Es hora de otro Pronóstico Cinco, donde CFI entra en detalles para que usted no tenga que hacerlo. Eche un vistazo a nuestros cinco puntos principales de la presentación del Consejo Legislativo sobre las perspectivas económicas y fiscales de Colorado.

1. Economy Update: Sluggish Growth

Businesses in Colorado and across the U.S. have grown increasingly cautious as the economy shows signs of slowing. Both economies are still expanding, but at a more modest pace than in recent years. Real gross domestic product (GDP) growth is projected at only 1.4% to 1.7% annually over the next three years, well below the 2.5% to 2.9% growth recorded between 2022 and 2024. This deceleration is reflected in weaker job growth, soft retail sales, and rising loan delinquency rates. Of particular concern, credit card delinquencies are approaching levels last seen during the Great Recession. While consumer spending has been strong enough to keep the recovery alive, high borrowing costs, inflation pressures, and uncertainty around federal policy have led businesses to pull back on investment and hiring. Sales tax revenue grew by a sluggish 1.8% in fiscal year (FY) 2024-25, implying real declines in retail sales. For Colorado, these dynamics point to an economy that is still moving forward, but on a more fragile path than in previous years.

2. School Finance Update (Gonna Need More General Fund)

Colorado’s school finance system faces shifting pressures heading into FY 2026-27. Total program funding is projected to rise by about $295 million, driven by inflation and the continued phase-in of the new school finance formula established in HB 24-1448 and amended in 2025 legislation. The state share of funding is expected to increase by $334 million, while the local share is projected to decline by $40 million due to falling assessed property values. Enrollment is also expected to drop by about 8,000 students. The state share of school finance comes from the General Fund or the State Education Fund (SEF). Relying more on the SEF—the state’s K-12 savings account—can plug short-term gaps, but risks draining the fund within three to four years and destabilizing the new school finance formula. There is a trigger that might turn off the new school finance formula. With this September data, it seems likely it won’t trigger that turn off.

3. TABOR Rebates (Small This Year, None Next Year)

For FY 2024-25, after paying for the homestead exemption, tax filers can expect between $20 and $62 in TABOR refunds on their 2025 returns depending on which of the six income tiers they fall into. No TABOR refunds are expected for tax year 2026. Colorado’s TABOR refund system continues to include multiple mechanisms, but two stand out for the next budget cycle. First, the homestead property tax exemption reimbursements for seniors, veterans with disabilities, and Gold Star spouses will total nearly $195 million in FY 2026-27. Because revenue is projected to fall below the Referendum C cap, this amount will come directly from the General Fund rather than being covered as part of the TABOR refund obligation. Second, the temporary income tax rate cut—from 4.40% to 4.33% in 2027 and 4.29% in 2028—remains on the books as another refund mechanism when surpluses are sufficient.

4. Special Legislative Session Addresses a Quarter of the Dent From HR1

Colorado is in a uniquely difficult position to absorb the cost shifts and revenue changes from HR1, which pushes more of the burden for programs like Medicaid and the Supplemental Nutrition Assistance Program (SNAP) onto states. Unlike most states, Colorado starts its income tax calculations with federal taxable income and maintains rolling conformity with federal changes, meaning that when Congress enacts new deductions—such as exemptions for overtime pay, tips, or big business write-offs—Colorado’s tax base shrinks automatically. HR1 alone cut more than $1 billion from state revenues, forcing a special session in August to patch the gap. And because Colorado is now below the TABOR cap, tax policy changes can add money to the General Fund; when the state is above the cap, by contrast, additional revenue simply flows out as refunds. Lawmakers were able to raise about $250 million by closing loopholes, but that is far short of the revenue needed.

5. Budget Outlook for FY 2026-27 (Another Large Shortfall)

Colorado lawmakers face another difficult budget year ahead, with at least an $840 million shortfall projected for FY 2026-27, following a similar gap they had to bridge in the current cycle. In fact, they are still closing the hole left in this year’s budget by the passage of HR1 at the federal level, which reduced state revenues. General Fund revenue has shown no growth for next year after falling for two straight years since 2023, leaving little room to maneuver. Looking further out, the beefed-up Earned Income Tax Credit (EITC) and Child Tax Credit (CTC) will be turned off for 2026, with only the possibility of partial availability in 2027 and 2028, pending the December forecast.