DENVER, CO – Democratic members of the Joint Budget Committee today released the following statements after the Legislative Council and the Office of State Planning and Budgeting delivered the March economic forecasts, both of which project lower general fund revenue compared to earlier estimates and which signal some tough budgetary decisions to come.
“We knew this would be a difficult budget year, and it’s clear that uncertainty in the economy due to the COVID-19 pandemic will make an already tight budget even tougher than we had anticipated just a few months ago,” said JBC Chair Rep. Daneya Esgar, D-Pueblo. “We remain committed to delivering a bipartisan and balanced budget that supports critical priorities for Coloradans in every part of our state, and will also be highly attuned to the immediate needs of the state as we respond to the COVID-19 pandemic. Public health and safety are a key priority at this time.”
“Like the rest of the nation, Colorado’s economy is taking a hit from the spread of COVID-19,” said JBC Vice-Chair Sen. Dominick Moreno, D-Commerce City. “But we have worked under similar budget restrictions before and will continue to prioritize the most pressing concerns of Coloradans. The important thing to remember is that we are all in this together. No matter what happens, we will find budgetary solutions that address critical health concerns and support our community.”
“We have had one of the strongest economies in the country, and I know that Colorado will get through the difficult months that lie ahead as we confront the COVID-19 pandemic,” said JBC Member Rep. McCluskie, D-Dillon. “The state of the economy is changing quickly, and it’s clear we’ll have significantly less revenue than we expected due to the pandemic. The committee will need to make hard decisions about what we can fund and how to support our critical priorities as we closely watch the state’s financial stability.”
“As we continue to navigate this public health crisis, the JBC is committed to formulating strong budgetary plans that reflect the most urgent needs of working families,” said JBC Member Sen. Rachel Zenzinger, D-Arvada. “Now is the time to come together and build a budget that meets the moment—ensuring that those who are hit the hardest by this pandemic are able to access the relief they need. Looking forward, we will also be cognizant of how our state needs may shift and change in the coming year.”
The forecast from Legislative Council staff estimates that General Fund revenue will grow by 1.4 percent in FY 2020-2021 over the previous fiscal year, a figure that was revised down from 4.1 percent in the December forecast. Relative to the December forecast, General Fund revenues are now expected to be $396.1 million less in FY 2019-2020 and $749.9 million less in FY 2020-2021 than anticipated in the December forecast. The new forecast also estimated that revenue will be below the Referendum C Cap by $247.7 million in FY 2019-20, $629.6 million in FY 2021-22 and $142.7 million in FY 2021-22, so TABOR refunds are no longer expected in these years.
The forecast from the governor’s Office of State Planning and Budgeting anticipates General Fund revenues will grow by 3.3 percent in FY 2020-2021 over the previous fiscal year, a drop from four percent projected in the December forecast. The OSPB forecast estimates that revenue will be below the Referendum C Cap by $22.1 million in FY 2019-20 and $33.7 million in FY 2020-21, and will be above the cap again by $216.6 million in FY 2021-22. Revenue forecasts relative to the December estimate are down by $300 million for FY 2019-20, $400 million for FY 2020-21 and $370 million for FY 2021-22.
Both forecasts acknowledge additional downside risk to the estimates due to the spread of COVID-19 and the rapidly changing nature of the pandemic. While the fundamentals of the state’s economy are strong, the forecast estimates near-term contraction of economic activity and an elevated risk of recession. The pandemic is anticipated to impact hospitality and tourism as well as service industries that drive state and local tax collections.