CO Economy Hums; Budget Hole Gets Deeper

(March 17) – Presenting their quarterly economic and revenue outlooks, the state government’s leading economists reported today that Colorado’s economy continues to expand and that the pace of that growth has increased slightly since the last round of forecasts in December.

But continuing a counterintuitive trend, the outlook for the state budget got worse. Henry Sobanet, director of Gov. John Hickenlooper’s Office of State Planning and Budgeting, told the JBC this morning that the state’s general fund reserve for the current 2016-17 budget year is $260.4 million short of maintaining the statutory 6.5 percent reserve, $42.7 million worse than the quarterly projection presented in December, and that the 2017-18 budget the governor proposed in November is $696.6 million short, a hole that is about $137 million deeper than in December’s forecast.

“The JBC and the legislature have some extremely difficult decisions ahead,” said Rep. Millie Hamner, vice chairwoman of the JBC. “The gap between our obligations and available revenue just grew by $137 million, making it even more difficult for us to present a budget that’s in balance and meets all the needs of the people of Colorado.”

The JBC usually uses the more conservative of the two March revenue forecasts to finalize the annual state budget. The JBC will vote on whether to adopt today’s OSPB forecast or the one presented by Natalie Mullis, the legislature’s chief economist.

“Our options just got uglier,” said Rep. Dave Young, D-Greeley, a JBC member. “Our spending levels for K-12 education are very much at risk, and other belt-tightening measures will have to be taken unless we act. I would like to remind my colleagues that we can ease the pain by turning the hospital provider fee into a state enterprise, which remains a constitutionally viable option.”

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