Dec. Revenue Forecast Shows Continued Growth
By Ali Mickelson
Despite the Colorado economy’s continued growth, state revenue projections have been lowered from prior estimates as expectations for income tax collections fall, legislative economists revealed last week.
Even so, Legislative Council economists presenting the regular quarterly economic forecast predicted lawmakers still will have 16.2 percent more general fund revenue in the 2014-15 fiscal year to invest in state priorities than they had in the 2013-14 budget year, which ends in June.
Economists said the December forecast showed the outlook for Colorado’s economy continues to remain positive, with growth in employment, sales and housing continuing through 2014. This expansion has already resulted in $512 million more in general fund revenue than budgeted for in 2013-14. Three-quarters of this additional money, or $361.5 million, will be transferred to the State Education Fund, and $30 million will be transferred to the Colorado Water Conservation Board Construction Fund, leaving $120.5 million more than the required statutory reserve.
Including this remaining surplus, Colorado should see an increased general fund budget of $1.37 billion in fiscal year 2014-15.
Growth in the economy also means the state is closer to the TABOR limit, which automatically triggers tax rebates when exceeded by revenue. Legislative Council predicts the state will be roughly $200 million below the limit in both FY 2014-15 and FY 2015-16. Yet while the forecast indicates growth will be insufficient for TABOR refunds in the next two years, Legislative Council notes that if the economy and revenue increase faster than anticipated, the TABOR limit could be reached as early as in the current fiscal year.
The strong housing market and robust oil and gas exploration translates to good news for Colorado schools, with an estimated 2.2 percent increase in assessed property values, most notably in Weld County on oil and gas properties. This money will be critical in supporting the 1.5 percent increase in students expected in the 2014-15 school year.
The increases in general fund revenue do not all translate into additional support for schools and other state priorities. The additional revenue also means the return of certain state tax credits and exemptions that are dependent on revenue growth. These credits include the in-stream flow income tax credit, the sales and use tax exemption for clean rooms, the child care construction income tax credit, the historic property preservation income tax credit and the clean technology medical device sales tax refund.
