Pandemic tearing $3 billion hole in Colorado’s budget
By Andrew Kenney
Colorado’s government faces a $3.3 billion shortfall for the fiscal year that begins in July, according to a new state economic forecast.
That means the state’s discretionary spending may have to shrink by 25 percent in the coming year, according to legislative staff — the equivalent of eliminating Colorado’s operating budgets for transportation and corrections.
A forecast from Gov. Jared Polis’ administration made similarly dire predictions.
It’s been obvious for weeks that the state stood to lose billions, but Tuesday’s reports detail the damage across practically every front — and they point to impacts that could last years, thanks in part to Colorado’s complex limits on government spending.
“I know that’s a daunting number. I’ll unpack it a little bit,” said chief state economist Kate Watkins in a meeting with the Joint Budget Committee.
With the unemployment rate predicted to reach 10 percent this year, the government will lose out on income taxes, Watkins reported. A collapsing oil market will decimate some local budgets and state funds. Closed businesses won’t pay sales taxes, and commercial property values could erode as they’re reassessed.
Before the crisis, state economists had expected weak growth in government revenues for the year ahead. But the outbreak and lockdown have put Colorado deep in the hole after just a few months.