OSPB Sept 2025 - Forecast_Supplemental_Materials.pdf (642 KB)

Colorado Outlook Supplemental Materials – September 2025

Supplemental Materials General Fund Overview The General Fund Overview shown in Table 4 of the Colorado Economic and Fiscal Outlook highlights the available funding, expenditures, and end-of-year-reserves for the current fiscal year and subsequent years. Below is a detailed discussion of the information presented in Table 4A as reflected in the September 2025 forecast, which includes current law through the 2025 Colorado extraordinary session and impacts from the federal bill, H.R. 1, as well. Note that the balancing figures shown in the Budget Section reflect the Table 4C in the appendix, which also incorporates transfers, diversions, and the changes to appropriations subject to the reserve, after those items become law during the 2026 session. The Table 4A, meanwhile, assumes that the executive order on spending reductions increase General Fund reversions at the end of the fiscal year. For further detail and overview of the budget, please refer to the Budget Outlook section of this forecast. REVENUE Lines 1-4 of the General Fund Overview detail the total funding available for spending in a given fiscal year. In addition to those tax revenues itemized in Table 3 of the forecast document, the General Fund receives transfers from other State funds. Table 4 Line No.

FY 2024-25 FY 2025-26 Preliminary Estimate

FY 2026-27 Estimate

FY 2027-28 Estimate

1 2 3

Beginning Reserve Gross General Fund Revenue Transfers to the General Fund

$3,153.5 $17,181.3 $520.0

$2,263.7 $17,041.0 $210.2

$2,082.3 $18,078.7 $27.8

$2,412.7 $19,038.8 $27.6

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Total General Fund Available

$20,854.7

$19,514.9

$20,188.8

$21,479.1

EXPENDITURES Lines 5-20 of the General Fund overview detail General Fund expenditures in a given fiscal year. By statute, General Fund expenditures, with certain exceptions discussed further below, cannot exceed 5 percent of aggregate personal income received by Coloradans. In FY 2024-25, estimated General Fund appropriations subject to this limit are $15.6 billion, and $16.5 billion in FY 2025-26. FY 2026-27 and FY2027-28 appropriations are illustrative of the amount that results in a balanced budget. Line 6 reflects Healthy School Meals for All (HSMA) General Fund Appropriations, prior to the creation of the HSMA Cash Fund. Line 7 reflects any overexpenditures which are not subject to the limit. Table 4 Line No. 5 6 7

Appropriation Subject to Limit Healthy School Meals for All GF Approp Overexpenditures from the General Fund

FY 2024-25 Preliminary

FY 2025-26 Estimate

FY 2026-27 Estimate

FY 2027-28 Estimate

$15,621.8

$16,538.1

$16,359.9

$17,257.7

$0.0

$0.0

$0.0

$0.0

$68.6

$0.0

$0.0

$0.0

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Colorado Outlook Supplemental Materials – September 2025

The next table itemizes those General Fund obligations that are not subject to the General Fund appropriations limit. A description of each line item is presented below the table.

Table 4 Line No. 8 9 10

11 12 13 14 15 16 17

Total Spending Outside Limit TABOR Refund under Art. X, Section 20, (7) (d) Homestead Exemption (including Portability) TABOR Refund Portion of Homestead Exemption Other Rebates and Expenditures Transfers for Capital Construction Transfers for Transportation Transfers to State Education Fund Transfers to Other Funds TOTAL GENERAL FUND OBLIGATIONS Reversions and Accounting Adjustments

FY 2024-25 Preliminary

FY 2025-26 Estimate

FY 2026-27 Estimate

FY 2027-28 Estimate

$2,883.1 $293.3 $173.1

$1,497.5 $0.0 $186.8

$1,416.2 $363.9 $193.0

$1,674.1 $721.1 $198.4

-$173.1

-$185.5

$0.0

-$198.4

$187.4 $254.1 $117.5 $146.0 $1,884.8 $18,573.5 $17.5

$834.4 $170.5 $42.7 $0.0 $448.6 $17,932.6 -$103.0

$335.9 $20.0 $61.0 $0.0 $442.4 $17,776.1 $0.0

$335.1 $20.0 $110.5 $0.0 $487.4 $18,931.7 $0.0

Line 8: Spending not subject to the appropriations limit includes any TABOR refunds funded by the General Fund. These refunds occur when state revenue exceeds the fiscal year spending cap as defined in Article X, Section 20 (7) of the Colorado Constitution (“TABOR”) and Section 24-77-103.6, C.R.S. (“Referendum C”). Line 9: TABOR refunds are projected throughout the forecast period and are shown in line 9. Refunds are obligated in the fiscal year they are incurred but are paid in the following fiscal year. According to the State Controller’s Office and audit findings, TABOR revenue exceeded the cap by $296.1 million in FY 2024-25, while additional adjustments from FY 2023-24 accounted for -$2.7 million, for a total FY 2024-25 TABOR refund of $293.3 million. Under the September forecast, TABOR revenues will not be exceed the cap in FY 2025-26, but return with $363.9 million in FY 2026-27 and $721.1 million in FY 2027-28. Line 10: The Homestead Property Tax Exemption, which reduces property-tax liabilities for qualifying seniors and disabled veterans, serves as the State’s first TABOR refund mechanism. The amount on Line 10 is the estimated Homestead Exemption expenditure, including portability, which is then reduced in the line below by the TABOR refund due in that fiscal year. In FY 2026-27 there is no TABOR refund resulting from FY 2025-26, so the $190.9 million Homestead Property Tax Exemption and $2.4 million of Portable Homestead Property Tax Exemption must be covered by FY 2026-27 general fund balance. Homestead is covered in all other years by TABOR refunds. Line 11: “Rebates and Expenditures” account for a large portion of General Fund obligations not subject to the appropriations limit. Primary programs under rebates and expenditures include: (1) the

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Colorado Outlook Supplemental Materials – September 2025

Cigarette Rebate, which distributes money from a portion of State cigarette tax collections to local governments that do not impose their own taxes or fees on cigarettes, however these funds are now treated as exempt per H.B. 24-1469; (2) the Marijuana Rebate, which has historically distributed 10 percent of the retail marijuana sales tax to local governments based on the percentage of retail marijuana sales in local areas, but was updated to 3.5 percent this past legislative session beginning in FY 2025-26; (3) the Old-Age Pension program, which provides assistance to low-income elderly individuals who meet certain eligibility requirements; (4) the Aged Property Tax, Heat, and Rent Credit, which provides property tax, heating bill, and rent assistance to qualifying low-income, disabled, or elderly individuals; (5) the State’s financing costs for providing interest-free loans to school districts to help them with cash flow within the fiscal year; (6) a warrant to backfill local governments from additional property tax cuts in S.B. 23B-001; (7) Fire and Police Pensions; (8) Amendment 35 General Fund expenditures to CDPHE and HCPF from a portion of cigarette collections; and (9) Property Tax Exemption Reimbursement to local governments as a result of additional business personal property tax exemptions in H.B. 21-1312. Additionally, the legislature now considers the PERA Direct Distribution as not subject to the limit, and is therefore included here, while SB25-310 created a new, one-time $500 million warrant in FY 2025-26. Line 12: FY 2024-25 Capital transfers total $254.1 million. FY 2025-26 transfers to capital construction are lower than the previous year at $170.5 million. In FY 2026-27 and ongoing, there is currently only a $20.0 million ongoing transfer for H.B. 15-1344 Fund National Western Center and Capital Projects. Line 13: Per statute, Transportation transfers for the forecast years are $5.0 million in FY 2023-24 and $117.5 million beginning in FY 2024-25. Prior to this legislative session, those $117.5 million transfers, with $10.5 million goes to the Multimodal Options Fund, $7.0 million goes to the State Highway Fund for the Revitalizing Main Streets Program, and $100 million to the State Highway Fund, were expected to continue throughout the forecast horizon. However, SB21-260 statute was revised by SB25-257, reducing those $117.5 million in transfers down to $42.7 and $61.0 million in FY 2025-26 and FY 202627 respectively. The timeline of the transfers extend out further now to ensure the full funding intended in SB21-260 remains intact, though on a different timeline. Line 14: Transfers to the State Education Fund (SEF) total $146.0 million in FY 2024-25 exists as a result of S.B. 23B-001. There are currently no other General Fund transfers into the SEF within statute for this time horizon. Note, however, that there is a new diversion of General Fund into the Kids Matter Account within the SEF, but that is not tracked on this line, but rather in Tables 3 and 6 in the Appendix. Line 15: State law requires transfers of General Fund to various state cash funds. Generally, the largest transfer relates to Proposition EE and the 2020 Tax Holding Fund where further transfers occur to various other funds as a result of H.B. 20-1427. Another substantial transfer is the special sales tax on retail marijuana, portions of which are transferred from the General Fund to the Marijuana Tax Cash Fund and to the Public School Fund. Note that the Bioscience Transfer includes the full amount based on the forecasted withholdings amounts, but reductions to those transfers offsetting approximately half of the anticipated amount is captured in SB25-264’s transfers into the GF, from line 3.

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Colorado Outlook Supplemental Materials – September 2025

Line 17: This line includes any General Fund money not expended out of appropriations each fiscal year that was “reverted” back to the General Fund. It also includes various accounting adjustments made by the State Controller’s office each year. For FY 2024-25, the amounts are a combination of an adjustment to the Healthy School Meals for all transfer into the General Fund combined with SB25-243 impacts and adjustments to account for prior year TABOR over-refunds, as reported in the state’s TABOR certification letter. RESERVES Lines 18-24 of the General Fund Overview highlight the year-end balance in the General Fund as well as the statutorily determined reserve requirement and any amount above or below this requirement. The ending balance is the difference between total funds available and total expenditures. Table 4 Line No. 18 19 20 21 22 23 24

$2,263.7 $2,263.7 $0.0

FY 202526 Estimate $2,082.3 $1,731.5 $500.0

FY 202627 Estimate $2,412.7 $2,061.9 $500.0

14.49%

12.59%

14.75%

14.76%

$2,358.5 15.1% -$94.8

$2,439.5 14.8% -$357.1

$2,412.7 14.7% $0.0

$2,547.4 14.8% $0.0

FY 2024-25 Preliminary Year-End General Fund Balance Portion of the GF Reserve Held at Treasury Portion of the GF Reserve Held at PERA Year-End General Fund as a % of Appropriations General Fund Statutory Reserve Statutory Reserve % Above/Below Statutory Reserve

FY 2027-28 Estimate $2,547.4 $2,196.6 $500.0

The required reserve was increased to 15.0 percent in FY 2022-23. For FY 2024-25 through FY 2026-27, the statutory GF reserve is adjusted slightly by H.B. 24-1231 and H.B. 24-1466. In Fiscal Year 2023-24, the year-end General Fund as a percentage of appropriations was elevated because of swapping GF for ARPA dollars as required by H.B. 24-1466, Refinance Federal Coronavirus Recovery Funds. Note SB25B001 updated statute that now requires the Governor to present a plan to balance the budget if the reserve falls by three percent, which then triggered the August 28, 2025 executive order and presentation to the Joint Budget Committee given that OSPB had expected a drop in the reserve from 15 to 10 percent due to revenue impacts from H.R. 1. Note that SB25-310 requires that $500 million of the statutory reserve be held within the Public Employees’ Retirement Association (PERA), while the rest is held at Treasury.

State Education Fund Overview Table 5 of the Colorado Outlook details revenue, expenditures, and fund balance information for the State Education Fund (SEF) and General Fund combined. The table below summarizes revenue, expenditures, and the ending balance for the State Education Fund. The State Education Fund plays an important role in the State’s General Fund budget. Under the state constitution, base K-12 education spending must grow at the rate of student population growth plus inflation. Changes in expenditures from the State Education Fund affect General Fund

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Colorado Outlook Supplemental Materials – September 2025

appropriations, which must shift accordingly to meet the targeted level of school funding. Recent legislation will place additional pressure on the fund, and the fund projections throughout the forecast period described in this section take into account all SEF appropriations and legislative changes enacted in the 2024 legislative session, including bills with the highest fiscal impact, which include HB24-1448 New Public School Finance Formula, SB24-233 Property Tax, and HB24B-1001 Property Tax. All 2025 legislative session changes are also incorporated, including HB25-1320, which created the Kids Matter Account within the SEF. This account receives a diversion of 65 percent of one-tenth of one percent of federal taxable income beginning in FY 2026-27. State Education Fund ($ in Millions)

FY 2024-25 Preliminary

FY 2025-26 Estimate

FY 2026-27 Estimate

FY 2027-28 Estimate

Beginning Balance Amendment 23 Diversion Kids Matter Account Transfers to SEF Other Total Funds to State Education Fund State Education Fund Expenditures Year-end Balance

$1,674.1 $1,060.6 $0.0 $146.0 $92.2 $1,298.8 $1,840.7 $1,139.9

$1,049.0 $1,042.7 $0.0 $0.0 $26.0 $1,068.7 $1,576.3 $541.4

$541.4 $1,135.3 $221.6 $0.0 $22.9 $1,379.8 $1,646.9 $274.3

$274.3 $1,192.1 $232.7 $0.0 $17.8 $1,442.6 $1,586.8 $130.1

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