Colorado’s budget picture has slightly improved, according to figures from the December revenue forecast that show a nearly $250 million revenue increase.
The non-partisan Legislative Council’s chief economist said there wasn’t one significant pot of money that significantly changed. But as they worked through the forecast, they repeatedly saw collections rising above projections.
“We found ourselves making upward revisions to most revenue streams based on collections that we've seen to date and our sort of firmer expectations for an economic expansion going forward,” said chief economist Greg Sobetski.
The state and national economy are expected to experience modest growth.
Sobetski presented his projections to the legislature’s Joint Budget Committee, the panel that crafts the state budget.
But state economists say the increased revenue doesn’t mean lawmakers will have that extra money to spend.
“Revisions in our general fund revenue outlook do not directly impact your budget picture because we are in a TABOR refund environment,” said Sobetski. Colorado’s constitution restricts budget growth to inflation plus population growth and anything beyond that must be refunded.
“That's money that goes back to taxpayers. We owe them a refund because we have exceeded the TABOR limit and that money is not available for the general fund budget.”
Lawmakers are still facing a nearly $700 million deficit largely due to increased Medicaid costs, and the loss of federal COVID relief money.
“We are in the hole from what it is that we did last year and what this committee I believe would want to do mostly again by about $672 million,” said Democratic State Sen. Jeff Bridges, chair of the JBC. “So we're no longer a billion down thanks to this forecast. We're about two-thirds of a billion down.”
Gov. Jared Polis presented his budget to the JBC in November, where it got a cold reception from members of both parties.
“Many of the things in the governor's proposal, I think we are discussing and have some heartburn with,” said Bridges, who told the governor’s office on Friday that he hoped their revised budget proposal in early January would have significant changes.
“And that we see something that is more reflective of the desires of the legislature,” Bridges added.
Republican Sen. Barbara Kirkmeyer, who also sits on the budget committee, asked if the governor’s Office would include a proposal that doesn’t propose Medicaid provider rate cuts and cuts to K-12 funding for certain districts that are losing enrollment, or cuts to higher education.
Polis’ Budget Director Mark Ferrandino, the former Democratic House Speaker, wouldn’t commit to specifics but said the goal is to be fiscally prudent for the long term. He said even though the revenue picture is a bit better, it’s still a difficult budget.
“The budget has significant challenges and we can't do everything that everyone wants or that we as a collective promised,” said Ferrandino, who once chaired the JBC as a state lawmaker.
The state budget doesn’t even factor in the $350 million voters approved for law enforcement to improve training and retention.
Added to the tight state budget is the uncertainty of what may happen at the federal level. Ferrandino said Colorado is already preparing for a potential federal government shutdown, which he said wouldn’t have huge impacts on state services provided it’s short.
But federal changes under a new Trump administration could add a much bigger wrinkle to what the state could have to spend or pay for.
“So maybe it's nothing but maybe it's huge and we just don't know yet,” said Ferrandino.
State lawmakers return to the Capitol on January 8 for the start of the 2025 legislative session. Passing a balanced budget is the only thing they’re constitutionally required to do, and it’s likely to overshadow anything else they want to pass next session, especially any proposals that come with a price tag.
