Weekly Policy Update: December Revenue Forecast Shows More Money Than Expected to Support Recovery
By: Colorado BioScience Association Date: 12/18/2020
Today the Governor’s Office of State Planning & Budgeting and the state’s Legislative Council presented their December economic and revenue forecasts to the General Assembly’s Joint Budget Committee. The forecasts show that Colorado’s economic recovery continues to outpace expectations, but it has slowed at the end of the year with the rise in COVID-19 cases. The two projections also convey the uneven impact of the economic downturn and recovery on different levels of wage earners. Higher income individuals have recovered very quickly, with employment returning to pre-pandemic levels, but lower income individuals are still severely impacted.
Earlier this year, the Joint Budget Committee made severe cuts to the state budget for the current fiscal year, but today’s forecasts showed that lawmakers may have cut more than they needed. State revenues have been better than expected, as a result of strong sales and income tax collections. Economists estimate that lawmakers could have a surplus as high as $3.75 billion to spend or save in the next fiscal year, beginning July 1. This does not include increases in demand for government support or inflationary pressures on the costs of goods and services, so legislators will still have tough decisions to make. But overall, this is good news. The question moving forward becomes how to allocate the one-time extra money.
To that point, Governor Polis continues to advocate for his $1.3 billion stimulus plan, in addition to restoring cuts made earlier this year and putting more money into the state’s reserves. Among other things, the Governor’s stimulus plan includes a one-time $10 million infusion for the Advanced Industries (AI) Accelerator Grant Program, which is a critical source of non-dilutive funding for our life sciences ecosystem. When the legislature convenes in January, CBSA will work hard to advocate for approval of the supplemental budget request for the AI Grant Program.
While today’s forecasts indicate there is more breathing room for the Joint Budget Committee than expected, legislators also expressed the need to be cautious given the instability of the economy. The uneven impacts of the economic recovery on different wage earners will also add to the challenges they face in writing next year’s budget.
You can view the forecast documents here: