The Colorado Joint Budget Committee is starting to plan next year's state budget, and while initial predictions look promising, war and inflation could put a damper on this outlook.
Currently, Colorado is projected to go into this next fiscal year with a 20.7% surplus over this fiscal year's budget, and over $1.6 billion will be refunded back to taxpayers. Revenue figures will be used to set the final numbers for next year's state budget, and they will be debated by the full legislature in upcoming weeks. Analysts predict that Colorado's tax collections for sales and income will level off in the coming fiscal year after growing more than 11% in the past two years. It has been acknowledged that that most of the economic data used for this budget forecast came from January and February of this year, meaning that the international situation that has come to fruition in the past few weeks could change this initial prediction.
The war in Ukraine is expected to weigh heavily on U.S. economic activity in the first and second quarters of this upcoming fiscal year, and it promises to exacerbate many of the challenges that we are already facing from a pandemic recovery.
In addition to the war in Ukraine, inflation is likely to have a big impact on this next year's budget as well. Energy, housing, transportation and food have seen the greatest price hikes both in Colorado and nationally. Economists predict this will limit consumer and business spending in the upcoming year. This also puts pressure on the state budget as prices for materials that the state needs become more expensive.
Analysts expect inflation on average of 7.1% in Colorado through 2022, and 3.8% in 2023. There are predictions that inflation will be back to normal by 2024.
Nationally, wages are gaining for all income levels, but that's being offset by inflation. The lowest quarter of earners has seen 5.8% median wage growth over the past year, but this is not enough to keep up with increased costs for goods and services, especially with the uncertainty the war in Ukraine brings to future U.S. economic stability.
The legislature is expected to approve the 2022-23 state budget, in the range of $40 billion, in April. Lawmakers plan to maintain a 15% reserve in the coming budget to account for uncertainty ahead.
Here are the bills we took a stance on this week.
Support
- House Bill 1304 creates two grant programs that provide grants to nonprofits for investment in affordable housing in their communities and provide local governments money to complete infill infrastructure projects for affordable housing development. This is an effective way to increase housing inventory, and we support the use of American Rescue Plan Act dollars to address this critical issue.
- Senate Bill 140 requires multiple state agencies to support work-based experiential learning opportunities through programs that partner with businesses and colleges in Colorado. We recognize that alternative pathways into the workforce are necessary to fill job vacancies and create a sustainable workforce pipeline as Colorado experiences a labor shortage. We believe this bill creates the infrastructure necessary to upskill and reskill Coloradans as business needs evolve.
- Senate Bill 159 creates the transformational affordable housing revolving loan fund program, which provides flexible, low-interest, below market rate loans to eligible recipients to encourage affordable housing development. This ensures that eligible recipients have access to favorable lending rates, putting Colorado in a position to retain a vibrant workforce despite rising housing prices.
- Senate Joint Resolution 8 asks state regulatory agencies such as the Colorado Oil and Gas Conservation Commission to issue permits to increase Colorado oil and gas production for use at home and abroad. We believe Colorado is uniquely positioned as an industry leader in oil and gas extraction to meet global energy needs, and we recognize that Colorado's regulatory standards are the best in its class.
Testimony
- House Bill 1199: Visitation Requirements Health-care Facilities | Opposition Testimony
- House Bill 1152: Prohibit Employer Adverse Action Marijuana Use | Opposition Testimony
Read our justifications for these positions and more on our current legislation page.
Have questions or concerns about policy? Contact our Government Affairs team.
