Colorado forecast no longer projects a TABOR refund for FY 2025-26
State budget forecasters told lawmakers June 18 that improved revenue estimates put Colorado about $425 million below the TABOR cap for FY 2025-26, though a smaller refund obligation is still projected for the following year.
Colorado budget forecasters told the Joint Budget Committee on June 18 that the state’s general-fund outlook improved by $498 million from the prior forecast, enough to put FY 2025-26 revenue about $425 million below the TABOR cap instead of above it, according to Legislative Council Staff’s June forecast and the committee hearing.
That means Colorado is no longer projected to owe a TABOR refund for FY 2025-26. The June forecast says revenue subject to TABOR is expected to come in $424.9 million under the Referendum C cap that year, while the General Fund would still finish the year with a $116 million surplus above the statutory reserve requirement.
For FY 2026-27, however, the state is again projected to collect more than the TABOR limit. The June forecast projects revenue subject to TABOR will exceed the cap by $483 million, producing a net TABOR refund obligation of $329.9 million after adjustments under House Bill 26-1419. Legislative Council Staff also projects the General Fund will end that year with about a $147.9 million surplus above the reserve requirement.
HB 26-1419, which Gov. Jared Polis signed June 3, requires the state controller, if FY 2025-26 revenue does not exceed the TABOR limit, to calculate how much the state over-refunded for FY 2024-25 after the latest federal tax-law changes and then reduce future TABOR refunds to recover that amount. Under the law, no more than half of that over-refund may be used to reduce refunds in a single fiscal year.
At the hearing, lawmakers pressed staff on what the improved numbers meant for the TABOR trigger, reserve calculations and an alternate planning scenario. The hearing record shows staff said the out-year scenario already assumed about a 13.2% reserve and would balance at that level.
Staff also told lawmakers in the hearing that they expect the Family Affordability Tax Credit and expanded earned income tax credit to be unavailable for tax years 2027 and 2028, though they said the 2027 determination will depend on the December 2026 forecast.
The June forecast is not a final certification. Legislative Council Staff said in the hearing that several end-of-year accounting items still could affect the final numbers before the state controller’s September certification.