limit, and he trusts lawmakers to make the right decisions.
"I think it's good government. A legislature is here to legislate. I'm not afraid of you," he told lawmakers.
Many Republican lawmakers oppose the plan and say it's an attempt to get around the state's tough limits on raising taxes and spending.
Rep. Marsha Looper, R-Calhan, said if the proposed new law had been in effect over the past 10 years, transportation funding would have been cut by $890 million.
Rep. Frank McNulty, R-Highlands Ranch, said state fiscal policy has been weakened by a variety of spending rules, including Arveschoug-Bird and Amendment 23, which requires annual increased spending on public education, and all of those issues should be reviewed.
Currently, state law allows the total general fund budget — which covers big-ticket items like public schools, prisons and higher education — to grow by 6 percent a year. Any leftover revenue must be spent first on highway construction and then other building projects. That generally happens only when tax revenue is up in good economic times.
Under those limits, no money is expected to be transferred to transportation until at least July 2010.
Under the bill being proposed, the existing 6 percent allocation formula would be replaced with a new 5 percent limit based on personal income growth.
The bill would guarantee that 2 percent of the general fund would be dedicated to transportation for five years, beginning in 2012, if personal income from the previous fiscal year grows more than 5 percent. The five-year period would begin in any year after that if the conditions are met.
The state also would increase the state's 4 percent general fund reserve to create a 10 percent rainy day fund to protect critical state services from any future recessions.
The bill now goes to appropriations.