Quarterly Revenue Forecast Shows Moderate Growth for Next Fiscal Year

DENVER — Thursday, Dec. 20, 2018 — The Governor’s Office of State Planning and Budgeting (OSPB) today released its quarterly economic and revenue forecast. The December forecast for General Fund revenue shows moderate growth in the months ahead. Revenue collections in the first half of FY 2018-19 continued to increase due to steady economic growth. Revenue growth projections now stand at 6.5 percent in FY 2018-19 and 5.9 percent in FY 2019-20.

“Colorado’s sustained growth is building generations of prosperity,” said Governor John Hickenlooper. “I’m proud of the state’s ability to build reserves and still provide the resources to build opportunity, protect against a possible downturn, and expand the middle class. As we wrap up this Administration, I’m optimistic about the future for our state.”

Relative to the September projections, FY 2018-19 General Fund revenue collections are projected to be $93.0 million higher, while the FY 2019-20 forecast of General Fund revenue is higher by $91.2 million.

The General Fund reserve was $691.1 million above the required statutory reserve amount of 6.5 percent of appropriations in FY 2017-18. SB 18-276 increased the reserve requirement to 7.25 percent beginning in FY 2018-19. Under the Governor’s November 2018 budget request, the State’s General Fund reserve is projected to be $289.0 million above the required statutory reserve amount in FY 2018-19. The Governor’s November budget request raises the reserve requirement to 8.0 percent of appropriations beginning in FY 2019-20. Under this forecast and the November budget request, the State’s General Fund reserve is projected to be $2.6 million above the higher required reserve amount.

TABOR revenue was above the State’s revenue cap by $18.5 million in FY 2017-18. TABOR revenue is expected to exceed the cap by $394.4 million in FY 2018-19 and $525.8 million in FY 2019-20. This represents an increase in the projected TABOR surplus compared to the September forecast of $133.9 million in FY 2018-19 and $144.5 million in FY 2019-20.

Colorado’s economic expansion has continued at a healthy pace in 2018. Employment growth has been strong, while wage growth has outpaced inflation each month for the past year. Oil and gas production continue to set record highs, but recent price declines may limit growth. Housing price growth has slowed in recent months, in part due to rising mortgage rates, but rental rates remain stable. Colorado’s economic activity is forecast to remain positive over the forecast period, but growth will moderate under tighter labor market conditions and constraints on construction activity. Recession risk remains low, but has increased since the September forecast as concerns of slower global growth and the ongoing trade dispute cause increased caution among investors.