State forecasts show Colorado's economy is recovering, but issues remain
(The Center Square) – State economists released two forecasts on Friday that indicate Colorado’s economy is recovering faster than anticipated.
“Colorado was one of the first states to successfully reopen in a safe way and this new data shows we are moving towards a strong economic recovery,” Gov. Jared Polis said in a statement.
“Coloradans have persevered through dark days, and now we’re beginning to see the sun,” he added.
The Office of State Planning and Budgeting (OSPB) anticipates the state’s general fund revenue will be approximately $425 million higher than state's projections released in December. In total, economists anticipate Colorado’s revenue to be $12.9 billion in fiscal year 2021.
Next year, OSPB expects general fund revenue to increase by $1 billion to $13.9 billion, as long as aggregate household savings and wealth continue to increase. This estimate is $390 million above the agency’s December projections.
Despite the projections, Colorado’s economy remains below pre-COVID levels as the pandemic’s disparate impact across industries continues to weigh down the recovery, the agency said.
A primary factor weighing on the state economy is the elevated unemployment levels. Though weekly initial unemployment claims remain far below the levels of last March and April, OSPB reports that total unemployment has more than tripled since September.
Sen. Julie McCluskie, D-Dillon, credited the federal stimulus programs for helping to keep Colorado’s economy and households afloat during the beginning of the pandemic.
“While our state finances are looking up, too many people in our communities are still unemployed and struggling to pay for basic needs,” she said in a statement.
“This better-than-expected recovery of state revenues has created an opportunity to use the one-time dollars we have to further boost our economy and help Colorado build back stronger,” McCluskie continued.
The governor in part credited the state’s increasing vaccination rate for the better-than-expected numbers.
“As we vaccinate more Coloradans and get back to normal, it’s important that we take this unique opportunity to make bold investments that will strengthen our economy and our communities for generations to come,” he said.
The Legislative Council Staff (LCS), a nonpartisan arm of the General Assembly, released a similar economic forecast Friday that projects the general fund to end the year with a 30.7% reserve, $2.95 billion above the statutorily required 2.86% reserve.
As state revenues continue to rebound, LCS projects the general fund to see year-over-year growth of 45.5%, a total of $5.29 billion over fiscal year 2020.
Sen. Dominick Moreno, D-Commerce City, who chairs the Joint Budget Committee (JBC), described the forecasts as “a breath of fresh air.”
“Thanks to the diligent efforts by this committee and an accelerated economic rebound, Colorado’s recovery is looking even more promising,” he said in a statement.
“At the same time, we must remember that these are one-time funds. Beyond the current fiscal year, long-term budget issues persist – making it imperative that we keep one eye on the horizon and prepare for other potential storms,” Moreno continued.
The JBC is responsible for writing and balancing Colorado’s budget during each legislative session. Last year, the committee was tasked with balancing a budget that was $3.3 billion in the red.
In response, lawmakers made deep cuts to several programs, including taking $1.3 billion from the state’s education coffers.