Colorado's economy 'healthy'

But budget chief says slowdown might creep in

April M. Washington, Rocky Mountain News

Published September 20, 2007 at midnight

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The state's economy remains strong, but a slowdown on the national level could "creep into Colorado," the governor's top economist said Wednesday.

"Despite these concerns, Colorado's economy remains healthy," said Todd Saliman, director of Gov. Bill Ritter's Office of State Planning and Budgeting. "Our unemployment rate is well below the national average and some local economies are booming, particularly along the Western Slope."

Ritter's Office of State Planning and Budgeting released its September 2007 economic and revenue forecast, the third since the governor took office in January.

The chief economist for the Legislative Council will release his forecast today.

Saliman expects the general fund, which pays for day-to-day operations of state government, to reach $7.8 billion by the end of the 2007-08 fiscal year on June 30, reflecting an 8.6 percent increase.

During the next five years, general fund revenue is expected to climb to $9.5 billion in fiscal year 2011-12.

Meanwhile, the state will keep $6 billion in Referendum C revenue over the next five years - a $360 million increase over the June forecast.

Saliman credits the surge in Referendum C money to increases in severance taxes derived from oil and gas activity along the Western Slope and hikes in unemployment insurance.

That projected windfall far surpasses the initial $3.7 billion the state estimated it would get to keep when voters passed the measure in 2005. Referendum C allowed the state, which was facing a budget crisis, to keep for five years money that normally would have been refunded to taxpayers.

Another big winner is transportation, which is expected to receive an additional $1.3 billion over the five-year forecast for road improvements.

"It's a meaningful amount of money, and a small step in meeting the long-term needs of transportation," Saliman said.

The governor's forecast comes a week after Tucker Hart Adams, chief economist for U.S. Bank's Rocky Mountain Region, predicted the state's economy will show growth, but only after it experiences a recession that may have already begun.

Adams continued to be troubled by the housing slump and consumer debt, noting a majority of Americans have rolling credit card balances at 18 to 19 percent interest rates.

While a sluggish national economy will contribute to a slower local economy, Saliman said Colorado is not in or headed toward a recession.

Where Saliman and Adams agree is that pockets of the state, largely the Western Slope and eastern Colorado are booming thanks to oil and gas activity and corn production fueled by the demand for alternative fuel.

It remains to be seen if the governor's budget office has a slightly different view of the state's economic outlook than the legislative council, whose numbers are used by the Joint Budget Committee when setting the budget.

Highlights of economic forecast:

• Individual income tax revenues continued to boom in 2006-07, rising 11.3 percent, likely bolstered by a healthy investment market that has yielded significant capital gains, but are expected to slow considerably over the next two years.

• Total general fund revenues for 2006-07 increased 8.6 percent, but are expected to grow at slower rates over the five-year forecast period.

• Revenue for capital construction for fiscal 2006-07 was $235.8 million, with an additional $183.6 million expected over the forecast period.

washingtonam@RockyMountainNews.com or 303-954-5086

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