Lawmakers got some good news Friday: Colorado’s economy is healing much faster than expected, and its budget outlook is nowhere near as dire as projected earlier in the pandemic.
“The worst of the recession appears to be behind us,” nonpartisan legislative economist Greg Sobetski told state budget writers.
The legislature now expects to have $5.3 billion more than it had for the 2021-22 budget cycle to use on new spending or to put into reserves — a roughly fourfold improvement on June’s forecast.
Projections were so dismal last March that lawmakers hacked about a quarter of discretionary spending from the current fiscal year, but they won’t be so constrained when they begin finalizing the 2021-22 budget next month.
Democratic Sen. Dominick Moreno, chair of the Joint Budget Committee, stressed that long-term budget uncertainty remains, but called the latest economic forecast “a breath of fresh air.” Vice Chair Rep. Julie McCluskie said she was “thrilled.”
Analysts credited a number of factors for the improved outlook, including high tax revenues and the fact that federal stimulus has helped float millions of people and businesses. Plus, Colorado’s state government is primed to get about $4 billion from the federal stimulus package signed into law last week, and analysts told lawmakers the state will have “remarkably broad authority” over how to spend that money.
“Oh my god! It’s a different world,” exclaimed Sen. Bob Rankin, a Republican committee member from Carbondale. “A year ago today, people were crying over the loss of critical funding that took care of human beings. Today, it’s just a pleasure. We’re getting back to restoring those funds, and then adding a little bit. It’s not even the same world.”
Anticipating good economic news, lawmakers last week announced plans for a roughly $700 million state stimulus package, which would bring state stimulus spending up to about $1 billion since December.
Though officials celebrated the top-line figures, it was clear during Friday’s hearing that the rising tide is not lifting all boats.
As of January, Colorado had regained about 50% of total jobs lost — nearly 400,000 — since the pandemic began. Analysts said the arts, entertainment, hospitality and food services industries were particularly affected.
There are about 30% fewer jobs that pay $27,000 or lower annually available today in Colorado than in February 2020, Sobetski said. But there are slightly more jobs that pay at least $60,000 today — just under 1%.
Sen. Chris Hansen, a Denver Democrat who sits on the Joint Budget Committee, said the state has “gone from bad to worse” when it comes to the unequitable nature of the recovery.
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