Colorado Is Broke

Whenever someone says “you know I am good for it,” or “I am going to pay you back really soon,” or “I am just a little short right now,” it is safe to conclude that you are not going to be paid and that the person to whom you foolishly lent money is broke. When companies have a ‘temporary cash shortage,’ even for a day or two, they go bankrupt.  No matter how the mainstream media wants to spin it, this week the State Government of Colorado went broke.

On Thursday, the Denver Post reported that Colorado was “temporarily short of money” and was suspending Medicaid payments. Colorado would “begin catching up on payments” next month. Try that with a cable TV bill. Further some taxpayers are still waiting on their income tax refunds which should have been paid by mid-May. This replay of California’s fiscal mismanagement is outrageous and will have consequences.

Among the many questions the Post failed to ask when it parroted the State’s official line is why did Gov. Ritter decide to cripple Medicaid providers? Why didn’t Ritter withhold the union dues the State collects from its employees’ paychecks? Why didn’t Ritter withhold payment on the various union construction projects around the state? Why didn’t Ritter withhold the paychecks of CU professors? How did Ritter decide to place the entire burden of Colorado’s illiquidity on the shoulders of small businesses that provide healthcare to the poor? Considering the State’s $18 billion budget, those small businesses must wonder how they got singled out at the bottom of the political slag heap.

The small businesses, which have payrolls and rent, yet must wait at least an extra month to get paid, just got the message: the State is no more reliable a customer than any other deadbeat. Worse still, the delayed payments came with little notice; even some deadbeats let their creditors know the check is not in the mail. The State has sent the same message to every business: don’t count on timely payments. When dealing with unreliable customers, businesses do one thing: raise prices. One of the advantages of government contracting used to be reliable payment terms, a factor that worked to the advantage of taxpayers. By punishing small businesses instead of his union cronies, Ritter has driven up the cost to run the Government for years to come. Look for Colorado’s already lower range investment grade ‘AA’ credit rating to be reviewed.

A properly run $18 billion enterprise like Colorado’s public budget should never run out of cash, and to do so is illegal. The Colorado Constitution forbids the budget deficits and debt that Ritter has illegally enacted by riding his payable accounts. Someone should lose his job and possibly be criminally punished. Ritter is simply not permitted to run a deficit and finance it by illegally withholding payments to a politically unpopular body. Despite this, the Post moved on with no further questions.

Taxpayers who are still waiting on their state refunds have also been sent a message: don’t pay estimated taxes throughout the year. If Colorado can’t pay its debts and arbitrarily decides to withhold tax refunds, the clear strategy is to never extend credit to the Government in the first place. The penalty for underpaying estimated state income taxes is less onerous than the prospect of an indefinitely delayed refund. Ritter, by singling out taxpayers and small businesses for his malfeasance, has probably reduced the quarterly float of cash Colorado used to enjoy when it was responsibly managed.

How is it that Colorado went broke? The sole reason is the repeal of TABOR, the law that requires Colorado to grow its budget no faster than inflation and population put together. Once these spending restrictions were lifted, the Democrats running the State went wild with new excessive spending on ‘green’ initiatives, union mandates, and public employee growth. When the recession hit, the same Democrats resorted to illegal tax increases and budget cuts. The State went on a bender right up to the recession, yet when reality forced Ritter back to earth, the adjustments were called cuts instead of a return to common sense. The reality is that Colorado’s politicians of both parties irresponsibly assumed that they could spend as if there would never be another recession, and when the bill came due Thursday, it was small businesses that were left stuck with the tab. Colorado politicians need to learn their place and stop ruining the good name of the people they serve.