DENVER – A clearer picture of refunds owed to Colorado taxpayers was presented to budget writers Monday, with averages between $13 and $41.
Two forecasts presented to the Joint Budget Committee highlighted a strong state economy, but without the generous revenue spikes seen after the initial boom after the economic downturn.
The Taxpayer’s Bill of Rights (TABOR) requires refunds when revenue exceeds inflation and population growth. Refunds are expected in spring, totaling $153.6 million, about $67 million lower than what was estimated with the last forecast in June.
The first $85.7 million of the surplus will be refunded through the Earned Income Tax Credit, available to low-income workers. The remaining $67.9 million will be refunded through the sales-tax refund.
Taxpayers filing single returns with adjusted gross incomes of up to $36,001 will receive refunds of $13 each; households that qualify for the EITC will receive an additional $262. Taxpayers filing single returns with adjusted gross incomes of $204,000 and up will receive refunds of $41 each.
Some budget writers appeared frustrated that refunds would be sent to taxpayers while critical services, such as K-12 education, remain underfunded. Seemingly on cue, the Colorado Supreme Court on Monday rejected a challenge to a formula used by state lawmakers to reduce school funding in order to balance the state budget.
“It is confounding that tax refunds will be issued when we still do not have the ability to properly fund our public schools,” said Rep. Dave Young, D-Greeley, a JBC member. “Our JBC members will work diligently to do what we can to meet our constitutional obligations and fund K-12 as much as possible.”
While the state’s economy is expected to lag revenue streams seen after an initial burst out of the downturn, economists still predict growth. The 2016-17 budget is expected to rebound from slower revenue expansion seen in the current fiscal year.
Revenues are expected to suffer from contractions within the oil-and-gas industry. Global economies also will contribute to economic uncertainties, said economists from the governor’s office and Legislature. But employment is growing, income is increasing and the housing market continues to improve.
Meanwhile, transportation and construction will see money thanks to cash transfer triggers as a result of personal income growth. Transfers from the general fund of $50 million to the Capital Construction Fund and $200.2 million to the Highway Users Tax Fund are expected after the latest forecast.
But the recent forecasts also highlight that the budget will be out of balance. General Fund revenue is expected to be $220.4 million lower than the amount budgeted to be spent and saved in the required reserve for the current fiscal year.
“We are going into some tough budget years,” said Natalie Mullis, the Legislature’s chief economist for Legislative Council. “We are not fully funding the budget that you built. ... There’s nothing that triggers any budget-cutting plans at this point, but it’s something to keep in mind.”
pmarcus@durangoherald.com
