While the General Assembly paused the session for two weeks, due to the novel coronavirus outbreak, lawmakers are still working behind the scenes.

That includes the budget writers of the Joint Budget Committee, which on March 16 got some bad news about State revenue projections that they were to use to do final work on the 2020-21 State budget.

Instead of an expected $832 million to pay for new programs and mandated cost increases, available revenue increases were estimated at $27.3 million. That’s not even enough to cover mandated inflationary increases for K-12 education and federal programs such as Medicaid. 

JBC members told reporters that there is no money for new programs, nor the $52 million they had hoped to put toward paying down the budget stabilization factor, the debt owed to K-12 education since 2012. They wouldn’t rule out budget cuts, including to K-12 education, on Monday.

Both the economists with the Governor’s office of State planning and budgeting and from the Legislative Council said the revenue forecasts are uncertain, and they attributed that uncertainty to two factors. A fight between Russia and Saudi Arabia led to a steep decline in the price of a barrel of oil, which on March 16, was $31.50. That’s not enough for most producers to even make a profit, and in some cases, the economists said, it’s costing them money just to pull it out of the ground. The second factor, of course, is the downturn in the economy due to COVID-19.

For agriculture, however, different factors are at play, according to the Legislative Council forecast.

Economists said ag producers “face ongoing headwinds from low commodity prices and increasing competition from global producers. While some of the pressure from the trade war between the United States and China eased toward the end of 2019, "purchases of agricultural equipment are either costlier or unattainable” because of the trade war. 

The phase one trade deal between the United States and China, signed on Jan. 15, requires China to purchase $32 billion more in agricultural products over the next two years.

But there are now questions about how much of that will happen because of the pandemic. Reuters reported last month that China has yet to make any purchases tied to the trade deal. 

The Legislative Council forecast noted the impact of COVID-19 as well, pointing out that the virus has driven down commodity futures, although the virus’ effect on global supply has meant higher prices for both pork and pork production.

The forecast hinted that the agriculture industry is wary of promises made in the trade deal. “With the onset of COVID-19 and the resulting pause in economic activity in China,” the first round of purchases is delayed, the forecast said. As a result, trade activity overall has fallen significantly during the first two months of the year.

Prices and production are unlikely to respond to greater demand from China until purchases begin, and prices may not react at all, the forecast said, since other countries have increased some crop production to offset lower imports from the United States, resulting in higher supply levels.

On the plus side, hay prices remain strong due to high demand from ranchers and Colorado milk production and prices are both up, which the forecast said would offset lower exports. 

The forecast also had not-so-good news for those interested in getting into the hemp market. In 2019, Colorado led the nation in the number of acres planted, at 80,000, with more than a third of the nation’s hemp production coming from the Centennial State. Another 40,000 acres are expected to be added this year. 

But that’s coming at a cost, the forecast said. The rapid increase in supply is driving down prices, especially since the amount produced is growing faster than the ability to process it. 

The JBC takes that information from the March revenue forecast and uses those numbers as the last guide for the upcoming State budget bill. Members said they still expect to have a 2020-21 State budget ready for lawmakers when they come back on March 30. However, on Tuesday, Speaker of the House KC Becker indicated they may come back on March 30 and adjourn again if public health concerns remain.

On March 19, State Representative Dafna Michaelson Jenet, a Commerce City Democrat, announced she tested positive for COVID-19. Michaelson Jenet has been battling cancer off and on for a decade and had been suffering from bronchitis for several weeks prior to contracting the virus. She said she started spiking a fever on Sunday night and is now in quarantine, although she remains at home.

When lawmakers come back for the rest of the session may be up to the Colorado Supreme Court, which is currently reviewing a request submitted by the General Assembly on March 14. That request is to determine whether the 120-days of the session that started Jan. 6 is consecutive days, as has been the practice for many years, or if they can pause it for public health reasons, which is allowed under a joint rule designed for public health emergencies. Should Democrats win that argument, they would be able to finish out the remaining 53 days of the session. If they lose, lawmakers might have considerably less time to finish up the 2020 session. 

Legislative leaders have said that they will prioritize legislation that is required by law, such as the budget, as well as “mission critical” legislation, including the school finance act and bills that reauthorize a variety of state programs. 

In other news:

Governor Jared Polis signed Senate Bill 91 into law on March 18, but the law may need changing before the ink is even dry. The measure, co-sponsored by Senator Jerry Sonnenberg of Sterling, hikes the minimum pay for National Guard troops from $20 per day to $88.80 per day when they are called into service by the Governor. Polis called upon the National Guard when he declared a state of emergency on March 11; at least a dozen troops are helping with COVID-19 testing around the State. However, the law is not due to go into effect until Aug. 6, and legislative leaders said this week they need to move that start date up.