Final revenue report shows Colorado’s still broke
Aspen, CO Colorado
DENVER – In case high gas prices and disastrous images from Japan haven’t gotten the attention of Colorado lawmakers, they heard gloomy economic news Friday in a final revenue report before they write next year’s budget: Colorado’s still broke.
Revenue forecasts delivered to lawmakers Friday predicted the economy isn’t improving fast enough to prevent deep budget cuts for next year, including likely teacher layoffs.
Lawmakers received revenue forecasts from economists working for both the Legislature and the governor’s office. The forecasts both predicted an improving economy and were rosier than in December, the last time lawmakers received such predictions.
But neither estimate suggested that deep budget cuts don’t remain. The projected budget deficit – assuming cuts aren’t made – still hovers around a half-billion for the fiscal year starting in July.
Gov. John Hickenlooper last month suggested a spending plan for next year that axes some half-billion in spending, including sweeping education cuts likely to result in teacher layoffs and the closure of a state park and a southeast Colorado prison.
But even if lawmakers agree to all of the new Democratic governor’s cuts, they’ll still have to find an additional $450 million or so of spending cuts to balance the state books, as required.
“We still have a lot of budget cuts yet to make,” Hickenlooper’s budget director, Henry Sobanet, told lawmakers Friday.
Both revenue forecasts mentioned economic uncertainty caused by the earthquake, tsunami and nuclear crisis in Japan. About 5 percent of Colorado’s total exports go to Japan, which bought $318 million worth of Colorado goods last year. Colorado’s top export to Japan is beef, which accounted for $89 million.
Inflation and rising gas prices are complicating the picture, too. Economist Jason Schrock joked with lawmakers that he now stops for gas three times a day because every time he turns around, prices seem to rise.
“Heightened uncertainty holds back investment, holds back job growth,” Schrock said.
The news wasn’t all bad. The forecast from the legislative economists said the state housing market is “showing signs of bottoming out” and that building permits are up. Forecasters also noted that personal income and wages are rising slowly, and the forecast predicted a slight uptick in gaming taxes next year as the economy improves and more people head to the mountain casinos.
Natalie Willis, the chief economist for the Legislature, compared Colorado’s economy to climbing a sand dune.
“Every time it takes a step, it feels like it slips as much as it goes up,” she said.
The forecasts now head to the budget-writing Joint Budget Committee, which uses the forecasts but makes the final decision on how much Colorado should spend next year. Those lawmakers will recommend to the full Legislature next week a proposed budget for next year, which the House and Senate must agree on a single plan before sending it to the governor.
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