The Governor’s Office of State Planning and Budget (OSPB) released its quarterly economic forecast this morning and according to forecasts, the outlook is good. This seems to go against what other states are predicting, but again, recent history has shown that Colorado generally lags national downturns.
“Colorado’s economy is strong and will continue to grow in the months ahead. Our administration is saving people money on everyday items, sending $750 to individuals and $1,500 to joint filers to help provide immediate economic relief, as well as debt relief. property tax,” Gov. Jared Polis said when releasing the forecast.
“I am committed to investing in education, saving people money on health care, and continuing to make Colorado affordable for everyone and one of the best places to start or running a business,” he added. “This new projection includes the good news that Coloradans will receive even more tax refunds when they file next year in April,”
“Despite global economic challenges, Colorado’s economy has continued to show resilience and strength, with employment numbers in Colorado now surpassing pre-pandemic levels by more than 55,000 and our unemployment rate remaining below the national average,” said Joint Budget Committee (JBC) Vice Chairman Sen. Chris Hansen, D-Denver.
“Colorado’s economy continues to grow and outpace the country with high job openings, despite global inflation pressures and rising Federal Reserve interest rates that have raised costs for families,” said JBC President Julie McCluskie, D-Dillon. “…The general fund forecast remains very strong with high levels of reserves that will protect the state from downside risks to the forecast – exciting news that could allow us to maintain strong funding for education again. K-12 and putting more resources into classrooms to prepare our students for success.
Colorado continues to have a tight labor market, with many more job openings than before the pandemic. The state has now surpassed pre-pandemic job numbers by more than 55,000, and the majority of sectors have recouped jobs lost during the pandemic. Although inflation remains high, it is expected to ease next year as energy and transportation costs are already falling in the state.
“Our state’s economic outlook remains resilient, with above-average wage growth and high labor force participation helping to offset lingering inflation,” said Sen. Rachel Zenzinger, JBC Member, D-Arvada. “We’ve created a budget that benefits Colorado families by investing in our schools and growing our workforce, lowering the cost of housing and health care, and saving taxpayers money, and results are bearing fruit as Colorado continues to outperform its peers despite the global economy. headwinds.
Domestically, pandemic-induced inflation continues to persist as an economic concern and the country has been recovering since the first half of the year.
As a state, Colorado continued to outpace other states with strong economic performance. The state has an unemployment rate of 3.4% and it is second in the nation for employment participation rate.
This year, Governor Polis announced the “100 Ways The Polis Administration Is Saving Colorados Money” initiative. He understands:
- Saving $700 million for Coloradans through property tax relief for small businesses, farmers and ranchers,
- Cut the cost of a Colorado State Parks Pass by more than half with the Keep Colorado Wild Pass starting in 2023,
- Reduction of vehicle registration fees,
- Provide free transit and buses throughout Colorado this past summer and next summer.
OSPB’s economic forecast predicted that General Fund revenue in fiscal year 2021-22 would have increased by 23.7%, to $17.7 billion, with revenue and excise revenue increasing by 20% or more.
The projection for the 2022-23 fiscal year is $130.8 million lower than the June forecast, as the reduction in withholding taxes and the estimated payments revenue forecast more than offset the increase in the sales tax. This translates to a decline in revenue of 7.2% in fiscal year 2022-23, before growing again by 1.7% in fiscal year 2023-24.
The downward revision of $551.1 million in fiscal year 2023-24 is due to reduced expectations for future individual deductions and estimated payments as consumer and labor demand work begins to decline. In fiscal year 2024-25, revenue is expected to grow faster, at 5.6%.
Once again, Colorado’s TABOR legislation adds uncertainty to state cash fund projections. With a record year of revenue in fiscal 2021-22, TABOR-subject treasury fund revenue increased 20.0% to $2.69 billion. Instead of withholding that funding for an upcoming rainy day, Colorado residents got refunds.
But in FY 2022-23, the impact of inflation could cause residents and tourists to tighten their belts and budgets, revenues are expected to fall 3.6%, followed by an increase of 0.5% in fiscal year 2023-24 and 4.0% in fiscal year 2024-25.
See the full forecast here.