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%

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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

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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 +/-

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What Happens if a Large Revenue Decline?

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Significant resources exist for responding to
coronavirus epidemic
Existing Resources Being Deployed

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Emergency Resources Readily Available

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…
Federal Resources Expected to be Significant

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Employee Benefits - State and Federal Action
● For employed workers:
○ CDLE emergency rule issued 3/11: workers in certain high-risk industries eligible
for up to 4 days of paid sick leave while being tested for coronavirus
○ H.R. 6201 would add new paid leave under FMLA and new sick leave for a total
of up to 12 weeks of paid leave for employees affected by the coronavirus
outbreak
● For workers who become unemployed:
○ Unemployment benefits are available for 26 weeks, and under federal stimulus
bill, would likely be extended to 39 weeks.
○ The Unemployment Insurance Trust Fund is solvent ($1.1 billion balance).
Benefits will be paid regardless of the Trust Fund balance, as the Fund has ability
to borrow from the federal government and/or issue bonds.
○ CDLE will waive certain requirements to speed access to UI benefits for workers
who are quarantined or caring for a family member if no federal action is taken.
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 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