Colorado’s economy is in such good health, state economists said Friday, refunds to taxpayers and temporary income tax cuts are likely through 2023.
The state government expects to take in 11.4% more revenue this fiscal – ending June 30 – than what was expected in March, analysts from the state’s non-partisan Legislative Council said in a quarterly economic forecast presentation to lawmakers. said. Growth is projected to continue with around 4% improvement next year and over $3 billion in general fund revenue by the 2022-23 fiscal year.
Colorado law does not allow the budget to grow unchecked. In times of good economic health, the government is required to refund citizens – $440 million this year, $658 million in 2021-22 and $909 million in 2022-23, according to Legislative Council estimates. This will be the biggest refund in the state since 2001.
Those savings would be split into three categories: a sales tax refund, a temporary reduction in the state’s flat income tax rate (from 4.55% to 4.5%) and reimbursement to local governments.
“The actual economic results so far this year are well above expectations. By the time this year ends strong, there is some terrifying news on the horizon,” said Governor Jared Polis. “While some Coloradans still face the challenges created by the global pandemic, today’s figures show That Colorado withdrawal is well underway. I look forward to formally announcing the tax cut and tax refund expected this fall.
Individual taxpayers will see a relatively small refund. Before the pandemic-induced recession, state analysts had forecast a $342 million surplus, which would translate to a return just shy of $100 for the wealthiest filers and an average of $30 to $50 for most Coloradans, and this year The refund will likely be near that limit. .
The strength of the state’s economy is largely attributed to better-than-expected income tax revenues. Jobs for people earning more than $60,000 have suffered little except for a brief decline at the start of the pandemic; Employment for that income group is up 15% today from January 2020 levels, the state reported.
Meanwhile the employment rate for Colorado’s poorest people – those earning less than $27,000 – is 6% below January 2020 levels and well below that level throughout the pandemic.
But state economists encouraged lawmakers who listened to the presentation to approach the figures with caution. Kate Watkins, the Legislative Council’s chief economist, said federal stimulus money is “masking what is happening beneath the surface”. She also warned about inflationary pressures, which are projected at 3.1% this year for the Denver area, and slightly lower over the next few years.