Gov. John Hickenlooper on Monday outlined a $27 billion budget proposal for the 2017 fiscal year that features $373 million in spending cuts and $189 million in taxpayer refunds.

The fiscal paradox — a result of more moderating economic growth and restraints in the state constitution — sets the stage for a major budget battle in the 2016 legislative session, as evidenced by the sharp reaction to the Democrat’s plan.

“If this is not the fabled death by a thousand cuts, it comes pretty close,” said Rep. Millie Hamner, the top Democratic budget writer. “At a time when we should be investing in our kids’ education, our rural and Western Slope hospitals and our roads, we’re making cuts and issuing refunds instead. That makes no sense.”

Hickenlooper’s plan represents a 0.4 percent decrease in spending compared with the current 2016 fiscal year budget, with the cuts hitting hardest on higher education, hospitals and state building maintenance.

The reductions are needed to offset increased costs in K-12 education and Medicaid, the health care program for the poor — as well as to cover a projected deficit in the current year budget that could reach as high as $220 million.

“We had to make difficult decisions to find this balance that will affect health care providers, students from kindergarten to college and state workers,” Hickenlooper said in a statement.

The governor’s 19-page budget letter serves as the starting point for a six-month process. The Joint Budget Committee — a panel of three House and three Senate lawmakers with an even partisan split — will begin meeting Nov. 12.

“What I know will happen is people will decide if they like these cuts and then they can offer other ones, or do this,” said Henry Sobanet, the governor’s budget director. “It’s the Zen of where we are.”

Republicans quickly cast the debate in partisan terms, criticizing Hickenlooper for rising costs related to Medicaid expansion under President Barack Obama’s health care law and “pet economic development projects.”

The budget requests “demonstrate that a lot of underlying problems still exist with regard to prioritizing funding and fundamentally reforming the unsustainable growth of government programs,” said Sen. Kent Lambert, the top Republican budget writer.

The items Hickenlooper prioritized include $6.7 million to hire 100 additional child welfare caseworkers; $4.7 million for 125 new staff members at youth corrections facilities; and $2.5 million for a program that provides birth control for low-income women — a line item GOP lawmakers rejected in 2015.

The proposal also includes an increase in per-pupil K-12 spending to $7,398 from $7,294 in the current year, a 1.4 percent hike. The budget adds $50 million to the shortfall in classroom spending under Amendment 23, increasing it to $905 million, which the Colorado Education Association called “an additional budget cut to our schools.”

The budget blow to Colorado colleges is estimated at $20 million, and the governor’s office proposes lifting the cap on tuition hikes, allowing governing boards to ask for significant increases.

The dollars for state building projects are slashed to $59 million, down from $272 million, and maintenance is cut in half.

State employees will not see a salary hike, but the proposal covers increased health care costs to keep take-home pay constant.

The governor’s office is projecting the budget deficit for the current budget year at $160 million — an average of the two economic forecasts issued in September — and suggested using the state reserve fund to cover the cost and prevent midyear budget cuts.

The fiscal year 2017 budget would then backfill the reserves. “When you have a hiccup in revenue, that’s what the reserve is for,” Sobanet said.

As part of the budget, Hickenlooper is asking lawmakers to approve a $100 million cut in the fees collected from hospitals. But because the dollars are matched by the federal government and returned to the hospitals, it means less money to cover the cost of uncompensated care.

Combined with a 1 percent reduction in provider rates, the Colorado Hospital Association estimates a total $285 million hit to health care professionals. Steven Summer, the organization’s president, called the cuts “entirely unnecessary” and pushed lawmakers to exempt the hospital provider fee from state revenue limits — a move that failed in the 2015 session.

In Hickenlooper’s proposed budget, the cut in hospital provider fees reduces the amount of the TABOR refunds by a corresponding $100 million — a politically difficult proposition.

Under the lower $189 million amount, the Taxpayer’s Bill of Rights rebates would range from $34 to $108 per person.