DENVER Spending is down and revenues are up at the state Capitol good news for legislators who have to pass a budget for the state next month.
But economists warned legislators not to get too excited during the quarterly economic forecast Friday. Revenues increased only slightly from the last prediction in December $116 million this year and $99 million in the next budget year, which starts in July.
Thats not much for a budget of $7 billion, said Natalie Mullis, the Legislatures chief economist.
The economy feels like its climbing a sand dune right now, she said.
Every time it takes a step, it feels like it slips as much as its going up. But its still going up, Mullis said.
Legislators entered their yearly session in January by confronting a $1 billion shortfall, spread over two years. A combination of conservative budgeting and slightly better-than-expected news on the economy has closed that gap by about half, according to forecasts by Mullis staff and Gov. John Hickenloopers budget office.
Public schools are expecting record budget cuts of up to $500 per student. The improved news from Fridays forecasts might make for an improvement, but cuts still will be needed.
Rep. Mark Ferrandino, D-Denver, said the forecast was definitely positive news, but not enough to rescue the state budget.
We still will see significant cuts in programs as we move forward. This might help a little bit, said Ferrandino, who sits on the six-person committee that writes the state budget.
Teachers and students wont know exactly how much Fridays news will help them until next month. Legislators will finalize the budget in two weeks of debates scheduled to begin March 28.
Hickenlooper is hunkering down for another year of budget cutting in 2012.
A billion dollars takes a long time to unwind, said Henry Sobanet, director of the governors budget office.
Fridays forecast had some long-awaited good news. The states unemployment insurance trust fund has been in the red for more than a year, but it is predicted to return to solvency in 2011-12, said Kate Watkins, an economist for the Legislature.
Also, the jobs picture will get better despite a recent increase in the unemployment rate, with salaries predicted to grow slowly from last year, according to the Legislatures forecast.
Higher salaries should translate into higher sales and income tax revenues for the government.
But Jason Schrock, an economist in Sobanets office, warned that rising inflation poses a risk to the positive forecast. So does a weak U.S. dollar, he said.
We need to be cautious at this point, Schrock said.
Reach Joe Hanel at firstname.lastname@example.org.