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 June economic forecasts, both of which project higher General Fund revenue compared to earlier estimates, but warn of continued budget challenges in years to come and uncertainty as the economy rebuilds from the pandemic.
“Today’s budget forecast shows that Colorado’s economy continues to trend in the right direction. As we continue to build back stronger from the economic devastation of the last year, this is certainly promising news,” said JBC Chair Dominick Moreno, D-Commerce City. “We are not out of the water just yet, especially as unemployment rates remain high, but as more vaccines are distributed throughout Colorado, COVID-19 concerns are reduced and we continue to reap the benefits of the federal American Rescue Plan, we can expect a positive economic recovery moving forward.”
“With the help of federal and state stimulus efforts, the Colorado comeback is well underway,” said JBC Vice-Chair Julie McCluskie, D-Dillon. “Our state economy is doing even better than expected, and Colorado is recovering jobs at a faster rate than the rest of the country, including in some of the hardest hit sectors. While threats remain and uncertainty continues to be heightened, it’s clear that Colorado’s economy is on track to make a full recovery. I’m proud of all of the work we did this session to ensure all Coloradans can share in our state’s prosperity.”
“Today’s economic forecast reassured us that as vaccine rates rise and the pandemic continues to abate, the economy continues to improve,” said JBC Member Chris Hansen, D-Denver. “Colorado is one of the leaders in the rebound in employment, with nearly two-thirds of our pandemic job losses now filled. Still, we cannot let up. The recovery continues to be K-shaped and lower income families have still not recovered to their pre-pandemic income levels. We will work to ensure that we lift up all people across this state and continue to implement stimulus measures and targeted relief to achieve that goal.”
“Today’s forecast brought great news: our economy is coming close to pre-pandemic levels and our stimulus efforts have supported families through the worst of the economic impact of COVID-19,” said JBC Member Leslie Herod, D-Denver. “As vaccination rates rise and Coloradans return to their everyday lives, jobs are coming back to our communities. Although we’re optimistic today, too many Coloradans, including low-income communities across the state, are still struggling. This is not the time to let our guard down. We’ll continue to monitor the economic recovery, and our work to ensure that no one is left behind will go on.”
The Legislative Council staff (LCS) June forecast anticipates General Fund revenues to be $14.34 billion in FY 2020-21 and $14.87 billion in FY 2021-2022 – a $1.62 billion and $1.06 billion increase from the March revenue forecast respectively. These persistent 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.
The Office of State Planning and Budgeting (OSPB) anticipates that General Fund revenue will be $14.42 billion for FY 2020-21, which OSPB revised upward by $1.51 billion relative to its March estimate. For FY 2021-22, OSPB projects General Fund revenue will be close to $15.02 billion, which OSPB revised upward by $1.16 billion relative to its March estimate.
Both OSPB and LCS anticipate the state will exceed its TABOR limit beginning in FY 2020-21 due to higher than anticipated income tax collections.
In addition, LCS and OSPB identified both upside and downside risks to the forecast but feel confident the risks remain fairly balanced with potential to lean towards the upside as vaccine distribution continues, employment recovers, and the economy continues to reopen. The most significant downside risks surround supply and demand mismatches and inflationary increases, however, both are expected to be temporary as the market stabilizes and businesses adjust to new consumer spending patterns.