(The Center Square) – Colorado’s economy is expected to see slower growth next year, according to a pair of forecast reports by state economists.
The forecast from the Governor’s Office of State Planning and Budget projects GDP to be 1.9% “as slower consumption is offset by rising investments,” which is down from 2.7% in 2024. Both years’ GDP forecasts saw upwards revisions of 0.2 percentage points from the last quarterly forecast.
The forecast from the Legislative Council Staff similarly noted similar upward revisions.
“While U.S. economic growth is expected to slow next year as employment gains moderate, the forecast has been revised up since September as inflation cools faster than previously anticipated, a series of interest rate cuts continues, and consumer spending holds fast against persistently high prices and a softening labor market,” LCS said in its forecast. “In addition, upward revisions to personal income data have elevated economic growth expectations.”
OSPB also noted strengthening wage growth, which is forecasted to “decelerate but remain healthy.”
“Today’s forecast shows that Colorado’s economy remains strong, with excellent wage growth, slowing housing costs, and healthy reserves,” Gov. Jared Polis said in a statement.
The governor added: “While this economic forecast shows potential challenges could emerge, Colorado’s budget environment remains tight, and the reality is that the legislature must make difficult decisions to deliver a balanced budget that makes Colorado safer, keeps our economy strong, and maintains solid reserves to protect Colorado’s future.”
The state’s general fund revenue forecasts also saw upward revisions from the September forecast, according to OSPB. The general fund forecast for fiscal year 2024-25 was projected to be $17.2 billion in the September forecast but is now projected at $17.6 billion, marking a $369 million increase. The general fund was forecasted at $17.6 billion for fiscal year 2025-26 in September’s forecast to $17.9 billion now – a $278.3 million increase.
The LCS forecast had slightly different general fund revenue projections, but they were still revised upward from the previous forecast from the agency. Its forecast had the general fund at $17 billion in fiscal year 2024-2025 and $18.2 billion the next year.
State revenue collections are projected by OSPB to exceed the Taxpayer’s Bill of rights cap by $873.3 million in fiscal year 2024-25, $553.1 million in fiscal year 2025-26, and $922.5 million in fiscal 2026-27, which triggers refunds for taxpayers in every year.
“Today’s economic forecast shows relatively good news for Colorado and for families’ budgets as increasing wages and easing inflation strengthen our economy,” Joint Budget Committee Chair Jeff Bridges, D-Arapahoe County, said in a statement. “However, due to TABOR, our state resources remain tight and we have our work cut out for us to balance this budget. Everyone will have to work together, across party lines, to protect essential services for the people of Colorado and continue efforts to make our communities safer and housing more affordable.”