Joint Release: Continued, but Slower Growth Expected, Difficult Budget Choices Lie Ahead

DENVER, CO — The Joint Budget Committee today received economic and state revenue forecasts, which predict continued expansion, low unemployment, and wage growth above the national average throughout the forecast period. The forecasts from Legislative Council Staff and the Office of State Planning and Budget both indicate the state will issue TABOR refunds in upcoming years and exceed the Referendum C revenue caps, which limit the state’s ability to invest in critical priorities, such as education and transportation.  “The forecasts confirm that this year’s budget will be much tighter than before and will require difficult decisions on how to balance our state’s important priorities,” said JBC Chair Rep. Daneya Esgar (D-Pueblo). “Every dollar is precious, and I will be working with my House and Senate colleagues and the governor to responsibly allocate our limited resources in a way that invests in our state’s future and helps build an economy that works for all Coloradans in all parts of our state.”“Both revenue forecasts anticipate growth, which is welcome news for the services that Coloradans depend on. But the real story behind both forecasts is how TABOR hamstrings essential spending for critical priorities like education, health care and transportation. As cash fund revenues increase, so do TABOR refunds. It’s important to continue looking for solutions to problems posed by TABOR in order to preserve the most basic services government provides,” said JBC Vice Chair Sen. Dominick Moreno (D-Denver).“Both forecasts show continued growth, which is good news for our state,” said JBC member Rep. Chris Hansen (D-Denver). “Still, we will have to evaluate our budget carefully to ensure we are investing state funds as best we can and for the greatest impact. Despite increased revenue forecasts, we won’t be able to invest those additional resources in transportation, K-12 education, or higher education because of TABOR. The budget is tight, and we know it will be a challenge to continue this progress.”“We're seeing healthy projections for the upcoming year that will allow us to continue prioritizing investments in crucial areas like transportation and education, but due to TABOR caps, we’re limited in our ability,” said JBC member Sen. Rachel Zenzinger (D-Arvada). “Risks of recession have eased, but as our economy grows, we must ensure that we continue to practice fiscal responsibility amid expected budgetary pressures.”The forecasts from economists in the Governor’s Office and General Assembly show that growth will continue at a slower rate due to an increasingly tight labor market. The tight labor market, however, will lead to accelerated wage growth, and recessionary risk for 2020 has eased. The state’s trade dependent industries, such as food and agriculture, are still facing pressures from ongoing trade tensions.The OSPB forecast shows that General Fund revenue is expected to grow 3.5 percent in FY 2019-20, which was revised down from September by $101.2 million due to lower collections from individual income tax withholding. General Fund revenues are projected to grow by 4 percent in FY 2020-21. The LCS forecasts that General Fund revenue will grow by 3 percent in FY 2019-2020 and 4 percent in FY 2020-2021.  The LCS forecast shows that the state will issue TABOR refunds totaling above $1 billion over the next three years, estimates that were revised upward from September. Revenue above the Ref C cap is expected to be $304.3 million in FY 2019-20, $367.3 million in FY 2020-21, and $453.4 million in FY 2021-22.

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