State revenue forecasts issued Friday morning provided a first look at the possible direction of 2015 school finance debates and a better sense of winners and losers among college construction projects.
Economists from the Legislative Council staff and the Office of State Planning and Budgeting each presented their quarterly revenue forecasts and economic reviews to the Joint Budget Committee.
The legislative economists were the more conservative, lowering their forecasts for state revenue growth from what they had estimated in March. The OSPB inched its March forecast upward about 1 percent for both 2013-14 collections and for the 2014-15 fiscal year, which starts July 1. Both found the Colorado economy generally strong and growing faster than the national economy.
Four pieces of the forecasts are of particular interest to education, including overall projected revenues, the health of the State Education Fund (SEF), projected inflation and expected marijuana tax revenues.
Here’s a quick look at what the forecasts say about those issues:
Overall revenues: The OSPB projects $10.8 billion in general fund revenues for 2015-16, compared to $10 billion for 2014-15. Legislative Council projects $10.5 billion in 2015-16.
“This is all positive, but they have built in some pretty conservative projections,” said Jane Urschel, deputy executive director of the Colorado Association of School Boards. Urschel said the forecasts make it possible for the education lobby to push for further reductions in the negative factor next year but that it’s too early to say how much.
State Education Fund: The SEF is used to supplement basic school funding and to pay for special programs. Flush with one-time revenues, many lawmakers sought to tap it for pet projects during the 2014 session. The OSPB estimates $693 million will be left in the SED at the end of 2014-15, money that lawmakers could try to spend.
Inflation: The state constitution requires basic K-12 spending to increase annually by the rate of inflation. OSPB projects 2.6 percent inflation; Legislative Council estimates 2.8 percent. A federally calculated inflation rate reported early in 2015 will be used to calculate school funding for 2015-16.
Marijuana tax revenues: State economists are projecting that marijuana tax revenues will be lower than previously predicted, something that has implications both for school construction, which gets a slice of that money, and for funding of marijuana education programs in schools.
Of special interest to higher education this year is the projected amount of the state surplus at the end of the 2013-14 budget year. A law passed during the 2014 session allocated surplus funds first to water projects and the SEF, along with other smaller distributions. Any revenue above those uses was earmarked for a prioritized list of college and university construction projects.
Legislative Council staff now estimate there will be only enough money for a library project at the Auraria Higher Education Center. But OSPB is projecting there will be enough excess cash for the Auraria work plus projects at Fort Lewis College, Colorado State University, the University of Colorado, Metropolitan State University and Adams State University.
The question will be answered in September after updated revenue forecasts are made.
The June forecasts provide lawmakers, bureaucrats and lobbyists with some broad groundwork for the following year’s budget debates. New forecasts in September will provide the base for the governor’s 2015-16 budget plan, which has to be filed by Nov. 1. And updated forecasts in late December set the stage for lawmakers when they return in January.
Lawmakers generally use the more conservative of the two forecasts when making budget decisions.
Read the Legislative Council forecast here and the OSPB projections here.