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 revised economic forecasts, both of which project significantly lower General Fund revenue compared to earlier estimates. Both estimates forecast General Fund shortfalls next fiscal year of more than $3.3 billion.
“Colorado is facing what may be the most dire budget situation in our state’s history, but I know that we will join together and meet this challenge,” said JBC Chair Rep. Daneya Esgar, D-Pueblo. “The JBC has been working hard to protect vulnerable Coloradans and soften the impact of these cuts, as we prioritize education and critical health and safety services. We’re exploring every possible option for how we can best support our state’s recovery, but it’s critically important that Congress provide additional aid if we are to minimize the impact of these cuts on our schools and essential services.”
“Colorado’s economy has a long road to recovery, and today’s forecast assures that there will be difficult cuts,” said JBC Vice-Chair Dominick Moreno, D-Commerce City. “We are prepared to meet these challenges head-on to prioritize our education and health care systems. Our task is not an enviable one, but we will work tirelessly to protect the vital programs and services that our communities depend on.”
“Today’s budget forecast is stark. Coloradans are strong and resourceful, and I am confident that we will step up to the enormous challenge that COVID-19 has presented,” said JBC Member Julie McCluskie, D-Dillon. “We will continue to look for ways to address our state’s pressing public health concerns and minimize the impact from this crisis on education and critical public health and safety services. We are going to work as hard as we can to deliver a budget that eases the pain of these cuts, supports our recovery and helps Coloradans regain their footing through this crisis.”
“This forecast confirms what we have anticipated for some time: there will certainly be painful decisions ahead,” said JBC Member Rachel Zenzinger, D-Arvada. “We must figure out how to do more with much less. Nevertheless, we remain steadfast in our convictions to ensure anticipated cuts do not fall disproportionately on our students, schools or health and safety programs.”
The updated forecast from Legislative Council staff (LCS) estimates a $895.8 million General Fund deficit at the end of FY 2019-20, a reduction of $900.1 million than what was projected in the March forecast. Revenues will fall by 11.6 percent in FY 2020-2021 from the current fiscal year, a figure that was revised down from 1.4 percent growth in the March forecast. General Fund revenues are now expected to be $892.8 million less in FY 2019-2020 and $2.42 billion less in FY 2020-2021 than anticipated in the March revenue forecast. LCS anticipates lawmakers will have $10.3 billion available for the general fund next year, a 25.3 percent drop from FY 2019-2020, and $4 billion less than estimated in the December forecast.
The forecast from the governor’s Office of State Planning and Budgeting anticipates General Fund revenues will fall by 7.5 percent in FY 2020-2021 over the current fiscal year, a drop from 3.3 percent projected growth in the March forecast. General Fund revenue forecasts relative to the March estimate are down by $1.1 billion for FY 2019-2020, $2.4 billion in FY 2020-2021 and $2 billion for FY 2021-22. The OSPB estimates that $11 billion will be available for the General Fund next year, $1.9 billion less than 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.