Colorado Ill-Prepared For Economic Downturn

Dec 4, 2017


Colorado is among the least prepared states in the country for the next recession.

As The Denver Post reports, a new analysis from Moody’s Analytics found that the state’s rainy day fund of $613 million is less than half the money needed for even a moderate economic downturn.

For this and other reasons, Colorado is in the sixth-worst shape of any U.S. state under the Moody’s analysis.

Hickenlooper has asked lawmakers to sock more money away next year and to steadily increase the statutory reserve requirement for the future. But the increase Hickenlooper is calling for only raises the required reserve from 6.5 to 7 percent and Moody’s says that number should be nearer to the 15 percent mark.

Moody’s says states typically need about 10 percent of their general fund spending in reserves to withstand a moderate downturn but Colorado is more susceptible to economic shocks – partly due to a reliance on volatile sources of revenue like oil and gas.