{"id":28665,"date":"2024-03-17T09:00:00","date_gmt":"2024-03-17T15:00:00","guid":{"rendered":"https:\/\/dh.durangoherald.com\/tj\/colorado-could-owe-2-billion-in-taxpayer-refunds-that-will-squeeze-next-years-state-budget\/"},"modified":"2024-03-17T15:00:00","modified_gmt":"2024-03-17T15:00:00","slug":"colorado-could-owe-2-billion-in-taxpayer-refunds-that-will-squeeze-next-years-state-budget","status":"publish","type":"post","link":"https:\/\/dh.durangoherald.com\/tj\/colorado-could-owe-2-billion-in-taxpayer-refunds-that-will-squeeze-next-years-state-budget\/","title":{"rendered":"Colorado could owe $2 billion in taxpayer refunds. That will squeeze next year\u2019s state budget"},"content":{"rendered":"\n

\"The
The dramatic architecture of the rotunda of the Colorado State Capitol is enhanced through a fisheye lens. (David Zalubowski\/Associated Press file)<\/span><\/figcaption><\/figure>\n<\/p>

Colorado budget writers may be headed back to the drawing board.<\/p>\n

Slower population growth and rising fee revenue could trigger upward of $300 million more state taxpayer refunds than expected in the current budget year, under economic forecasts presented to the Joint Budget Committee on Friday.<\/p>\n

The latest forecasts leave top lawmakers well short of what they expected to be able to spend in next year\u2019s budget, with less than a week left to finalize the 2024-25 spending plan before it has to be submitted to the General Assembly for consideration.<\/p>\n

Under Colorado Legislative Council Staff estimates, the budget committee could need to cut or reject as much as $267 million in spending requests to balance the budget for next fiscal year, which starts July 1. Even under a more optimistic scenario presented by the governor\u2019s Office of State Planning and Budgeting, lawmakers could still face a gap of $150 million or more without major budget balancing maneuvers.<\/p>\n

State economists present revenue forecasts to the legislature every 3 months. But the March update takes on special importance, because the estimates determine how much the legislature has to work with when it adopts the annual budget, known as the long bill.<\/p>\n

Here\u2019s some key takeaways from the forecasts.<\/p>\n

A tight budget ahead<\/div>\n

For months, lawmakers and governor\u2019s office officials have insisted this year would represent a return to a \u201cnormal\u201d Colorado budget after years of booming growth coming out of the pandemic.<\/p>\n

That return to normal could be even more challenging than expected \u2013 but not because of any economic turbulence.<\/p>\n

Instead, the budget will be squeezed primarily by two seemingly minor factors.<\/p>\n

One, U.S. Census estimates now say the state\u2019s population grew by less than the state\u2019s demographer had anticipated. That means the state revenue cap under the Taxpayer\u2019s Bill of Rights, which tracks inflation and population growth, can only increase by 5.8% this budget year rather than the 6.1% legislative forecasters were expecting.<\/p>\n

Two, the state is now expected to collect $185 million more in road usage fees and retail delivery charges this year than last, under the legislative staff estimates.<\/p>\n

Taken together, the two forecast changes mean state lawmakers could have to issue larger than expected TABOR refunds to Coloradans next year, leaving the state with fewer General Fund tax dollars to spend on public services.<\/p>\n

Under the legislative staff forecast, Colorado would have a $1.8 billion TABOR surplus this budget year, while the governor\u2019s office expects $2 billion in excess revenue. That would translate to a nearly $400 refund for the average single-filer in 2025 under the current refund formula, which is tiered based on income. (This year, all single-filers received $800.)<\/p>\n

Reductions in this year\u2019s cap spell trouble for the 2024-25 spending plan, too.<\/p>\n

The JBC has pushed to increase spending significantly on Medicaid providers and state workers to combat staffing crises that continue to linger after the coronavirus pandemic. And lawmakers have major decisions yet to come before the long bill is introduced in the House on Friday \u2013 like how much to increase spending on higher education.<\/p>\n

Economic growth expected to slow<\/div>\n

Economic forecasters expect the state\u2019s economy to continue to grow \u2013 just more slowly than in years past.<\/p>\n

Wages have been rising faster than inflation in recent months, a positive change from 2022 and early 2023, when the cost of goods and housing more than offset the pay increases workers received. Real disposable income grew 4.2% after adjusting for inflation, according to the governor\u2019s office forecast. That\u2019s the highest mark since 2020, after Coloradans\u2019 spending power fell 6% in 2022 due to high inflation.<\/p>\n

Wage growth has led to strong consumer spending, even as inflation fell to 3.5% year-over-year, forecasters said.<\/p>\n

Nonetheless, unemployment ticked up to 3.4%. And while forecasters don\u2019t expect an imminent recession, governor\u2019s office analysts said it may feel like one in some industries over the next year.<\/p>\n

The governor\u2019s office expects 2.2% GDP growth in 2024, slowing to 1.5% in 2025.<\/p>\n","protected":false},"excerpt":{"rendered":"

state\u2019s quarterly economic forecast in March takes on special importance, because the estimates determine how much the legislature has to spend in its annual budget<\/p>\n","protected":false},"author":1,"featured_media":28666,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[],"tags":[394,28,1823,265],"naviga_topic":[],"class_list":["post-28665","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","tag-colorado-legislature","tag-headlines","tag-money-and-monetary-policy","tag-politics"],"acf":[],"author_name":"dh_admin","_links":{"self":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/28665","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/comments?post=28665"}],"version-history":[{"count":0,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/posts\/28665\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media\/28666"}],"wp:attachment":[{"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/media?parent=28665"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/categories?post=28665"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/tags?post=28665"},{"taxonomy":"naviga_topic","embeddable":true,"href":"https:\/\/dh.durangoherald.com\/tj\/wp-json\/wp\/v2\/naviga_topic?post=28665"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}