Colorado's economy grew stronger in 2013 and that momentum is expected to continue through the coming years, factors that will contribute to a state general fund budget for next year that will exceed original forecasts.
But not all news from …
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But not all news from state economists that came out of the March 18 Legislature's Joint Budget Committee briefing was rosy. While much of the state is doing better post-recession, other areas continue to struggle.
And lawmakers lamented the continuing budget challenges that come as a result of the Taxpayer Bill of Rights — including a TABOR problem involving marijuana revenue that the Legislature may end up having to deal with soon.
The JBC was briefed on Colorado's economic outlook by the state's budget director and staff from the Colorado Legislative Council. Their reports are an essential component for the committee to consider when it craft the state's spending plan — a budget that is expected to be about $20.5 billion.
While the economists' revenue forecasts differed slightly, they all agreed that Colorado's economy is on a healthy footing.
"Over the past year, household wealth has grown because of increases in home prices and recent gains in the stock market,” Louis Pino of the Legislative Council said. “As a result, consumer spending has improved, especially on big-ticket items like furniture and vehicles. U.S. corporations continue to post strong profits, the equity market posted its best gains in years, inflation remains benign and the global economy, especially in the Eurozone, appears to have turned a corner for the better.”
The budget forecast for the 2014-2015 fiscal year will be $61 million higher than what was originally predicted. And, after money is set aside for an increased state reserves fund, about $75 million will be leftover for bills that are currently waiting to be appropriated — an "up-for-grabs" amount that is certain to lead to battles among lawmakers in the coming weeks.
Priorities for that money include helping flood and wildfire victims and more funding for K-12 and higher education. After that, there is a guessing game as to which of the many bills that have yet to be appropriated become funded.
"There are a lot of competing priorities within the budget, so as we've said from the start we have to be prudent in how we allocate the resources of the state," House Speaker Mark Ferrandino, D-Denver, said the day after the forecast was released. "We are not going to be able to pass every idea and bill through the Legislature."
The state's general fund budget for the next fiscal year is expected to be $9.2 billion, higher than the current fiscal year's revenue projection of $8.8 billion.
Driving the healthy economic forecast is a 27-week streak of consecutive job growth and a state unemployment rate that is currently 6.1 percent. While the unemployment rate has dropped, "the state's labor market added jobs at the fastest rate in seven years," according to the Legislative Council.
Meanwhile, wages and salaries grew 4.7 percent last year and personal income is expected to improve during the 2014-2015 fiscal year, economists said.
The current fiscal year will also yield a general fund surplus of $257 million, most of which — about $170 million — will be transferred to the State Education Fund.
Funding for education will increase through the annual School Finance Act and accompanying bills aimed at pumping more money into K-12 and higher education. Those dollar amounts are still being negotiated.
While the Denver Metro area and much of the Front Range is experiencing economic growth in many areas, other parts of the state aren't faring as well. For Colorado Springs, Pueblo, and the Western Slope, including Grand Junction, growth has been "sluggish," according to Louis Pino of the Legislative Council.
As for marijuana tax revenue that is coming in as a result of Proposition AA, $54.7 million will be pumped into the 2014-2015 fiscal year.
But while that revenue amount is less than what was originally projected by Prop AA proponents, the state may end up having to cut checks to Colorado taxpayers for that money.
A TABOR technicality may require the state to issue pot revenue refunds — even though voters intended for money that is collected from marijuana tax money to go toward school construction and the cost of pot industry regulations.
TABOR is generally thought of as being a statute that requires that all tax hikes be approved by the voters. But the technical clause also includes an area that requires the state to issue tax refunds when state spending exceeds expectations that are included in voter information material that is sent out each election, otherwise called the "Blue Book."
That seems to be the case this year, and lawmakers are trying to figure out how to deal with it.
"This is confounding," said Sen. Pat Steadman, D-Denver. "TABOR told us to let the voters decide. The voters have decided and their wishes may be frustrated by something hidden in the TABOR amendment."
Lawmakers could issue refunds for the marijuana tax money or they may end up having to go back to the voters to ask if they can keep it — something for which the voters already gave permission.
Ferrandino said that it is likely that the Legislature will deal with this issue before the session is out.
The concern over marijuana revenues isn't the only TABOR-related monkey wrench that lawmakers have had to deal with this session. They ran into problems with flood recovery money because counties wouldn't be able to take state reimbursements, out of concern that the money would cause them to hit their TABOR spending limits. The state will instead fund the money through different means.
Those issues caused JBC members to rail against TABOR. Rep. Crisanta Duran, D-Denver, the committee chairwoman, said that TABOR has caused the state "major problems" that has tied budgets into "fiscal knots."
And one Republican said the recent TABOR issues have caused her to change her perspective on the Taxpayer Bill of Rights.
"I have to tell you, quite honestly, the more I learn about TABOR, particularly what it did to the floods and our counties, the less and less I like it and the more insidious I believe it's been to state government," Rep. Cheri Gerou, R-Evergreen, said.
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