Yesterday the Joint Budget Committee (JBC) met to hear the March Economic and Revenue Forecast and the takeaway was bleak. At best, the budget will remain flat from last fiscal year and at worse, the JBC will need to make cuts.
Revenue projections were about $773 million less than the December projections. The now expected $27.3 million of new dollars is not enough to cover the state-mandated required increases to K-12 funding and Medicaid. Projections now indicate that TABOR refunds will not occur for at least the next two upcoming fiscal years, meaning the senior property homestead exemption must be funded by the general fund, estimated at $162 million.
Several JBC members stated on the record that any new programs will be the first things they set aside. That could mean that controversial legislation with a significant price tag such paid family leave, unionizing state employees, pubic option, and other mandates on the health care industry will face up-hill challenges. Even less controversial bills that cost the state money are now in jeopardy; including expanding slots for preschool children, one of the Governor Polis’ highest priorities, along with legislation to open a new state park. Bills that require fees for funding will likely have a better chance of passing because that revenue will not contribute to the TABOR revenue cap.
Both Legislative Council’s presentation (link here) and the Governor’s Office of State Planning and Budgeting presentation (link here) stressed there is uncertainty to come and the next forecast in June will likely be even more dire as the coronavirus is expected to hit hardest over the next several months.
The JBC announced they would not meet until March 23 and will then work to have the budget ready for the legislature’s expected return on March 30. However, the economic-impact of COVID-19 is on everyone’s minds and several Colorado legislative leaders are bringing ideas forward now.
First to announce a proposal were several House Republicans who urged that the state postpone collecting business income tax for at least 30 days. The letter was signed by seven Republican Representatives including the House Minority Leader Patrick Neville and Assistant Minority Leader Kevin Van Winkle.
Additionally, a Senator of one of the counties hit most hard to date by COVID-19, Kerry Donovan, has called for a study committee to look at the impacts of the virus and to plan for an economic impact package along with tax relief.
The Governor’s spokesperson has said the Governor appreciates all ideas and will look at all efforts.
The Capitol remains closed to the public until at least Thursday while it undergoes a deep cleaning and disinfecting process. The Legislature announced closure until at least March 30, but many speculate it could be extended.
Capitol staff are working remotely and available to work on amendments to bills. At this point, legislators are planning to take up the remaining bills but with the budget news, priorities are changing quickly.
Finally, the State Supreme Court has accepted interrogatories from the General Assembly asking whether, according to the constitution, the 120 day session can be split or whether the clock keeps running. It is hoped that their decision will be rendered by the end of the month.
Your team at CLS will continue to share news and updates. Please contact us at any time and for assistance. Stay healthy.