Report: Colorado economy robust and still growing
DENVER — Colorado’s economic recovery is proving to be a stable one, leaving the state flush with cash it hasn’t seen in years, state economists told legislators Tuesday.
Although the economy in some parts of the state are still “sluggish,” such as Grand Junction and much of the rest of the Western Slope, Colorado continues to maintain sustained economic momentum, the economists told members of the Colorado Legislature’s Joint Budget Committee, which drafts the state’s annual spending plan.
“Over the past year, household wealth has grown because of increases in home prices and recent gains in the stock market,” said Louis Pino, a Legislative Council economist. “As a result, consumer spending has improved, especially on big-ticket items like furniture and vehicles. U.S. corporations continue to post strong profits, the equity market posted its best gains in years, inflation remains benign and the global economy, especially in the Eurozone, appears to have turned a corner for the better.”
In short, barring some unforeseen event, the state and national economies appear to be solidly back at pre-recession levels, added his boss, Chief Economist Natalie Mullis.
That will result in a surplus of about $257 million during the current fiscal year, which ends June 30, and more than $1 billion next year.
While that revenue forecast is rosy, it isn’t nearly enough to erase all of the budget cuts the Legislature has made over the past four years, lawmakers said.
“We are at the end of what appears to be 27 months of job growth in a row, and I think our tax-revenue stream reflects that,” said Henry Sobanet, director of the governor’s Office of State Planning and Budgeting.
But the good news isn’t statewide.
While much of the Front Range appears to have recovered from the recent recession, other parts haven’t, Pino said.
“The northern Front Range of Fort Collins, Loveland, Boulder and Weld County have performed well,” Pino said. “Other areas, like Grand Junction and Colorado Springs, remain below pre-recession levels.”
Still, Pino said economists expect the state’s labor market to improve over the next 18 months.
According to a report by Mullis and Pino, the western region of the state, which stretches from San Miguel to Moffat counties, continues to be impacted by relatively low natural gas prices, which have kept rig counts down throughout the region.
The economists were hopeful, however, that things could change if recent upticks in natural gas prices prove to be more than just a seasonal change.
The forecast is the final report the JBC needs to complete next year’s spending plan, which is expected to be around $20.5 billion.
While lawmakers say they won’t be able to fund every request, they do plan to address the chief ones, such as increasing spending to K-12 education and higher education.
Sobanet said the state should see “modest” growth from some cash fund revenue, such as severance taxes, but most of that will be offset by expected declines in other revenue streams, such as the state’s gambling taxes.
Overall though, both he and Mullis agree that revenues still aren’t high enough yet to trigger mandated refunds under the Taxpayers Bill of Rights, though revenues from the newly established recreational marijuana industry could get the state there by the 2015-16 fiscal year.
That prompted a discussion among JBC members, who said TABOR could hinder the state’s ability to retain any of the increased tax revenues from pot sales that voters approved in 2012.
Those lawmakers indicated they might push for a ballot question as early as this year asking voters to make those pot tax revenues exempt from TABOR.
“Quite honestly, the more that I learn about TABOR, particularly what it did with the floods in our counties, the less and less I like TABOR, and the more insidious I think it has been to state government,” said Rep. Cheri Gerou, R-Evergreen. “I’m sure I’ll have an effigy burned in my front yard when I get home, but it’s the honest-to-goodness truth. It’s not been good.”