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Published on Friday, February 14, 2014

Might the February revenue forecast give city priorities a much needed nudge?

Cities are paying close attention to the state’s revenue forecast, updated every three months. Preliminary information for the February 19 forecast reveals that since the November 2013 update, revenues are up slightly (0.7 percent), but because of unexpected refunds, there is no overall gain. But that could change.

A higher revenue forecast could help support city needs. We’ll be watching to see whether the updated forecast assumes any revenues from marijuana taxes – nothing has been projected during the current biennium (July 2013-June 2015). Legal grow operations are starting up and legal retail outlets are opening around the state later this year, creating new revenues – some of which AWC is urging the state share with cities and counties to help ensure a well regulated industry.

House and Senate legislators who have the keys to the state’s fiscal resources haven’t been willing to consider building back diverted liquor revenues or sharing new marijuana taxes to help cities meet public safety obligations. They are understandably concerned first with state obligations. Absent growth in revenues, they are also reluctant to open the funding floodgates.

AWC hasn’t asked for new/restored liquor revenue this biennium. HB 2314/SB 6361 restore cuts to local liquor profits revenue in a gradual and thoughtful way beginning next biennium (July 2015-June 2017). Absent such a fix, we estimate cities across the state will have lost over $85 million in liquor profits alone between July 1, 2012 (when the legislature’s “cap” became effective) and June 30, 2017. Cuts to shared tax revenue continue and are projected to total close to another $73 million during this same time period.

AWC is asking the state to share new marijuana taxes with cities and counties as soon as it starts coming in – that’s when recreational growers, processors and retail outlets will be calling their local public health and safety resources to keep them legal, safe and secure. The federal government and our citizens expect no less.

Colorado’s recreational marijuana stores opened in January 2014 and Colorado cities are receiving a share of the tax revenue. NBC news recently reported that in the first 30 days of business, 18 Colorado retail marijuana businesses paid anywhere from $1.24 million to $3 million in taxes. According to NBC, the stores are on track to add $100 million in marijuana tax revenue in the first year of recreational sales.

There has been a positive response on the House side to reconsidering last year’s diversions of Public Works Trust fund revenue streams. SHB 2244 was voted out of the Appropriations Committee with a unanimous bi-partisan vote and sets up a commitment to look at building back the fund starting in July, 2015 rather than waiting until July, 2019. We expect the bill to pass the House with an opportunity to make a case for it before the Senate Ways and Means Committee. Assuming this happens, we’ll need all hands on deck to help it move from there.

Look for February revenue forecast details in Wednesday’s CityVoice e- newsletter. The forecast might just give us the nudge we need to come out of this session with something constructive for cities.