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Colorado’s budget basics
According to the National Association of State Budget Officers (NASBO), Colorado’s total expenditures in fiscal year (FY) 2021 were $36.8 billion, including general funds, other state funds, bonds, and federal funds. NASBO reported that total expenditures across all states in FY 2021 were $2.7 trillion, ranging from $4.7 billion in Wyoming to $512.8 billion in California.
Each state allocates spending and taxes differently among different levels of governments, and local governments often administer programs with state funds, so combined state and local government data show a more complete picture of individual benefits and contributions when comparing states.
Per the US Census Bureau, Colorado’s combined state and local direct general expenditures were $55.5 billion in FY 2019 (the most recent year census data were available), or $9,641 per capita. (Census data exclude “business-like” activities such as utilities and transfers between state and local governments.) National per capita direct general expenditures were $10,161.
Colorado’s largest spending areas per capita were elementary and secondary education ($2,020) and public welfare ($1,677). The Census Bureau includes most Medicaid spending in public welfare but also allocates some of it to public hospitals. Per capita spending is useful for state comparisons but is an incomplete metric because it doesn’t provide any information about a state’s demographics, policy decisions, administrative procedures, or residents’ choices.
Colorado’s combined state and local general revenues were $58.9 billion in FY 2019, or $10,235 per capita. National per capita general revenues were $10,563. Colorado uses all major state and local taxes. Colorado’s largest sources of per capita revenue were charges ($1,979), such as state university tuition and highway tolls, and property taxes ($1,816).
Governor Jared Polis, a Democrat, was elected in 2018 with 53 percent of the vote. The next gubernatorial election is in 2022.
Democrats control both the House of Representatives (40 Democrats to 24 Republicans) and Senate (20 Democrats to 15 Republicans). Control of the governor’s mansion and each house of the legislature gives Democrats a trifecta in Colorado. All Colorado House seats are on the ballot in 2022 because representatives serve two-year terms. Senators serve four-year terms; roughly half the senatorial seats are on the ballot in 2022, and the other half will be up for election in 2024.
Colorado’s budget institutions, rules, and constraints
Colorado uses an annual budget. The legislature must pass a balanced budget, but it can carry a deficit into the following year. Colorado also has one of the most stringent tax limits in the country: the state’s Taxpayer Bill of Rights (TABOR) requires voter approval for any increases in state or local tax rates and requires the state to return any excess revenue beyond the previous year’s limit—increased annually by population growth and inflation—to its taxpayers. Colorado also limits spending, restricting it to either 5 percent of personal income or 6 percent of expenditure growth from the previous year’s budget (whichever is lower). Both the revenue and spending rules are binding and thus a legislative supermajority or vote of the people is required to override them. On top of these rules, the state limits both its authorized debt and debt service.
(Note: Some states have informal budget institutions that constrain overall spending growth or a specific expenditure’s growth.)
Colorado’s current budget
Colorado enacted its FY 2022 budget in May 2021. The enacted budget included $12.5 in general fund spending , an 11.4 percent increase over the previously enacted budget. According to the governor, in June 2021, Colorado increased its earned income tax credit from 15 percent of the federal credit to 20 percent for tax year 2022 and 25 percent for tax year 2023.
Under the American Rescue Plan, Colorado will receive $3.8 billion in direct state fiscal aid and $1.7 billion in local government aid from the federal government. As of January 2022, Colorado had spent part of its state ARP funds on housing assistance, economic development, and capital construction.
According to NASBO, Colorado’s recent expenditure totals (general fund spending/total spending, including federal transfers) were:
FY 2021: $11.1 billion/$36.8 billion
FY 2020: $12.2 billion/$35.6 billion
FY 2019: $11.6 billion/$30.0 billion
For more on Colorado’s budget, see
Colorado’s economic trends
Colorado’s per capita income (per the Bureau of Economic Analysis) was $69,016 in 2021, ranking ninth among the states. It was above both the national average of $63,444 and the Rocky Mountain regional average of $61,587. The state’s median household income (five-year estimate) was $75,231 in 2020, ranking 11th among the states and above the national average of $64,994. Colorado’s poverty rate was 9.8 percent in 2020 (five-year estimate), below the national rate of 12.8 percent.
Although Colorado’s averages tell a story about the entire state, Colorado is composed of diverse localities. For example, the city of Pueblo’s median household income was $42,902, and its poverty rate was 21.8 percent; the city of Erie’s median household income was $124,480, and its poverty rate was 4.7 percent.
Colorado’s unemployment rate has historically been below the national average, and in recent years it has been among the lowest in the country. (See how COVID-19 is affecting state employment and earnings data.)
Unemployment rates (like other economic indicators) often vary significantly by race and ethnicity. In Colorado, the average unemployment rate in 2021 was 4.4 percent for white residents, 16.8 percent for Black residents, and 6.7 percent for Hispanic or Latino residents. (This is preliminary data. See the 2020 data for a more detailed breakdown of state unemployment rates by race and ethnicity.)