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 June quarterly economic forecasts, both of which project slightly higher General Fund revenue compared to earlier estimates in May.
“We’re seeing that as we work to contain the COVID-19 pandemic, our economy is slowly beginning to rebound,” said JBC Chair Daneya Esgar, D-Pueblo. “We had to pass a balanced budget with an over $3 billion shortfall, and we worked as hard as we could to mitigate the harm to our most vulnerable. We prioritized our students and teachers and the services hardworking Coloradans need the most right now. The truth is, there’s still a lot of uncertainty with how the virus will progress in the coming months and how that will impact our economy and our budget.”
“As Colorado begins to open up and recover, we’re seeing our revenue forecast gradually improve as well,” said JBC Vice-Chair Dominick Moreno, D-Commerce City. “But we are not out of the woods yet. COVID-19 remains a real threat to our communities and the economic impacts of the shutdown will have dire consequences for years to come. We need the federal government to step up and provide states with flexible funding while we continue to weather the storm, or there will be irreversible damage Colorado’s infrastructure.”
“In the budget the General Assembly just passed, we prioritized education and our most vulnerable as we responsibly balanced the budget with hard choices and cuts that no one wanted to make,” said JBC Member Rep. Julie McCluskie, D-Dillon. “We closed special interest tax loopholes and put that money toward education and toward boosting incomes for hardworking Coloradans. That’s had a positive impact on our budget, and while revenues may increase a little next year, we’ll have fewer resources and face an even worse budget crisis if Congress doesn’t provide states with additional and flexible funding to protect our schools and core services.”
“Facing an unprecedented blow to our state’s budget, I am incredibly proud of the way we were able to protect the priorities that matter most to Coloradans, including K-12 education and critical human services,” said JBC Member Sen. Rachel Zenzinger, D-Arvada. “Unfortunately, despite modest improvements in our economy, our state revenue is set to see even bigger losses next year. We need to continue coming together to find creative solutions that help us navigate these difficult times, which is exactly what we are committed to doing.”
The updated June forecast from Legislative Council staff (LCS) estimates that revenues will fall by 12.3 percent in FY 2020-2021 from the projected revenues for the current fiscal year. General Fund revenues are now expected to be $320.9 million more in FY 2019-2020 and $526.1 million more in FY 2020-2021 than anticipated in the May revenue forecast, due in part to tax policy changes enacted by the General Assembly in the 2020 legislative session and higher economic expectations. LCS anticipates lawmakers will have $10.8 billion available for the General Fund in FY 2020-2021, a 10 percent drop from anticipated revenue for FY 2019-2020.
The June forecast from the governor’s Office of State Planning and Budgeting anticipates General Fund revenues will fall by 12.7 percent in FY 2020-2021 from projected revenues for the current fiscal year. General Fund revenue forecasts relative to the May estimate are up by $311.2 million for FY 2019-2020, and down by $82.3 million in FY 2020-2021. The OSPB estimates that $11.8 billion will be available for the General Fund next year, $1.6 billion less than what is projected for FY 2019-2020.
The LCS estimate indicates there is downside risk to the forecast from a prolonged economic recovery or a double-dip recession due to the resurgence of COVID-19 this fall or “vicious cycle.” There is upside risk to the estimate from a faster economic recovery.