Even as Colorado enacts drastic changes to its tax policy, economic forecasters still expect the state to hit the constitutional cap on revenue collections in coming years.
But, the state could flirt with falling below the cap, set by the Taxpayer’s Bill of Rights, for the first time in half a decade during the adjustment period. The TABOR cap grows based on population growth and inflation, and money collected over it needs to be refunded to taxpayers.
Greg Sobetski, the chief economist for the Legislative Council Staff, didn’t raise any red flags during a forecast Thursday but acknowledged “a new set of budget circumstances” for state officials to navigate after years of explosive growth in state revenues. That growth resulted in billions of dollars being refunded to taxpayers in recent years, most notably through direct payments in fall 2022 and through tax returns this year.
Lawmakers this past legislative session, however, passed more than 30 bills either adjusting or creating new tax credits, according to a tally by the governor’s office. They include expansions to the earned income tax credit for the lowest-income Coloradans, senior housing tax credits and, if certain economic triggers are met, a new credit potentially worth thousands of dollars to families.
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Collectively, the credits will reroute hundreds of millions of dollars — if not more than a billion — per year in coming years from state coffers, though it still ends up Coloradans’ wallets. In the next fiscal year, which begins July 1, the credits could also push state revenues below the TABOR cap. Economists for the legislative branch and governor’s office both expect revenue to remain above the cap, but Sobetskis’s office, in particular, warned a routine margin of error that comes with predicting the future could drop that below the TABOR cap.
Legislative forecasters expect $1.4 billion in revenue collected above the revenue cap this fiscal year, which ends July 1, will need to be refunded. They expect it to drop to about $328 million next fiscal year before bouncing back to $1 billion-plus for the fiscal year that begins July 1, …read more
Source:: The Denver Post – Politics
