Revenue forecast puts Colorado firmly back in black
Projection shows $1.8 billion surplus; state back to pre-recession levels
DENVER — Colorado’s economy is doing even better than predicted just three months ago, and the state’s budget is all but restored to pre-recession levels, state economists said Monday.
In addition to an $848 million surplus in general fund revenue for the current fiscal year, which ends June 30, next year the state should see an additional $924 million over this year’s spending.
Together, that $1.8 billion surplus all but restores the revenue losses the state suffered when the recession began in 2008.
“This economy is not fully healed from the imbalances that created the recession, but it has healed enough,” said Natalie Mullis, chief economist for the Colorado Legislative Council. “I believe we are there and I think it’s appropriate that we’re giving this forecast in the spring because I believe it is the spring of this recovery.”
Mullis said the state’s revenue forecast is doing so well, she’s predicting that as early as 2015 it could reach the state’s revenue cap set under the Taxpayer’s Bill of Rights. If that happens, it would result in automatic refunds to taxpayers, the first time that’s occurred since 2005.
Still, that good news came with some caution from Mullis and Henry Sobanet, director of the governor’s Office of State Planning and Budgeting.
Though both said Colorado is leading the nation in job creation and overall economic growth, they said there is enough uncertainty elsewhere in the nation and world to continue to give them pause.
Much of that centers on the so-called sequestering in the federal budget, which could lead to more than $85 billion in cuts in federal spending. Additionally, Europe continues to flirt with a recession, and China is facing a bubble in its housing market, they said.
“There’s a lot of indicators that Colorado is outperforming the nation and most states,” OSPB economist Jason Schrock told members of the Joint Budget Committee. “But we’re still a little bit unsure about the national economy. We see the grass growing, but we’re just wondering how robust and strong those roots are.”
Mullis said most of the state’s economic recovery continues to be centered along the Front Range, particularly the Denver metropolitan area.
She said other parts of he state, such as western Colorado, are seeing their economies showing signs of stalling.
The region saw a slight rebound in employment during the first half of last year, only to see it lose ground during the second half, she said in her report to the six-member JBC, which drafts the annual budget. At the same time, consumer spending that had shown positive growth through much of 2012 slowed by the end of the year.
Mullis’ report does say, however, that the region saw an increase in new housing permits, and a slight increase in non-residential construction.