According to the latest economic forecast Colorado’s recovery is among the most vibrant in the country.
It means there will be more money in the state budget, but economists are also warning of possible challenges ahead. Larson Silbaugh told lawmakers the legislature will have an additional $1.8 billion of wiggle room to work with.
“The economy is improving, employment is growing, the unemployment rate is on the decline, personal income is growing, retail sales is improving,” says Silbaugh.
And while the state is in similar shape to the last forecast in December of 2012, non-partisan chief economist Natalie Mullis says she’s feeling more confident.
“You reach a critical mass and the economy begins to move forward,” Mullis said. “This economy is not fully healed from the imbalances that created the recession but it’s healed enough, that that critical mass has been reached and we’re moving forward. I believe we’re there.”
But it’s still a fragile recovery.
Economists note that the recession in Europe and a real-estate bubble in China could hurt overall growth. Budget committee member representative Cheri Gerou (R-Evergreen) also worries about the impact of policies in Washington D.C.
“We’re a little bit tentative, my question is what will sequestration do and could it send us into another down cycle?”
State economists say sequestration and higher federal taxes are slowing growth, but they don’t expect it to stop altogether. The Governor’s budget director is also warning that some of the state’s additional revenue is from one-time sources, such as stock sales.
“What we’re dealing with is a volatile revenue stream,” said Henry Sobanet. “And so what we need to be careful to do is not spend it all in programs where you need to repeat it the following year.”
Sobanet says the Governor plans to prioritize capitol construction projects and education in his budget proposal. But lawmakers actually write the budget, and with nearly $2 billion additional dollars there’s likely to be lots of different ideas on where the money should go.
