Colorado’s Economy Continues to Grow, Budget Constraints Remain

DENVER, CO – Democratic members of the Joint Budget Committee (JBC) today released the following statements after the Legislative Council Staff and the Office of State Planning and Budgeting delivered the December quarterly economic and revenue forecasts.

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“Today’s economic forecast shows relatively good news for Colorado and for families’ budgets as increasing wages and easing inflation strengthen our economy,” said JBC Chair Jeff Bridges, D-Arapahoe County. “However, due to TABOR, our state resources remain tight and we have our work cut out for us to balance this budget. Everyone will have to work together, across party lines, to protect essential services for the people of Colorado and continue efforts to make our communities safer and housing more affordable.”

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“Today’s forecasts show Colorado’s economy is strong, with rising wages, lower housing and energy costs and inflation that is below the national average,” said JBC Vice Chair Shannon Bird, D-Westminster. “Democrats have worked diligently over the past several years to boost our state’s reserves while investing in the crucial services our communities depend on, including health care for our most vulnerable community members. While we are facing tight budget conditions ahead, we’re committed to protecting critical services Coloradans rely on – education, public safety, health care and community services. The JBC has a track record of collaboration, and I know that we will work together once again to prioritize the people of our state and craft a balanced and bipartisan budget that protects our future.”

“Colorado has a strong economy. Inflation is down and wages continue to grow,” said JBC Member Judy Amabile, D-Boulder. “However, we are contending with a tight budget year that will result in difficult decisions for the JBC and the entire General Assembly. Along with my colleagues on the JBC, I am committed to doing what’s best for working families, protecting those who rely on critical safety net services, and protecting the investments we’ve made in our students and schools. We will work tirelessly to craft a responsible budget while standing strong in our values.”

“This forecast showcases the strength of our economy, especially as real wages continue to tick upwards for Coloradans,” said JBC Member Emily Sirota, D-Denver. “Despite bright spots in the forecast, rising Medicaid costs and the budget constraints from our TABOR environment means everyone, Republicans and Democrats, will need to make tough decisions to best allocate state dollars. Budgets are moral documents, and our job is to put the people of Colorado first and cast aside partisan attacks that only distract us from preserving investments in communities that need it the most.”

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The U.S. and Colorado economies have avoided a hard landing in the post-pandemic inflation cycle and the risk of a near-term recession has dissipated. Personal income, primarily driven by wages and salaries, continues to grow faster than inflation in Colorado and the nation, indicating that household finances are healthier than previously thought. Additionally, Colorado’s unemployment rate remains low at 4.1 percent and in-line with the nation’s rate of 4.2 percent.

The Legislative Council Staff (LCS) forecast anticipates General Fund revenues to be $17.0 billion in FY 2024-2025, and $18.2 billion in FY 2025-2026 – a $109 million increase to FY 2024-2025 and a $223 million increase to FY 2025-2026 as compared with the earlier September forecast.

The Office of State Planning and Budgeting (OSPB) anticipates that General Fund revenue will be $17.6 billion for FY 2024-2025 and $17.9 billion for FY 2025-2026 – a $369 million increase for FY 2024-2025 and a $278 million increase for FY 2025-2026 as compared with their September revenue forecast.

The forecast anticipates Colorado’s economy will continue to grow at a moderate pace in 2025. Additional interest rate reductions and receding inflation will boost growth, while slowing employment growth and high consumer prices presents risks that could negatively impact the forecast. Overall, Colorado’s economy is expected to be comparable with the nation’s, with slower consumer spending, similar unemployment rates, lower inflation, and similar strong income growth.