Five important takeaways from the Dec. 21 quarterly revenue forecasts:

1. Cutting during good times.

Colorado has one of the best economies among states in the country, but that economic growth doesn’t translate into increased state budget flexibility. Colorado had the fifth fastest-growing state economy (measured by GDP) from 2013 to 2014, and the state’s job market is outperforming most states, with unemployment at 3.6 percent compared to 5 percent nationally. This is the lowest unemployment in Colorado since Spring 2007. Nonetheless, Colorado’s state budget which ranks 49^th largest among states (only Texas has a smaller state budget relative to its economy than Colorado) can’t harness that economic growth, which is resulting in cuts to state services this budget year.

2. The General Fund Reserve was meant for times like these.

When the current fiscal year’s budget (FY 2015-16) was adopted in March 2015, our elected officials relied on projections of state taxes and fees. They also relied on projections for local property taxes and student enrollment. These have all changed since March. The end result is that the current budget is between $207.8 million and $156.6 million short of what was adopted in March. But because of lower enrollment growth among students in Colorado’s schools and increases in local property taxes, $159 million more in school funding was available than what was expected when the 2015-16 budget was passed. Legislators could use those additional local dollars to increase the K-12 budget and help reduce the $855 million shortfall in school funding known as the “negative factor.” This would also require tapping into the General Fund Reserve. But that’s what it’s for.

3. There’s now a “Butterfly Effect” on the budget.

The complicated interactions between fee revenue, tax collections, constitutionally mandated rebates and money transferred to transportation and capital construction projects have really become apparent again this forecast period. When preparing next year’s state budget, elected officials essentially must make a gamble on a variety of scenarios based on very marginal changes in tax collections. Very small changes in forecasted state revenue can result in large changes in the amount of money available for budgeting this year and next.

4. Gallagher and TABOR don’t play nice together.

The residential assessment rate (which is applied to home values to determine property taxes) is projected to fall in 2017, which will further erode local support for schools and increase the reliance on state funding for education. The often conflicting and always confusing interaction between the Gallagher amendment and the TABOR amendment is once again working against well-funded public services. Gallagher provisions will drive down the residential assessment rate in 2017 after years of the TABOR amendment keeping the residential assessment rate lower than required by the Gallagher Amendment. Weird, huh?

5. Small TABOR rebate in 2016, none the next year.

In Fiscal Year 2014-15, Colorado collected $156.5 million more in taxes and fees than TABOR’s revenue limit allows. When taxpayers fill out their taxes in early 2016 for the 2015 tax year, the average Colorado taxpayer will get an extra $18 from the state. The current revenue projections for Fiscal Year 2015-16 indicate that Colorado will not collect more in taxes and fees than the TABOR revenue cap allows, which means no rebates for taxpayers next year.