After multiple years of strong General Fund revenue, Colorado is again facing a potential recession. On news from the Federal Reserve Bank of their dedication to reduce inflation regardless of the recessionary risk, Colorado economists from both Legislative Council Staff (LCS) and the Governor’s Office of State Planning and Budgeting (OSPB) forecast a slowing economy. However, Colorado’s continued strong revenues mean the largest constraint to state spending remains the TABOR Cap. This Cap grows with inflation and population meaning the General Assembly is expected to have $1.086 billion to spend in the 2023-24 budget year. Joint Budget Committee (JBC) members expressed caution when addressing this excess funding noting inflationary pressures on current spending and caseload growth is not captured in the projections.
Addressing recessionary risk, economists highlighted revenue above the TABOR Cap expected in fiscal years 2022-23, and 2023-24. The revenue above the TABOR Cap is higher than it has ever been. This means any decrease in revenue due to a recession could likely be absorbed by the excess revenue.
The September Revenue Forecast marks the beginning of the 2023-24 budget cycle. After the Governor’s budget request is released on November 1st, the JBC will reconvene in mid-November to begin reviewing the request.
Links to both presentations and full forecasts can be found below:
Colorado Legislative Council Staff Economic and Revenue Forecast
Colorado Legislative Council Staff Economic and Revenue Forecast Presentation to JBC
Office of State Planning and Budgeting Economic and Revenue Forecast
Office of State Planning and Budgeting Economic and Revenue Forecast Presentation to JBC