Colorado’s Economy Continues Streak of Strength Following Economic Forecast

DENVER - The Governor’s Office of State Planning and Budgeting (OSPB) today released its quarterly economic forecast.

Colorado’s economy continues to thrive, with the labor market remaining healthier than anticipated and consumer demand exceeding expected growth. Colorado’s unemployment rate remains low under the Polis administration. But the high cost of housing continues to lead to increased inflation at the local level. Governor Polis continues to push for more housing now to help support Colorado’s economy, hardworking families, and individuals and communities. 

“Colorado’s economy continues to be strong, companies and entrepreneurs are starting and expanding businesses in our state but high housing costs contribute to inflation and threaten our economic livelihoods,” said Governor Polis. “I am proud of our track record of fiscal responsibility and strong budgetary reserves to help prepare for an economic challenge or national issues that impact our thriving state, and we look forward to making more progress on increasing housing supply.” 

Under the OSPB forecast, the General Fund ending balance is projected at $345.3 million and $183.7 million above the statutory reserve level of 15 percent in FY 2022-23 and FY 2023-24, respectively. The statutory reserve remains at 15 percent of appropriations beyond FY 2023-24.  Governor Polis has repeatedly called for strong budgetary reserves to ensure the state is prepared for a rainy day. 

Under the OSPB forecast, General Fund revenue is revised up $792.9 million in FY 2023-24, largely a result of stronger than anticipated individual and corporate income revenue, with smaller upward revisions in sales, insurance, and interest income.

In FY 2024-25, General Fund revenue is revised up $137.8 million largely due to sustained higher individual income withholdings revenue as the labor market is expected to be in a stronger position than the June forecast. General fund revenue is expected to grow 3.7 percent to $19.0 billion in FY 2025-26 due to stable growth in income and sales revenue as the economy grows at potential GDP. Cash funds are expected to remain about flat in the near-term, falling an expected 1.6 percent in FY 2023-24 and then increasing 5.3 percent in FY 2024-25. Compared with the June economic forecast, cash funds are revised up $56.0 million and $18.6 million in FY 2023-24 and FY 2024-25 respectively, particularly due to severance and transportation revenue expectations.

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