Colorado taxpayers should expect to see Taxpayer’s Bill of Rights refunds for the next several years, provided state revenues continue to do well over that time, state economists told lawmakers Tuesday.
Those economists told the Colorado Legislature’s Joint Budget Committee that their third-quarter revenue forecasts are showing that if the economy continues to bounce back from last year’s pandemic downturn the way it is right now, the state could see more than $4 billion in surplus revenue over the next four years.
That’s money over and above what the 1992 TABOR and 2005 Referendum C voter-approved amendments allows the state to retain, meaning it all is to be refunded to taxpayers when they file their income tax forms starting next year.
As things stand now, the Legislature expects to refund about $471.4 million next year, $1 billion in 2023, $1.2 billion in 2024 and $1.4 billion in 2025, the economist estimated.
That’s all possible because the state’s economy overall is at or near at pre-pandemic levels.
“These forecasts show that many industries and people are thriving, Colorado is ahead of the pack nationally and people are returning to work,” said Rep. Julie McCluskie, a Dillon Democrat whose district includes Delta County.
“Our strong public health response to the pandemic, high vaccination rates and state stimulus efforts are powering the comeback,” added McCluskie, who is one of six lawmakers on the JBC, the legislative panel that drafts the state’s annual budget. “There is still some uncertainty ahead, and the recovery hasn’t been the same for every industry or every community.”
Economists for the Legislative Council, the research and staffing arm of the General Assembly, said that the state ended the 2020-21 fiscal year on June 30 with a 28.7% reserve fund, or about $1.9 billion more than the 13.4% general fund reserve the state is supposed to maintain.
In addition to giving money back to taxpayers, which will come through as a sales tax break on their income tax returns, the Legislature is expected to have about $3.3 billion more to spend when it drafts the 2022-23 state budget during the next legislative session that starts in January.
Gov. Jared Polis’ economists in the Office of State Planning and Budgeting, which produces quarterly revenue forecasts at the same time as Legislative Council staff, agreed with those projections.
They said it’s largely due to strong household finances, increased wage growth and lowering unemployment, some of which was propped up by the COVID-19 relief money and expanded unemployment benefits.
“Similar to what you heard from Legislative Council staff, we are seeing the economic recovery being slowed slightly by the (COVID-19) delta variant, but strong household finances remain supportive of continued growth,” said Luke Teater, deputy OSPB director.
“Despite the slow recovery in employment, household finances are very strong,” he added. “Personal incomes remained above their February 2020 levels throughout this pandemic with the exception of March of 2020, which really speaks to the strength of the policy response in supporting incomes despite wage losses.”
As of last week, the number of Coloradans filing weekly unemployment insurance claims dipped to 1,808, below pre-pandemic levels, while the state’s unemployment rate declined to 5.4% as of the end of August, according to the Colorado Department of Labor and Employment.
Grand Junction and Mesa County were at 5.7%, down from 6.5% in July.
Locally, Legislative Council economists said the 10-county western region of the state, which includes Mesa, Garfield and Delta counties, was also seeing improvement, though not as great as the state has a whole.
The economists said that the region’s residential construction industry has greatly improved, seeing a 33.6% increase in building permits since a year ago.
They also said that non-residential projects has bounced back, too, with the value of projects quadrupling over the same period last year, citing such things as the Riverfront at Dos Rios development in Grand Junction and the new 80 megawatt solar project in the Delta-Montrose area as factors in helping to boost that industry.