Colorado finishes fiscal year with more revenue
June 20, 2012
DENVER – Colorado finished the fiscal year with more tax revenue than economists anticipated three months ago, but analysts warned Wednesday that next year can produce slower growth.
Gov. John Hickenlooper’s economists said the state will finish the year with about $7.6 billion in general fund revenue. That’s $239.5 million more than what the economists had projected in March. Analysts said taxes on stock sales have boosted the latest numbers.
“Otherwise our recovery has some choppiness to it,” said Henry Sobanet, Hickenlooper’s chief economist. “We are seeing job growth, but at the same time we’re still trying to crawl back to the point we were before the recession.”
Economists said the figures show Colorado is faring better than the nation. However, Hickenlooper’s office noted that general fund revenue is still about $1 billion lower than it was five years ago when adjusted for inflation.
The latest quarterly revenue forecast concludes a fiscal year during which Colorado’s economy improved slowly. More tax revenue has prevented further budget cuts to schools and returned a property tax break for some seniors.
Colorado’s general fund this fiscal year will end with a $350 million surplus to be rolled over to next fiscal year, which begins July 1.
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Economists cautioned that a national slowdown and the European debt crisis could hamper future growth. General fund revenue is expected to grow at a lower rate during the 2012-2013 fiscal year, when economists are projecting an increase of $77 million, or 1 percent.
Sobanet said the tax gains on stock sales is money that “might not be repeated next year,” but that state officials have set aside money to protect the state from a downturn.
“For the moment, the news on the budget is welcome and it’s good. Even if we have a little bit of a slowdown, we have a good cushion,” he said.
Sobanet said economists are watching for possible federal budget cuts, but are more concerns about Europe’s economy and uncertainty over federal tax policy.
He said Colorado has managed to do better than the national economy so far because of a young, highly educated workforce and investments in oil and gas development in recent years.
Legislative economists also released an economic forecast Wednesday, with projections similar to the governor’s office. Natalie Mullis, Legislature’s chief economist, said that while Colorado’s economy appears to be improving, it’s not immune to outside forces.
“There are sunny skies and beautiful vistas ahead for our economy, but we have some big rocks to get over, and hopefully Europe won’t throw us into a little bit of a ditch,” she said.