Massive State Budget Deficits: Colorado and California

Both California and Colorado are preparing for massive state government budget deficits estimated today in the billions. California is anticipating a $54.3 billion shortfall. They are projecting budget deficits through 2024. Colorado’s $30 billion state budget is expected to have a $3 billion gap that the State Legislature will first address after Memorial Day. May 26 is the date, recently moved back, the legislature reconvenes for the first time since it adjourned mid-March due to COVID-19.

Each state has reserves it can use and some sources of funding easier access in terms of restrictions on use and less painful in their immediate impact on programs and employees. Also, there will be some federal funds newly available for specific use, such as COVID-19 costs. But still, there will be painful shifting of funds and program reductions in both states to meet balanced budget requirements. Unlike the federal government, they can’t print money.

In Colorado, sales tax that supplies municipal and some special district budgets and augments some county budgets is starting to drop. A $44 million, one- percent sales tax collection in the six-county Denver metro area was down approximately 8 percent in March, a month that experienced only a couple of weeks of the shutdown. The drop in April should be spectacular.

Gov. Jared Polis provides an update on the state's response to the
coronavirus | Andrew Kenney/CPR News

Gov. Gavin Newsom updates the public about California's response
to the coronavirus outbreak | Office of the Governor of California