September Forecast Shows Recovery Underway and Resilient

DENVER, CO – Democratic members of the Joint Budget Committee today released the following statements after the Legislative Council staff and the Office of State Planning and Budgeting delivered the September economic forecasts, which project strong General Fund revenue, but warn of continued budget challenges in years to come and uncertainty as the economy rebuilds from the pandemic.

“It’s exciting that Colorado’s economy is gaining steam,” said JBC Vice Chair Rep. Julie McCluskie, D-Dillon. “These forecasts show that many industries and people are thriving, Colorado is ahead of the pack nationally, and people are returning to work. Our strong public health response to the pandemic, high vaccination rates and state stimulus efforts are powering the comeback. There is still some uncertainty ahead, and the recovery hasn’t been the same for every industry or every community. As we craft next year’s budget, we’ll focus on building back stronger and forging a recovery where every Coloradan, and especially those hit hardest by the pandemic, can thrive.”

“Today’s forecast is promising news for our state, and the progress we’ve made to bounce back is something to be proud of, but we cannot let up,” said JBC Chair Sen. Dominick Moreno, D-Commerce City. “Far too many low-income Coloradans and small businesses are still struggling, and it’s imperative that we focus our attention on helping them. As we continue to work toward becoming more economically resilient and recovering from the effects of the pandemic, we remain committed to ensuring that no Coloradan is left behind.”

“These forecasts are good news for Coloradans and show that our state’s recovery is resilient,” said JBC Member Rep. Leslie Herod, D-Denver. “The forecasts also show an uneven recovery for lower-income Coloradans and small businesses, particularly people of color and minority owned businesses who were disproportionately impacted by the pandemic, so that’s where our focus should be. Last session, we took bold action to expand economic assistance for hardworking families and cut taxes for small businesses. As our economy roars back and next year’s budget process begins, we will continue our efforts to boost Colorado’s recovery, create a more resilient economy, and help all our communities build back stronger.”

“Since we began our work this session to power the Colorado Comeback, we’ve seen positive improvements in our economic recovery, and we certainly have a lot to look forward to with this month’s forecast,” said JBC Member Sen. Chris Hansen, D-Denver. “While many Coloradans are getting back on their feet, however, those most vulnerable are not. As we move forward, we must continue our work to invest in education and uplift marginalized communities across our state to ensure an equitable recovery.”

The Legislative Council staff (LCS) September forecast anticipates General Fund revenues to be $14.24 billion in FY 2020-21 and $15.11 billion in FY 2021-2022 – a $96.1 million decrease for FY 2020-21 and a $246.4 million increase for FY 2021-2022 as compared with the earlier June revenue forecast. These continued improvements in the state’s economic outlook are due in large part to federal and state stimulus dollars, which have elevated personal incomes throughout the pandemic while allowing Colorado to invest in stabilizing the industries and individuals most severely impacted by COVID-19.

Colorado, however, is still seeing inequitable recovery trends driven by differing rates of recovery by sector and the disparate impact of unemployment on low wage workers. This means that some sectors and households have emerged unscathed while others continue to struggle. Specifically, the pandemic had disproportionate impacts on Black and Brown Coloradans, and the unemployment rates for Black Coloradans remain much higher than before the pandemic.

The Office of State Planning and Budgeting (OSPB) anticipates that General Fund revenue will be $14.24 billion for FY 2020-21, which OSPB revised downward by $182 million relative to its June estimate. For FY 2021-22, OSPB projects General Fund revenue will be close to $15.76 billion, which OSPB revised upward by $260.6 million relative to its June estimate.

The state will exceed its TABOR limit due to higher than anticipated income tax collections, and both OSPB and LCS anticipate the state exceeding the TABOR limit in the upcoming fiscal years, as well. In addition, LCS and OSPB identified both upside and downside risks to the forecast, with passage of the bipartisan infrastructure bill and additional federal spending identified as an upside risk and continued supply and demand mismatches, waning fiscal stimulus, and inflation as downside risks.