Colorado Economic and Fiscal Outlook Lauren Larson - Director Luke - PowerPoint PPT Presentation

Colorado Economic and Fiscal Outlook Lauren Larson - Director Luke Teater - Deputy Director March 16, 2020

The economic outlook is extremely uncertain

Lead Indicators not yet Reporting

Consumer Expectations Declining

Corporate Bond Risk Increasing

Treasury Yields Declining March 12th +2.9% 7

GDP Benchmarks Declined & Still Changing

GDP Benchmarks Declined & Still Changing

GDP Benchmarks Declined & Still Changing

The revenue forecast was revised downward from December

General Fund Revenue Forecast Declines FY 2019-20: -$300M FY 2020-21: -$400M FY 2021-22: -$370M

Downward revenue revision means less budget available 12

FY21 Revenue Changes: -$400M General Fund Revenue -$52M Cash Fund Revenue FY21 Expenditure Changes: +$162M Homestead Exemption +$48M State Education Fund

Recession odds are increasing, with potentially significant budget impacts

General Fund Revenues ($ Millions) Pre-Recession Year 1 Year 2 Cumulative Cumulative GF Revenue Shortfall ($) Shortfall (%) 2001 6,521 (FY01) (984) (1,082) (2,066) -32% 2008 7,743 (FY08) (1,003) (1,301) (2,304) -30% 2020 12,613 (FY20) (1,768) (2,105) (3,873) -30% Simulated Recession

What If? Budget Impacts

In times of uncertainty, important to budget to a range

Budgeting to a Range +/- ● ● ● ●

What Happens if a Large Revenue Decline? ● ● ● ● ⅔ ● ● ● ● ●

Significant resources exist for responding to coronavirus epidemic

Existing Resources Being Deployed ● ● ○ ○ ○

Emergency Resources Readily Available ● ● ● …

Federal Resources Expected to be Significant ● ● ● ○ ○ ○

Employee Benefits - State and Federal Action ● ○ ○ ● ○ ○ ○

Summary ● High level of revenue uncertainty ● Recommend budget to a range ● Significant resources available for COVID-19 response

Appendix

Table 1: Colorado Economic Variables-History & Forecast

Table 2: National Economic Variables-History & Forecast

Table 3: General Fund Revenue Estimates by Tax Category

Table 4: General Fund Overview

Table 5: General Fund & State Education Fund Overview

Table 6: Cash Fund Revenue Subject to TABOR

Table 7: TABOR and the Referendum C Revenue Limit