Colorado’s economy is in such good health, state economists said Friday that taxpayers are likely to receive refunds and a temporary income tax cut through 2023.
The state government is expected to generate 11.4% more revenue this fiscal year – which ends June 30 – than expected in March, analysts on the state’s bipartisan Legislative Council said in a quarterly economic forecast Presentation to the legislature. Growth is expected to continue into the next year, with an improvement of nearly 4% and more than $ 3 billion in revenue for the General Fund through fiscal 2022-23.
Colorado law does not allow the budget to grow unchecked. In times of good economic health, the government has a duty to reimburse citizens – likely $ 440 million this year, $ 658 million in 2021-22, and $ 909 million in 2022-23 , according to Legislative Council predictions. These would be the largest refunds in the state since 2001.
These savings would be broken down into three categories: a sales tax refund, a temporary decrease in the state income tax rate (from 4.55% to 4.5%) and reimbursements to local governments.
“The actual economic results this year have so far been well above expectations. As long as this year ends strong, there is some great news on the horizon, ”said Governor Jared Polis. “While some Coloradans are still facing challenges from the global pandemic, today’s numbers show that the Colorado comeback is in full swing. I look forward to officially announcing the expected tax cut and tax refund this fall. “
Refunds would be relatively small for individual taxpayers. Prior to the pandemic-induced recession, government analysts forecast a surplus of $ 342 million, which would have resulted in a refund of just under $ 100 for the richest applicants and an average of $ 30 to $ 50 for most Colorado residents.
The strength of the state economy is largely attributed to better-than-expected income tax revenues. Employment for people earning more than $ 60,000 has suffered little except for a brief decline at the beginning of the pandemic; Employment in this income bracket is up 15% today from January 2020 levels, the state reported.
Meanwhile, the employment rate of the poorest in Colorado – those who earn less than $ 27,000 – is 6% below its January 2020 level and has been well below that level throughout the pandemic.
But state economists encouraged lawmakers who heard the presentation to be careful with the numbers. The federal stimulus money “hides what’s going on under the surface,” said chief economist Kate Watkins of the Legislative Council. She also warned of inflationary pressures, which are estimated at 3.1% for the Denver area this year and will be slightly lower over the next few years.