DALLAS — Colorado Gov. John Hickenlooper plans to restore school funding after he learned that fourth-quarter revenues are running $231 million ahead of projections.
That amount represents a 3.2% increase over the September forecast, according to the Office of State Budgeting and Planning.
"The weakening in the economy that influenced the projections in September has reversed, and there is more momentum in the economy than was previously evident," the December report from the budget office said Tuesday. "Based on the higher forecast, the state will end the fiscal year with a reserve equal to 7% of appropriations, $212.2 million above the required 4% reserve level."
The extra revenue will prevent $89 million in public school funding cuts and provide $110 million more for statewide education in the next fiscal year, according to Hickenlooper.
"The cuts to K-12 education in next year's budget were the last and hardest to make. That's why we want those cuts to be the first restored," the governor said in a statement.
The restoration of funds comes on the heels of a Denver state district court ruling that inadequate funding for K-12 education violates the state constitution. Cuts in this year's budget made the situation worse, according to the ruling, which is expected to be appealed to the Colorado Supreme Court.
Hickenlooper, a Democrat, is expected to face challenges from Republicans who are seeking to reinstate tax exemptions for senior citizens that were suspended in a declining economy.
House Speaker Frank McNulty, R-Highlands Ranch, said in July that his caucus wouldn't accept another suspension of the senior homestead exemption, which provides a tax break on the first $200,000 of a senior citizen's appraised home value.
Reinstating the exemption is expected to cost about $100 million.
While the Office of State Budget and Planning reported a steadily improving economy, forecasters remained conservative in their outlook for 2012.
Colorado carries an issuer credit rating of AA from Standard & Poor's, and a Aa1 from Moody's Investors Service.