A woman walks with luggage in Denver International Airport. (Getty Images)
The latest economic forecasts released by Colorado officials predict continued growth for the state even amid supply chain disruptions, a labor shortage and high inflation.
That means Coloradans can expect to receive refunds and tax cuts — mandated under state law when revenue exceeds a certain amount — in each of the next couple of years.
Nonpartisan Legislative Council Staff and fiscal analysts with the governor’s Office of State Planning and Budgeting presented two separate economic forecasts Friday to state lawmakers on the Joint Budget Committee.
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According to preliminary figures from the state controller’s office, general fund revenue grew 10.7% from fiscal year 2020-2021 to fiscal year 2021-2022. The forecasts predict the growth will continue at a faster pace in the current year.
Legislative Council Staff predicted for the fiscal year that began July 1, state general fund revenue — mostly comprising income and sales taxes — will increase 11.7% above last year, while analysts with the Office of State Planning and Budgeting predicted a 12.2% increase. The LCS forecast projects that general fund revenue will amount to $15.9 billion for this fiscal year. OSPB’s estimate was slightly higher, at $16 billion.
“We still have some room to heal in the labor market and with regards to employment,” Jeff Stupak, an economist with Legislative Council Staff, said during Friday’s Joint Budget Committee meeting. Colorado’s unemployment rate dropped to 5.1% in November — a far cry from the worst depths of the pandemic recession, but still above pre-pandemic levels.
“Today’s forecast shows that Colorado’s recovery is well underway and that many of our efforts to boost the economy have been successful,” Rep. Julie McCluskie, a Dillon Democrat who chairs the Joint Budget Committee, said in a Friday statement. “While we’re all heartened to hear that many of our most treasured industries have come roaring back, we are also keenly aware of the rising cost of living in Colorado and are determined to craft a budget that saves people and businesses money and leaves more money in their pocket at the end of the month.”
The LCS December economic outlook for the current fiscal year has improved since the last forecast, in September.
Colorado ended the last fiscal year with a general fund reserve balance $2.85 billion higher than the law requires, and is expected to end this year with $1.85 billion more reserve funds than required, based on what’s currently budgeted.
This year, LCS predicts the state will take in $1.9 billion more revenue than allowed this year under the Taxpayer Bill of Rights, a voter-approved constitutional amendment, and a subsequent ballot measure known as Referendum C. That surplus would trigger another income tax cut and a sales tax refund next year for Coloradans, who are already getting a so-called TABOR refund and income tax cut due to high revenue collections last year.
In fiscal year 2022-2023, both forecasts predict continued economic growth.
“While this continued progress is welcome news, we know that this recovery is still leaving too many of our neighbors behind,” Sen. Dominick Moreno, a Commerce City Democrat and the vice chair of the Joint Budget Committee, said in a Friday statement. “We must keep working to close those equity gaps and ensure that Colorado’s comeback lifts up all communities.”
Nationwide, the U.S. has seen year-over-year inflation growth of 6.8%, the most in 39 years. The consumer price index for the Denver-Aurora-Lakewood metro area grew 6.5%.
“This forecast shows a robust recovery,” Polis said in a Friday statement. “My administration has been hard at work saving Coloradans money and this forecast is a call to action to double down on our efforts to save people money on everyday items, on health care, fees and prescription drugs.”
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