Colorado lawmakers could have between $956.8 million and $1.22 billion in surplus revenue to put toward education, transportation and other priorities in the 2019-20 budget, according to forecasts Thursday from state economists.
The Governor’s Office of State Planning and Budgeting, in its latest revenue forecast, said the state’s economic expansion “has continued at a healthy pace in 2018. Employment growth has been strong, while wage growth has outpaced inflation each month for the past year. Oil and gas production continue to set record highs, but recent price declines may limit growth.”
The one dark cloud on the horizon: the potential for the next recession. The risk is low, state economists predicted, but is higher than it was in September because of factors outside Colorado, such as slower economic growth globally and the trade war. The tariff dispute is particularly concerning for agriculture and business costs, the forecast said.
As for revenue, the state office estimates that in this fiscal year, the general fund revenue forecast crept up by $93 million over the September estimate; for 2019-20, revenue is expected to rise by $91.2 million over that estimate.
The growth in state revenues also is expected to slow down, from 4.8 percent in 2018-19 to 4.1 percent in 2019-20. That’s based on a combination of inflation and population growth, both of which are expected to drop in the next year.
Is a Taxpayer’s Bill of Rights refund in the future? While it hasn’t been recommended in Gov. John Hickenlooper’s 2019-20 budget, there’s definitely a possibility.
TABOR limits the amount of revenue the state can retain and spend, and revenue must be refunded to taxpayers if it exceeds TABOR limits.
Veterans and seniors who take advantage of a property tax exemption will get the first refunds.
But individual and joint filers also could be in for a refund, albeit not enough to cover the monthly costs of the local coffee bar.
The state forecast estimates taxpayers filing single returns would get a refund of $68 in 2019-20; joint filers would get $137.
As to the general fund surplus, the governor’s budgeting office’s figure is not quite a large as the General Assembly’s in the 2018-19 budget — $1.013 billion — but it’s close at $956.8 million.
During the 2018 session, lawmakers devoted slightly less than half of that surplus — $495 million — to transportation, through Senate Bill 1. Hickenlooper, in his budget request presented on Nov. 1, proposed lawmakers tap $200 million for transportation in 2019.
The governor recommended boosting the state’s reserve from its current 7.25 percent to 8 percent, or about $89.5 million more, although the reserve would still be below what national economists have said Colorado would need to stave off even a moderate recession.
The General Assembly’s economists with the Legislative Council had a more optimistic take on the General Fund surplus, projecting it to be at $1.22 billion for 2019-20. The Legislature’s economists also project a TABOR refund for 2019 of $380.4 million. The first $150 million would first go to property taxes for seniors and veterans, with the balance to single and joint-filing taxpayers after that.
The Legislative Council forecast said Colorado continues to add jobs. The strongest growth has been in mining and logging (16.9 percent) and arts, entertainment and recreation (10.2 percent).
However, interest and mortgage rates are on the uptick, the economists warned, which is cooling off the state’s housing market. The good news is that home prices are finally leveling off.
Colorado exports are in negative territory, according to the forecast, particularly in cattle, pork and electronic integrated circuits and related parts. That’s largely because of the trade war enacted by President Donald Trump with major trading partners such as China. But the drop in exports hasn’t triggered inflation, with a core inflation rate of 2.2 percent in 2018.
Oil prices are down by 40 percent — good news for consumers, not so good for a state that relies on severance taxes from oil production.
Finally, the state’s long-sought ability to collect sales taxes on out-of-state online sales shows up as a forecast risk that could drive larger TABOR refunds in the future, the economists estimated.