(June 19) – Colorado’s economy will continue to expand, but the state government will go from being $831 million under budget to being $181 million over budget for the 2015-16 fiscal year, which begins next month, the legislature’s chief economist predicted today.
“Though these forecasts will undoubtedly move up or down, it looks like we’ll need to tighten our belts to get the 2015-16 budget back in balance,” said Rep. Millie Hamner, D-Dillon, who will take over later this year as chairwoman of the Joint Budget Committee.
Delivering her quarterly update on the state’s economic and revenue outlook, the legislature’s chief economist, Natalie Mullis, told the JBC at a hearing this morning that the Colorado economy continues to outperform the nation as a whole.
“Growth is going to be more moderate than it has been in the past, but we’re still going to see healthy economic growth,” she told the committee. She predicted general fund revenue would actually increase by $211.5 million from the forecast she delivered in March, but that said that most of that money would not be available for the state’s general fund budget.
Part of the additional expense is a Colorado version of the federal earned income tax credit that triggered sooner than expected, meaning $43.5 million in tax credits for middle and lower-income Coloradans. Colorado’s version of the EITC – which mirrors a federal credit – was made law in 2013 by Rep. Daniel Kagan in that year’s Senate Bill 1.
The outlook for TABOR refunds of state taxes is unclear. While Mullis’s 2015-16 forecast predicted that state revenues would fall just short of the threshold for TABOR refunds, the forecast delivered by Henry Sobanet, director of the Governor’s Office of State Planning and Budgeting, predicted that modest TABOR refunds would continue.
“The irony of having to make cuts to our schools while handing out tax refunds still baffles me, but that’s unfortunately how Colorado’s state budget works,” said Rep. Dave Young, D-Greeley, a JBC member.