Colorado lawmakers hear final state economic forecast ahead of budget bill
Lauren Larson and Bryce Cooke with the Governor’s office of State Planning and Budgeting present to the Joint Budget Committee on March 16, 2023. (Sara Wilson/Colorado Newsline)
Colorado’s economy is expected to continue its growth over the next few years, though it will be at a slower pace in the near term, economists told the Joint Budget Committee on Thursday.
Nonpartisan representatives from the Legislative Council Staff and Governor’s Office of State Planning and Budget presented their quarterly economic report to lawmakers, the last time they will do so before the JBC sets spending for the next fiscal year.
“Our forecast anticipates continued growth, albeit slow growth, through the current year, and a return to a more moderate pace of expansion in 2024 and 2025,” LCS analyst Louis Pino said.
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The potential for complications to that forecast is still significant, staff said, amid inflation, geopolitical uncertainty, the federal government’s monetary policy and recent small bank failures. That means a recession could happen, and would impact the Legislature’s spending power and the amount Colorado taxpayers receive in the form of refunds they are entitled to under the Taxpayer’s Bill of Rights.
“We’ve fought hard in recent years to make critical investments in housing, health care, and education, and we must work to defend those gains while fulfilling our funding obligations. Despite the unpredictability, we are committed to passing a responsible budget that keeps Colorado on a sound and sensible economic path so our state can continue to thrive for generations to come,” JBC Chair Sen. Rachel Zenzinger, an Arvada Democrat, said.
LCS and OSPB both estimated higher general fund revenues than their December estimates for the current and upcoming fiscal years.
They also both predict tax revenue in excess of the TABOR cap on government growth and spending this fiscal year. That figure will be about $2.75 billion according to the LSC and about $2.7 billion according to OSPB.
Taxpayers can expect money through checks tied to their income next April, unless the Legislature decides to change the refund formula like it did last year, when Colorado earners got flat $750 checks months ahead of schedule.
State tax revenue is expected to exceed the TABOR cap through the 2024-25 fiscal year, barring any significant tax breaks passed through legislation or ballot measures.
While the Legislature should have all the money it needs, those rising revenues might not make up for certain pressures that the forecast lags behind.
“We expect those revenue increases to not make up for the budgetary pressures that arise from inflation and population. Of course, we’re in a TABOR surplus environment, so it ends up not directly mattering to your budgetary calculations. But I wanted to note that even though you see increases, this is a decline in general fund revenue on a per capita, inflation adjusted basis,” said LCS chief economist Greg Sobetski.
The budget “Long Bill,” which includes funding for most state expenditures, is typically introduced in the Legislature in late March.
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