By Steven Bonifazi
(DENVER, Colo.) The Office of State Planning and Budgeting released the June economic forecast Friday to highlight that the state's economy is returning to a normal condition.
“The actual economic results so far this year are well above expectations," said Governor Jared Polis. "As long as this year finishes out strong, there is some terrific news on the horizon: Not only will Coloradans get another income tax cut next year, but every Colorado taxpayer will also get a tax refund."
The U.S. economy is expected to rebound greatly this year as GDP is likely to grow at its quickest pace in decades, according to a press release from the Governor's office. As business applications continue to grow, aggregate household finances are strong for the most part, with growth in wages supporting high savings and low debt.
The reasons for the current high inflation are mainly due to supply chain disruptions and the reopening of sectors. It is expected to subside, however, persistent higher inflation is still a risk.
The state's labor force participation rate has gone back to pre-pandemic levels, driving a slower recovery for the unemployment rate. Downtown areas may lag as businesses allow additional remote work and business travel comes back slowly.
General Fund revenue is projected to grow by 12.1 percent in the fiscal year 2020-21 followed by 4.1 percent in the fiscal year 2021-22 and 4.2 percent in the fiscal year 2022-23. The forecast is revised upwards from March by $3.7 billion between the fiscal year 2020-21 and fiscal year 2022-23 as a result of higher collections in recent months across major revenue sources and economic expectations with vaccine distribution and heightened consumer spending.
The total cash fund revenue that was subject to TABOR was $2.3 billion in the fiscal year 2020-21, with an increase of 2.1 percent from the prior fiscal year. In the fiscal year 2021-22, cash fund revenue is expected to grow by 9.2 percent, followed by 5.7. percent growth in the fiscal year 2022-23.
Revenue subject to TABOR is expected to surpass the voter-approved Referendum C cap in each of the upcoming three fiscal years. Revenue subject to TABOR in the fiscal year 2020-21 is proposed to reach limits beyond the cap by $696.6 million.
The General Fund reserve is now expected to be $1.76 billion above the statutory reserve amount of 13.4 percent of appropriations in the fiscal year 2022 following accounting for legislations passed in this year's legislative session.
“While some Coloradans are still facing challenges created by the global pandemic, today’s figures show that the Colorado comeback is well underway," said Gov. Polis. "I look forward to formally announcing the expected tax cut and tax refunds this Fall.”
For more information regarding the economic forecast, click here.
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