Colorado Legislators Are on a Seven-Year Winning Streak
It’s been seven years of good luck for Colorado’s state budget. And we’re still on a roll.
State economists delivered their crucial spring revenue forecast Monday. The results give legislators the bottom-line number they will use to balance the state budget, which is scheduled to be introduced next week.
For the 2018-19 budget year, legislators will see a $1.3 billion expansion in the General Fund — an 11.5 percent increase from this year — thanks to an expanding economy.
Shifting Smoke
In the public health world, we pay particular attention to the forecast for tobacco tax revenues and — recently — marijuana tax collections. Tobacco revenue funds many public health initiatives, but it is on the decline as fewer people smoke cigarettes.
Legislators have turned to marijuana taxes to fill the void, and that revenue source continues to grow, but at a slower pace than the past few years. In 2018-19, marijuana taxes are projected to bring in $275 million, about $22 million more than this year but less than last year’s increase of $42 million. Despite what comedians around the country say, Coloradans apparently do not have a bottomless appetite for pot.
Hospitals in the Clear
Last year, legislators removed the Hospital Provider Fee from the Taxpayer’s Bill of Rights (TABOR). The approximately $700 million fund was pushing the state above the TABOR revenue limit and requiring refunds to taxpayers.
The 2017 change was supposed to eliminate TABOR refunds for the foreseeable future, but the state’s economy is growing so fast that economists expect a small TABOR refund of about $30 million in 2018-19.
Without last year’s change, though, legislators probably would have had to cut hundreds of millions of dollars in funding for hospitals that is paid for with the fee, said legislative economist Greg Sobestski.
Extra Money Means Heightened Debate
But what about the $1.3 billion windfall for the overall state General Fund?
Economists for the legislature and governor’s office said this growth comes from Colorado’s strong economy, aided by the federal tax cut that Republicans passed late last year, which spurred businesses to speed up some investments.
The growth is even more notable because it’s just the latest year in an extraordinary expansion in state finances. Look at the past seven March revenue forecasts for year-over-year General Fund growth:
- 2018-19: Up 11.5 percent
- 2017-18: Up 2.4 percent
- 2016-17: Up 3.6 percent
- 2015-16: Up 8.7 percent
- 2014-15: Up 13.0 percent
- 2013-14: Up 12.3 percent
- 2012-13: Up 8.3 percent
You have to go all the way back to 2011-12 to find a shortfall, when the state budget was still suffering a multiyear downturn from the Great Recession.
This good news sets the stage for a debate over the next several weeks about how to use the money. Republicans, in general, would like to put it toward highways. Democrats favor a mix of programs, including education and transportation.
The big question for legislators is how long they expect this run of luck to continue. Put simply, is this $1.3 billion growth a bonus or a raise? A bonus can pay for a one-time expense — maybe a vacation or a new refrigerator. A raise carries the expectation of more money in future years, allowing for long-term investments like buying a house.
Gov. John Hickenlooper’s budget chief, Henry Sobanet, thinks it’s a bonus, and he cautioned legislators about expanding programs or creating new ones that will need to be funded in future years. State economists told legislators they didn’t see any major signs of a recession on the horizon, but it’s inevitable that someday the economy will again turn sour.
The House is scheduled to vote on the budget next week. Look for a debate between legislators who want to create new programs or take out loans for highways and the fiscal hawks who want to be cautious about how it’s spent.
It might be a hard time to be a fiscal hawk when there’s an extra billion dollars on the table.
Find Joe Hanel on Twitter: @CHI_joehanel
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