This week the Colorado budget writers, members of the Joint Budget Committee, heard the June revenue forecast from both Legislative Council and the Governor’s Office of State Planning and Budgeting (OSPB). Both illustrated signs of slowing economic growth for Colorado, but still foresee strong gains over last year between six and ten percent.
Legislative Council predicts that the General Assembly will have $763.1 million more to save or spend in FY 2020-2021. When population and inflation growth are taken into account, this number is reduced to $338.2 million. According to Legislative Council, revenue is expected to come in $342.1 million above the Referendum C cap in FY 2020-21, resulting in a FY 2021-22 TABOR refund obligation. There is also enough of a TABOR refund in FY 2019-20 to fully fund the senior and veterans homestead exemptions and return money to tax-payers through a six-tier sales tax refund mechanism (est. avg. $69 per taxpayer).
OSPB’s forecast is more conservative in its projections for FY 2020-21. 20-21 is the year that is not yet budgeted. OSPB estimates around $623 million will have to be refunded. Senior and veteran property homestead exemptions, the six-tier tax refund and a temporary lower rate for the income tax will all be in place if these predictions prove true.
Both forecasts in the larger picture are closely aligned predicting continued, but slowing, growth. There is agreement in the uncertainty of the forecasts due to national and global dynamics and trends like the trade war with China. Aiding in the uncertainty is: a rumor about a special session, and Proposition CC.
State Sen. Dominick Moreno (D-Commerce City), chair of the JBC, told the Colorado Sun that legislators are discussing a bill that would increase the revenue limit in TABOR by $200 million, meaning the state could pay out smaller refunds. If supported by some key members and the governor, this would be debated during a special session. There is a legal opinion from the legislature’s legal counsel which indicates lawmakers could increase the cap without going to the ballot for a vote in order to reduce the size of the tax refund scheduled for calendar year 2020.
The conversation is taking place as Democratic leaders prepare their campaigns to support Proposition CC on the Nov. 5 ballot. The question will ask voters to allow the state to keep the taxes it collects in future fiscal years. If approved, the measure will allow money in excess of the Referendum C cap to be kept by the state, instead of refunded to the voters, and invested only in K-12 education, higher education and transportation.
The political picture will become clearer once and if these two questions are answered. For now, voters have a better idea about the money at stake in the decisions that lay ahead of JBC members and a detailed look into what the state’s economy could look like in the coming years.
You can find the full forecast documents here:
Legislative Council Forecast