Weekly Policy Update: State Releases June Economic & Revenue Forecast
By: Colorado BioScience Association Date: 06/19/2020
Today, the Joint Budget Committee (JBC) heard presentations on the June economic and revenue forecast from Legislative Council Staff and the Office of State Planning and Budgeting (OSPB). The takeaway from the forecasts is that the state is still in a very difficult financial situation, and there continues to be a lot of economic uncertainty.
That being said, there was some good news. For the current fiscal year ending on July 1, the Legislative Council’s forecast showed that the state’s revenue is now expected to exceed the required reserve by $364.7 million. And with recent legislative actions to balance the budget, the revenue for fiscal year 2020-21 was also revised slightly upwards, with a surplus of $272 million from the forecast in May.
The forecast from OSPB also showed that state revenue was revised slightly upwards over the two years of the forecast period, but the numbers were a bit more conservative.
This comes as a big relief, as Governor Polis would have been forced to implement immediate budget cuts by executive order if the revenue had been down from the May forecast.
It’s worth nothing that while the forecasts are somewhat optimistic, the general fund reserve for the current fiscal year is 3.07% and will go down to 2.86% for fiscal year 2020-21 – down significantly from the prior level of 7.25%. That means the Joint Budget Committee has very little cushion to absorb any revenue fluctuations in the months to come.
These forecasts also assume ongoing growth in economic actiivty for the state and the nation in the years ahead, but the recovery is expected to be slow and contingent upon public health conditions and federal relief measures. There is still a great deal on uncertainty.
You can view the forecast documents here:
- Legislative Council forecast and the Legislative Council Presentation
- OSPB Forecast and the OSPB Presentation
In September, the Joint Budget Committee will hear another quarterly economic and revenue forecast. The threat of immediate budget cuts will persist for the rest of the year, so we will keep our community updated.