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 March economic forecasts.
“Colorado’s economic outlook remains strong, despite the mixed signals and persistent challenges that are confronting us,” said JBC Chair Rachel Zenzinger, D-Arvada. “We’ve fought hard in recent years to make critical investments in housing, health care, and education, and we must work to defend those gains while fulfilling our funding obligations. Despite the unpredictability, we are committed to passing a responsible budget that keeps Colorado on a sound and sensible economic path so our state can continue to thrive for generations to come.”
“The economic forecast shows that Colorado continues to lead the nation with unemployment rates well below the national average and more job openings than unemployed workers,” said JBC Vice-Chair Rep. Shannon Bird, D-Westminster. “We have put our state on the path to success by governing responsibly, investing in the most pressing needs in our community, and supporting small businesses. This year, we face constraints from Colorado’s unique fiscal situation and will need to make thoughtful decisions on how we allocate resources. We are committed to passing a balanced budget that continues historic investments in public education, increases funding to improve public safety and grows our economy.”
“Today’s budget forecast tells us a cautiously optimistic story of a strong economy for Colorado, one with falling unemployment rates and rising wages,” said JBC Member Jeff Bridges, D-Greenwood Village. “I’m incredibly proud of the many hours of work my colleagues and I have spent working on this year’s state budget. With this final forecast before the budget is introduced in the Senate, the JBC can finalize its deliberative work of crafting a budget that is thoughtful, responsible, bipartisan, and that will meet the many needs of Coloradans in every corner of the state.”
“As we work to complete the budget, we are focused on making responsible investments that set up every Coloradan to thrive,” said JBC Member Rep. Emily Sirota, D-Denver. “In recent years, we’ve made important progress to boost access to early childhood education, save people money on health care and improve our public schools. Although the economic forecast looks promising, Colorado’s budget still faces unique fiscal constraints while contending with the aftermath of the COVID-19 pandemic and the worldwide impacts of inflation. With this forecast, JBC can finalize a balanced budget that uplifts Coloradans and helps build a more equitable economy for all.”
Colorado’s economy continues to grow, with more than two job openings for every unemployed worker and an unemployment rate of 2.8 percent, which is lower than before the pandemic and below the national average of 3.4 percent. The majority of sectors have recovered all the jobs lost during the pandemic, and wages growth continues, outpacing inflation and the national average. While inflation remains high, mostly driven by the cost of housing, service, and food costs, it is decreasing and is projected to further decline next year with construction and energy costs trending downward. Revenue continues to increase, but fiscal constraints and higher costs from inflation limit the amount of funding available for new legislation and new ongoing obligations.
The Legislative Council staff (LCS) forecast anticipates General Fund revenues to be $17.16 billion in FY 2022-2023 and $17.74 billion in FY 2023-2024 – a $296 million increase for FY 2022-2023 and a $391 million increase for FY 2023-2024 as compared with the earlier December revenue forecast. The forecast anticipates General Fund revenues to be $18.44 billion for FY 2024-2025.
The Office of State Planning and Budgeting (OSPB) anticipates that General Fund revenue will be $17 billion for FY 2022-2023, which OSPB revised upward by $128.1 million relative to its December estimate. For FY 2023-2024, OSPB projects General Fund revenue will be $16.7 billion, which OSPB revised upward by $201.7 million relative to its December estimate. For FY 2024-2025, OSPB estimates that General Fund revenue will be $18 billion. LCS anticipates that budget writers will only have $1.79 billion to address caseload increases, inflationary pressures and spend or save this year.
The forecast anticipates continued growth as Colorado stands well positioned to fare better in the case of a downturn. Risks that could improve the forecast include slowing inflation in the services industry, stronger wage growth, and reduced housing costs. Risks that could negatively impact the forecast include financial contagion tied to recent bank failures and elevated inflation causing additional Federal Reserve policies to restrict consumer spending.