For the past two-and-a-half years, the legislature’s quarterly economic updates have been a cause for doom and gloom around the statehouse as the prelude to yet another round of budget cutting. The June update left lawmakers happier, even if they aren’t quite breaking out the party hats yet.
Here's a transcript of Megan Verlee's report:
State economist Natalie Mullis likes metaphors. She can usually boil down an entire economic forecast down to one pithy comparison. Yesterday, she went zoological.
MULLIS: "When I was talking about our expectations for the Colorado economy getting better, I wanted to caveat that with saying really, instead of looking at a snail’s pace, we’re looking at a turtle’s pace now. So it’s still slow, just a little bit better."
The lines on Mullis’ charts have begun a tortoise-like crawl in the right direction. Federal data suggests that Colorado created new jobs faster than the rest of the country over last year. Consumer spending is also up above the national average and personal income is improving. Still, Mullis told the Joint Budget Committee that not every industry is looking bright.
NATALIE MULLIS: "The housing market is going to remain a drag on the economy for at least the next three to five years."
Foreclosure filings have dropped off, but Mullis says the backlog of bank-owned homes waiting to the hit the market is keeping prices down. The financial sector is also touchy; mid-sized Colorado banks are still struggling with tight credit markets and the Greek debt crisis has American investors jumpy. In all you might call Mullis’ forecast "partly-sunny."
MULLIS: "Businesses are doing better, employment is getting a foothold. It’s broadbased. We see consumers recovering. And while there are still risks in the financial industry, we see that the real economy is beginning to pick itself back up again."
This quarterly forecast isn’t just some abstract check in on Colorado’s economic health. The whole point of Mullis’ presentation is one vital calculation: is the state bringing in enough money to cover what it’s committed to spending?
MULLIS: "There are a lot of numbers, but what I can tell you is that this year, in [fiscal year] 10-11, we have a balanced budget."
And Mullis says next year’s budget is also in the black. This is the first forecast since 2008 where lawmakers haven’t had to make new cuts. State economists actually predict Colorado will run a surplus this year and next, although that extra money is nothing near what legislators cut out of the budget during the recession. While the news sounded good, lawmakers on the budget committee greeted it with something less than enthusiasm.
KENT LAMBERT: "We’ll be cautiously optimistic."
PAT STEADMAN: "Cautious optimism is I think the best way to characterize the economic forecast we received today."
Senators Pat Steadman (D) and Kent Lambert (R) weren’t alone in that mood. Democratic representative Mark Ferrandino warned people not to get the wrong idea with this report.
MARK FERRANDINO: "While people see this extra 300 million dollars, they might start to say, 'oh great, we’re out of the woods.' But in reality, the general public and the other members of the general assembly need to know we really aren’t out of the woods, and we still have tough economic times to go forward and there’s still a lot of uncertainty about the economic recovery."
In fact, no sooner had they gotten the good news about revenue, than the budget committee started worrying about new expenses down the line. Growing school populations and Medicaid enrollments could force more cuts in other areas in coming years. And then there’s the matter of a property tax break for seniors that the General Assembly put on hold during the recession. It’s due to come back next year, to the tune of $100 million out of the state budget.
Republican representative Cheri Gerou is already worrying about that.
CHERI GEROU: "Do you live up to that? Do you find that 100 million dollars someplace and take care of those people that you made that promise to? And how do you handle that? And I think that’s what’s going to be an interesting conversation in this next legislative session because I think that’s where a real divide’s going to be."
TWith this fiscal year ending on June 30th, and next year’s budget currently in balance, lawmakers have some breathing room before the next round of pressing budget concerns.
Click the listen button to hear Megan Verlee's story about the June budget forecast