Colorado Gov. Jared Polis unveiled an initial fiscal 2024 budget that he said maintains record reserves to cushion the blow of a potential economic downturn or natural disaster.
The $42.7 billion all-funds spending plan for the fiscal year that begins July 1 includes a $16.7 billion general fund with a $2.174 billion reserve.
“We need to maintain strong reserves more than ever before in the face of global economic uncertainty,” Polis told reporters on Tuesday. “Otherwise, the legislature would be in a position to make major slashes to the budget should a recession occur, which has a significant likelihood.”
The budget’s Nov. 1 release, which is required by statute, comes just ahead of the Nov. 8 election. Polis, a Democrat, is seeking a second term in office in a race against Republican Heidi Ganahl and other candidates.
If reelected, Polis said he will submit a supplemental budget amendment package in January.
He also said propositions on the general election ballot, including measures to reduce the state income tax rate and dedicate a small slice of income tax revenue for housing, would not affect his proposed budget if they are approved by voters.
Proposition 121 would reduce the flat state income tax rate for individuals and corporations to 4.4% from the current 4.55%. The income tax generated $10.7 billion or 68.4% of the state’s general fund revenue in fiscal 2021, according to a legislative report.
If passed, the measure’s long-term impact on state spending would depend on whether revenue is above or below a constitutional limit.
“During years when the state collects money over the TABOR (Taxpayer Bill of Rights) limit, Proposition 121 will reduce the amount of money returned to taxpayers and will not change the amount of money available to pay for state operations,” the report said. “During years when the state collects less than the limit, Proposition 121 will reduce the amount of money available for state government operations.”
Polis said he favors an income tax cut, adding that the legislature could take action to reduce the rate if the proposition fails.
The proposed budget would increase K-12 per-pupil funding by $861, allocate $8.4 million for school safety improvements and training, and provide an $86 million general fund boost for higher education. It also sets aside state matching money to compete for federal Infrastructure Investment and Jobs Act funding of up to $7 billion over the next five years for transit, drinking water, broadband, and other projects.
“There’s very little room in this budget for new programs,” Polis said, adding he is willing to work with lawmakers in both political parties to find additional savings.