DENVER - State economists delivered crushing news to lawmakers Friday, predicting a deeper, longer recession and the need for dramatic budget cuts."In December, we had expected a pretty mild recession in Colorado. Now, we're expecting the recession to be pretty deep," said Natalie Mullis, chief economist for the Legislature.
Her quarterly forecast was a litany of bad news:Colorado lost 48,000 jobs between August 2008 and January 2009, or one out of every 50 jobs in the state.
The state's unemployment insurance trust fund will be almost out of money by the middle of next year.
The recovery will start later and happen slower than previously expected.
State budget cuts will total $1.4 billion this year and next, up $400 million from the last forecast in December.
"The recession has fully taken hold in Colorado, with consumer and business optimism at record-low levels," Mullis wrote in her forecast.
The consequences for the state budget are dire. Legislators will need to cut an extra $208 million out of the general fund this budget year, which ends in June. They are just now completing a round of wrenching cuts.
Next year's budget cuts will total at least $900 million, according to Mullis' forecast.
"The forecast is bad," said Sen. Moe Keller, D-Wheat Ridge, chairwoman of the Joint Budget Committee. "It means we will have to work very hard on next year's budget to make cuts to balance the budget. We know we will be asking everyone to take a hit."
The forecast from Todd Saliman in the governor's office also was bad, but not as terrible as the one by Mullis' staff. He does not predict the need for more budget cuts this year.
"We are not out of the woods yet, and it's going to take a little while for the economy to turn around," Saliman said.
Saliman predicts the recovery will take hold by the end of the year, while the Mullis' staff thinks it won't begin until the middle of 2010. This month and April will likely be the worst of the recession, Mullis added.
Both forecasts partially include the benefits of the federal stimulus bill. They don't include the $621 million Colorado is expected to get for education, but because that money is earmarked for schools, it probably won't help close the gap in the general fund.
Gas and oil taxes will plummet, the forecasts say. The Legislature's staff predicts an 83 percent drop, down to $41 million, next year. Saliman predicts a smaller drop to $148 million.
Employment in the gas and oil industry was one of the few bright spots last year, as jobs were lost in most other sectors. But that industry is expected to lose jobs as part of a national downturn in gas prices and drilling.
The forecasts could easily change for the better or for the worse, the economists said.
"These are incredibly uncertain times, even on a month-to-month basis," Saliman said.