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Under the Dome: State Economic Forecasts Shows Future Risks

NCLA Takes Positions on Newly Introduced Bills

This week Kate Watkins, Chief State Economist for Legislative Council, provided a presentation to the NCLA Board of Directors following the release of the State’s March Revenue Forecast.

Amid soaring inflation, elevated fuel prices, fresh worries about supply-chain disruptions, and the uncertainty around the Ukraine invasion, the March forecast reveals that while jobs have recovered from pre-pandemic levels, economic forecasts risks are highly elevated. As inflationary pressure continues, prospects of a recession were factored in the forecast this quarter, a first in many quarters.  Meanwhile, economic activity has reached and exceeded pre-pandemic levels but employment has yet to fully recover in several service industries hit hardest by the pandemic.

Notably, growth of the past year gave the General Assembly a projected $3.2 billion, or 20.7 percent, more to spend or save in the General Fund than what is budgeted to be spent and saved in FY 2021-22.  The legislators opted to spend nearly all of the projected revenue (we’ll have a breakdown of the budget next week).  Excess TABOR Revenue that exceeds the allowable “Referendum C Cap” amounts to $1.56 billion.  Majority Democrats are considering how to refund those dollars to taxpayers. 

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Under the Dome: Workforce Package and More Air Quality Measures

5 Weeks remain in 2022 Legislative Session with More Bills to Come

April 1, 2022

Air Quality Improvement Investments
Senate President Steve Fenberg (D-Boulder) introduced Senate Bill 193 regarding “Air Quality Improvement Investments”. Another all encompassing measure, with spending over $125M, the bill includes the following primary elements:

  • Creates the $25M “industrial and manufacturing operations clean air grant program” in the Colorado energy office to award grant money to private entities, local governments, and public private partnerships for voluntary projects to reduce air pollutants from industrial and manufacturing operations.
  • Creates the $12M “community access to electric bicycles grant program” through which the office awards grant money to local governments and nonprofit organizations that administer or plan to administer a bike share program or an ownership program for the provision of electric bicycles in a community. There is also created a “community access to electric bicycles rebate program”.
  • Creates the $15M “diesel truck emissions reduction grant program” through which the
    division of administration in the CDPHE awards grant money to certain private and public entities for decommissioning diesel trucks and replacing the trucks with newer model trucks.
  • Creates the $65M “electrifying school buses grant program” through which the department, with technical assistance from the office, awards grant money to school districts and charter schools to help finance the purchase and maintenance of electric-powered school buses, the conversion of fossil-fuel-powered school buses to electric-powered school buses, charging infrastructure, and upgrades for electric charging.
  • Infrastructure and the retirement of fossil-fuel-powered school buses.
  • Updates the definition of federal act regarding the reference to the federal Clean Air Act.
  • $7M to the CDPHE to finance the aerial surveying of pollutants
  • Other more technical additions for review

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Under the Dome: UITF Partial Replenishment Secured

Colorado-Nebraska South Platte Water Dispute gets National Attention

March 26, 2022

$600M Replenishment of the Unemployment Insurance Trust Fund Secured
The state budget proposal was finalized this week with the release of the March Economic Forecast.  The Joint Budget Committee and legislative leaders will offer $600 Million in funds from the federal ARPA dollars to replenish a portion of the depleted unemployment insurance trust fund.  As noted in the final report on the Economic Recovery & Relief Cash Fund Task Force, an infusion of $600 million to the UITF will lower UI premium tax rates for 4 out of the next 5 years. Based on different growth forecasts, there are scenarios where the total benefit to employers could exceed $600 million by 2027. The Colorado Department of Labor and Employment’s hypothetical scenario of a 10-employee firm showed that, with a $600 million infusion to the UITF, the firm would save a total of $1,896 from 2022-2026, assuming all 10 employees make at least $30,600 annually or a payroll of at least $306,000. NCLA is pleased the $600 M pledge will be a reality, but we note the UITF fund balance peaked at $1.2 billion in March of 2020, and the subsequent depletion of the fund and federal loans due to pandemic unemployment demand left the UITF in $2 Billion hole.  Replenishment of the UITF has been a high priority for the NCLA and we will continue our pursuit of additional relief in the coming year. 

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Under the Dome: Anticipation of the Economic Forecast

With a Continued Push to Replenish the Unemployment Insurance Trust Fund

March 12, 2022

The Joint Budget Committee Long Bill and Economic Forecast Anticipation
As the state anxiously awaits the JBC Economic Forecast, the Joint Budget Committee will be finalizing the long bill and budget through the end of March, and the Economic Forecast will be presented to the Committee on March 17.  The March economic forecast presents the final numbers to which the joint budget committee budgets its annual state budget bill, aka “The Long Bill”   With the Ukrainian crisis compounding and exacerbating inflationary pressures that have been evident for some time, there is high interest in how the state economist will project state revenues in the coming year and in the 3 year forecast horizon.   

Should you have an interest in the preparation of Colorado’s state budget, Legislative Council provides , tools to explore aspects of the state budget

With the budget looming, a series of legislative measures are pending that have appropriation requests attached and await action by the respective body’s Appropriations Committee.  The Fiscal Notes report, released this week, contains several reports showing the fiscal impacts of all legislation currently pending before the General Assembly or that has been enacted into law at the 2022 legislative session.  Data is available on expenditures, revenue, TABOR refunds, and fund transfers, as well as the net General Fund budget impact of legislation.  Of all the bills introduced this session so far, there will be almost $58mm in expenditures, have nearly a ($362mm) net budget impact, a TABOR Refund of ($219mm) with a net result of ($142mm).  The Operating Budget for the various 21 state agencies can be reviewed on the Colorado Operating Budget Report.  For FY 21-22, that total operating budget of $36.5B.  This includes Includes total appropriations and General Fund-only appropriations for each state agency.

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Under The Dome: ETRP 2.0 Legislation Defeated

Transportation Funding Grants Explored while P3 Progress is Made

March 5, 2022

HB22-1138 Defeated after Business Community Pressures the House Finance Committee
NCLA took a lead role in the defeat of House Bill 22-1138, the “Clean Commute” bill or Employer Trip Reduction Program (ETRP) 2.0, which was killed on a 1-9 vote, including a no vote from Fort Collins Rep. Cathy Kipp in the House Finance Committee.  In the face of 4 no confirmed votes on Thursday last week, sponsors laid over the bill and scrambled to structure amendments to make the onerous provisions permissive.  Believing they had the votes, they brought the bill back for committee consideration.  NCLA’s Sandra Hagen Solin testified in opposition to the measure highlighting that “Employers have minimal abilities to prevent their employees from driving to and from work especially in rural areas.  SOV trip numbers and vehicle miles traveled (VMT) are driven by many factors outside the employer’s control, including economic factors, land use patterns, road infrastructure, the availability of transit, individual family circumstances, and others.  Therefore, it is not equitable to hold the employer responsible for personal Colorado citizen choices.” 

With the resolve of opposition from NCLA, Colorado Chamber, Colorado Springs Chamber, Weld County, Auto Dealers Association and Associated General Contractors, coupled with the continued opposition of the Committee Chair, Shannon Bird, we worked during the day to hold our votes (and add to the count) as sponsors worked to count their own votes.  We will be sure to carefully follow any attempted amendments to HB 1026, a true incentive measure, over in the Senate that would add back in some of the undesirable requirements of HB 1138.

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