Colorado Economic Forecast

Last week, the Joint Budget Committee heard the September Economic Forecast from Legislative Council Staff (LCS) and the Office of State Planning and Budgeting (OSPB).

Under the presented forecasts, the economy is in a transitional period from rapid post-recession recovery to a trend of slower growth. A recession is still not forecasted for Colorado, despite national trends. However, unemployment has risen slightly in the state and inflationary pressures continue. Inflation now outpaces wage gains as real wages decline.

In the current fiscal year, revenue collections broke records but the state does not expect much additional growth. Both LCS and OSPB expect revenue projections to increase for all fiscal years relative to the June forecast. This means TABOR refunds are also expected throughout the forecast.

Looking forward to the FY 2023-24 budget, General Fund revenue is expected to exceed current collections and the Referendum C cap (which constrains the state to inflation) will incorporate the current inflation rate at 8.2%.

The General Assembly is projected to have $1.08 billion (+5.6%) to spend or save in FY 2022-23. However, once you account for caseload growth, costs in K-12 education, increases in compensation and provider rates consistent with those in the last fiscal year and costs for capital construction, the projected surplus is much lower at $85.1 million (+0.4%).

Attached is a copy of the full forecast presentation slides.