DENVER — Colorado’s projected budget deficit for the coming fiscal year has grown to close to $700 million, according to the governor’s latest economic forecast released Friday.
Lawmakers use the quarterly forecast to help craft a budget for the fiscal year that begins July 1.
By law, they must produce a balanced budget during the Legislative session that ends in May.
The expected deficit was $500 million when Gov. John Hickenlooper released his proposed $28.5 billion budget last fall.
Friday’s forecast said state revenues will increase as Colorado’s economy strengthens this year, though that growth mainly in the metro Denver and Fort Collins regions is being restrained by tight labor and housing markets. Low agricultural prices mean rural areas continue to struggle.
Despite increasing revenues, constitutionally-mandated tax rebates, transportation spending and other measures mean there is a $697 million gap in the general fund, which is the state’s treasury.
Revenues are expected to grow by 4 percent this year and by more than 5 percent in fiscal year 2017-18.
But the report said that government spending can grow by less than 1 percent because of those spending mandates — as well as a requirement that the general fund reserve equal 6.5 percent of total spending.
Under the forecast, the government would have to issue $135 million in taxpayer refunds next fiscal year and $145 million in fiscal year 2018-19.
The Taxpayer’s Bill of Rights requires refunds whenever revenues surpass a cap that is based on population growth and inflation.
The forecast was being presented to the powerful Joint Budget Committee on Friday.
Legislative economists were also expected to present their own quarterly forecasts.