June revenue forecast stronger than expected
The Colorado Legislative Council today released its quarterly forecast, showing that the state is bringing in more money than expected and that Colorado seems to be recovering from the recession at a slightly faster pace than the country as a whole.
As a result of revenue growth, the state should be able to keep more money in the education fund than had been expected, with as much as $311 million being transferred to the education fund by the end of the fiscal year. The forecast indicates the state should have a surplus of about $179 million this year and that next fiscal year should see the state with about $685 million more in the budget than was available this year.
“While the June Revenue Forecast was only cautiously optimistic, I was relieved to hear that there would be some additional revenue that can be used to help fund our children’s education in the future,” said Rep. Andy Kerr in a press release.
Senator Mary Hodge, D-Brighton, chair of Colorado’s Joint Budget Committee, said that she’s glad to hear that state budget forecasts show promise, but said she’s cautious as she looks to the future. Hodge and her fellow Joint Budget Committee members were presented with two separate economic revenue forecasts today, one from the Governor’s Office of State Planning and Budgeting, the other from the Colorado Legislative Council Staff.
Both the Governor’s Office of State Planning and Budgeting and the Colorado Legislative Council Staff reported signs of some economic recovery, suggesting a positive effect on state revenues. Both predicted some future challenges as well.
“I am encouraged that the economy seems to be on the upswing,” Hodge said. “This is good news for the State Education Fund because it puts more money into that fund.”
Economic forecast Summary from the Colorado Legislative Council Staff:
Colorado’s economy continues to recover and has begun to outperform the national economy. However, ongoing challenges will constrain the economic expansion, such as tight credit or small businesses and high debt levels or households.
The FY 2010-11 General fund budget is in balance, with an estimated $310.9 million transferred to the State Education Fund at the end of the year.
The FY 2011-12 General Fund budget is in balance. A surplus of $178.9 million is expected to remain in the fund at the end of the year.
The General Assembly will have $684.6 million more to spend in FY 2012-13 than the amount budgeted for FY 2011-12. This amount does not account or expenditure pressures resulting from inflation and caseload growth and assumes the $178.9 million surplus in FY 2011-12 is carried forward into FY 2012-13.
Economic forecast Summary from Governor Hickenlooper’s office of Economic and Fiscal Review:
For the current fiscal year, the June forecast for General Fund revenue increased by $78.1 million compared with the March forecast, mostly due to sales tax revenue exceeding projections. Consumer spending held up more than expected in the face of rising food and gas prices. Total FY 2010-11 General Fund revenue increased 10.6 percent above the prior year’s amount as total wages earned by Coloradans grew, consumers and business began spending again, and capital gains surged from the rebound in the stock market.
The forecast shows that the FY 2010-11 budget is balanced and revenue will come in $325.0 million above the required reserve level. Under current law, this money will be credited to funds used for public schools.
The strong growth in revenue in FY 2010-11 is expected to be one-time in nature. Although there are some positive economic developments, the economy overall continues to be weighed down with negative forces related to the recession. Thus, FY 2011-12 General Fund revenue is expected to be essentially flat. Revenue is forecast to come in $22.4 million below the level needed to meet the four percent reserve requirement.
General Fund revenue will post modest growth in FY 2012-13 as stronger economic and job growth is expected to continue to elude the state. Based on forecasted revenue, General Fund appropriations will be able to grow 1.1 percent, or $78.4 million in FY 2012-13 while maintaining a 4.0 percent reserve. General Fund revenue in FY 2012-13 is expected to be about $355 million below its FY 2007-08 level.
Cash fund revenue subject to TABOR collected in FY 2010-11 is expected to increase 11.9 percent over FY 2009-10, mostly due to growth in severance taxes and revenue from the Hospital Provider Fee. FY 2011-12 cash fund revenue is projected to increase 8.9 percent, again mostly due to increases in Hospital Provide Fee revenue.”
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