DENVER – Taxpayers would not see refunds next year and the state is at risk of slipping into another recession, according to a revenue forecast presented to lawmakers Friday.
The March forecast will help guide lawmakers as they head into the annual spring budgeting process, this year crafting a $27 billion spending plan for fiscal year 2016-17.
The Joint Budget Committee also must rethink proposals for the current fiscal year, given news that General Fund revenue is expected to be $111 million short, according to a legislative analysis. That’s after lawmakers already cut about $300 million from this year’s budget.
“That’s what we have to see over the next couple of days. I don’t think we’ll really know all of the target numbers probably until Monday,” said Sen. Kent Lambert, R-Colorado Springs, vice chairman of the JBC.
“The question everyone wants to know is will their bill get funded. I think we still don’t have enough information,” said JBC chairwoman Rep. Millie Hamner, D-Dillon. “It’s going to be a competitive budgeting process.”
Overshadowing the process are fears for the future, especially as it relates to slumping oil and gas revenues. For the upcoming fiscal year, overall state revenue is expected to decrease by nearly $90 million, which means lawmakers have less to work with.
The governor’s budget office said the outlook for oil and gas prices is for continued weakness through 2016, and possibly well into the future. Employment in the industry contracted an estimated 25 percent in 2015 and could decrease another 15 percent this year.
Volatile global markets also are leading to the uncertainty, with state economists cautioning of the risk of recession.
“The risk of recession is not yet large enough for us to call for a recession. We have a lot of things that are really positive in our domestic economy right now ...” said Natalie Mullis, the state’s chief economist. “But our manufacturing and commodities sectors are struggling because of what’s going on in the global economy ... With much of the rest of the world in recession, they’ve not been able to buy our stuff.”
Lambert is a bit more concerned, suggesting that the state is going to have to make some difficult decisions in the years ahead.
“If we are looking at being an energy producer, agriculture producer, beef, wheat, steel – if the international economy slows down, we don’t have as much demand for our products, we won’t have as much profitability, we won’t have as much revenue,” Lambert said.
Meanwhile, taxpayers likely won’t see refunds when they file their taxes next year. Revenue is expected to come in $80 million below the spending cap.
But taxpayers could see refunds in the following two years, including $149.3 million when they file their taxes in 2018 and $350.9 million when they file in 2019.
For the 2014-15 fiscal year, $153.7 million is being refunded to taxpayers on tax returns this year. Refunds for individuals range from $13 to $41 and double for joint filers.
With the Earned Income Tax Credit, taxpayers making up to $36,000 receive an additional $234 this year, and those making between $36,001 and $77,000 will receive an extra $137.
pmarcus@durangoherald.com
