Legislators on Tuesday got their best news about the economy since the Wall Street crash of 2008.
Its such good news, in fact, that Gov. John Hickenlooper has cancelled his plans to cut the public school budget.
The $89 million reduction we proposed to K-12 education can be eliminated, said Henry Sobanet, head of Hickenloopers budget office.
Schools had been bracing for a fourth-straight year of cuts.
However, the governor did annonce Wednesday that he will appeal the decision, according to a denverpost.com article posted Wednesday.
During the summer, Sobanet and economists for the Legislature saw troubling signs that the economy might be sinking into recession again. But it didnt happen.
Were seeing activity that was simply not evident during the summer, which was full of turbulence and uncertainty, Sobanet said during his quarterly revenue forecast for the Legislatures Joint Budget Committee.
Just about every sector of Colorados economy added jobs, except for construction and financial services, according to Sobanets report.
Hickenlooper also said the state can cancel $30 million in planned cuts to financial aid for college students, and it can add another $8 million to the $10 million pool it had set aside to make grants to local governments affected by energy production.
Legislators were impressed.
Henry, I didnt know it was in your job description to be Santas helper this year, said Sen. Kent Lambert, R-Colorado Springs.
But no one is ready to start doing the Dance of the Sugar Plum Fairy.
For one thing, the economy is still growing slowly and adding fewer jobs than it needs to get everyone employed.
And worse, a risk looms from 6,000 miles away in Europe, where entire counties are at risk of default.
If Europe has a major crash, it would hurt banks and credit markets around the world, making it harder to borrow and lend and possibly driving the United States back into recession.
Its a big risk to the economy. Its the second-largest economy in the world, said Jason Schrock, Sobanets deputy.
If that happens, than Tuesdays rosy forecast would be wrong, Sobanet said.
But economists for both Hickenlooper and the Legislature think its more likely that Europe will limp along but avoid a catastrophe.
The next forecast will be March 20, just as legislators get set to vote on the states 2012-13 budget.
Reach Joe Hanel at [email protected].
