A $231 million increase in the forecast for fourth-quarter tax revenue will allow Colorado to restore planned cuts to public schools, Governor John Hickenlooper’s budget director said today.
The gains in income, sales and use taxes will help officials plug gaps in funding for the 2012 and 2013 fiscal years, said Henry Sobanet, director of the Governor’s Office of State Planning and Budgeting, at a presentation to the Legislature’s Joint Budget Committee.
“We’re seeing a lot of activity that simply was not evident during the summer, when there was a lot of turbulence and uncertainty,” Sobanet told the committee. “Now we’re seeing stronger employment and business activity.”
Sobanet said his office is preparing a supplemental budget request for fiscal 2012 that will ask for $22 million to accommodate increasing enrollment in public schools.
Gains in job growth and income-tax revenues will allow the governor to restore $30 million to higher education and $67 million for public schools for fiscal 2013, Sobanet added.
“The cuts to K-12 education in next year’s budget were the last and hardest to make,” Hickenlooper said in a statement. “That’s why we want those cuts to be the first restored.”
The governor proposed using additional revenue to set aside about $8 million for tax rebates for financially strapped seniors and to increase grants for local communities from severance taxes derived from natural gas, oil and other natural resources extracted in Colorado, by $8 million.
March 2012 Update
The Colorado Legislature will consider the governor’s requests. Hickenlooper’s budget for fiscal 2013 will ultimately be based on a March 2012 forecast update.
Sobanet cautioned that a 4.1 percent growth rate for fiscal 2012 is likely to slow next year to 1.1 percent, largely because of the European debt crisis and tax-policy changes.
He attributed growth in the fourth quarter to capital gains subject to income tax -- which represents 55 percent of the state’s general-fund revenue -- realized after stock market volatility this fall led investors to sell assets.
Job growth in manufacturing, oil and gas also helped Colorado’s employment outperform the nation’s. The state posted an 8 percent unemployment rate in November, compared with 8.6 percent nationally.
The state is on track to add 27,000 jobs this year -- the largest annual gain since 2007, according to the forecast released today by the planning office.
An oil and gas boom in northeast Colorado led to the restoration of all of the jobs lost in the state’s mining industry since the recession began in 2008, the report showed.