New Revenue Forecast Offers Breather for State Budget

I think we can all remember – since it was as recent as last year – when every new economic forecast from the Colorado Legislative Council meant another round of cuts in order to balance the state budget.

In March, the forecast featured an uptick in the revenue estimates and offered a glimmer of hope, giving lawmakers a bit of a breather in the budget battles during the last legislative session.

For health care policy, this meant that legislators during the recently-concluded session were able to turn their attention to strategies for making existing programs work better and cost less. The higher-than-expected revenues also meant that a number of health programs slated for fiscal trimming were able to stay whole. And money from the Amendment 35 tobacco tax, which had been diverted to balance the budget the past three years, could be allocated to its original purpose of funding health programs.

Yesterday, the glimmer of hope grew even brighter. The latest economic forecast from the legislative council revealed that the General Assembly is expected to have 6 percent more to spend in FY 2013-14 than what they budgeted for FY 2012-13. That may not sound great, but it’s an extra $490 million.

Some highlights from the council’s report:

  • Colorado’s economy has been slowly improving, and is beginning to outperform the national economy, with increases in employment, income and consumption. The housing market is showing signs of life and the agricultural sector has turned in two strong years.
  • But Colorado won’t be insulated from the economic downturn in the national and world economies. Much of the recent revenue growth is expected to continue, but at a slower rate.
  • Still, after $1.3 billion in revenue declines in FY 2008-09 and FY 2009-10, the General Fund began to recover in FY 2010-11. With this trajectory, Colorado’s revenue is projected to meet pre-recession levels in FY 2012-13.

CHI continues to monitor the Colorado’s fiscal health through the prism of the state’s health care system and how it affects the health of Coloradans. If the last session is an indication, leaders are proceeding cautiously despite the better revenue news, still worried about the pressures that increasing enrollment in public insurance programs such as Medicaid and Child Health Plan Plus (CHP+) place on the budget.

The bipartisan work and innovative thinking that emanated from the 2012 session surrounding health care policy showed that a better budget didn’t mean an open checkbook – it just meant there was some time to think through how to better spend taxpayer dollars on health care in Colorado.

Deb Goeken is a vice president at CHI.