Colorado’s economy and state revenues continue to grow, executive branch and legislative economists told the Joint Budget Committee Friday.
But the overall trends were much the same as those identified by the last set of quarterly forecasts in June.
The new forecasts showed only slight change in the projected balance of the State Education Fund, a dedicated account used to supplement overall K-12 spending. Both the State Office of Planning and Budgeting and the Legislative Council’s economists predict a balance of about $1.6 billion in the fund in the 2013-14 budget year. That’s about the same as was forecast in June.
Use of the fund is both a touchy policy question in the legislature and an issue in the campaign to pass Amendment 66, the proposed $950 million P-12 tax increase that’s on the November ballot.
The fund annually receives $400-$500 million from a slice of income tax revenues. But the legislature has bulked up the fund by diverting surplus state revenues into the account for the last two years.
Many school districts and some lawmakers argued unsuccessfully during last spring’s legislative session that the fund should have been tapped more heavily to increase K-12 spending in the current school year and help districts partially recover from $1 billion in cuts in prior years. The Hickenlooper administration and the Joint Budget Committee resisted that idea, arguing that a substantial amount of money needed to remain in the fund as a “savings account” for future years. In the end per-pupil school funding was increased about 2.7 percent.
Opponents of Amendment 66 point to the fund’s healthy balance and argue it should be spent instead of raising taxes. Amendment supporters respond that the fund contains mostly one-time money and can’t support the future costs of Senate Bill 13-213, the new finance formula that would be paid for by the tax increase. (The projections issued Friday show new income to the fund dropping in 2014-5 and 2015-16.)
Use of the fund is expected to be an issue during the 2014 session regardless of whether Amendment 66 passes. If it does pass, some lawmakers may argue that the fund can be drawn down for the 2014-15 budget year because of the significant new revenues coming in the future. If the proposal loses there likely will be a continued fight over how much of the fund to spend in 2014-15 and how much to save for the future.
The issue came up briefly during Friday’s meeting. JBC member Rep. Cheri Gerou, R-Evergreen, asked how the administration will view the budget if Amendment 66 passes.
“If tax law changes in November, obviously this general fund forecast will change dramatically,” said OSPB director Henry Sobanet.
However, the administration’s proposed 014-15 budget has to be delivered to the JBC by Nov. 1, a few days before the election results are in. But submission of the governor’s budget is usually just the opening round in a long process of revision that doesn’t end until lawmakers approve a budget, usually in late April.
Read the OSPB forecast here and the Legislative Council predictions here.