DENVER – State economists say Colorado’s economy continues to outpace the nation’s.

But constitutional mandates could tie lawmakers’ hands over how they spend growing revenue, while the state continues to crawl out of a dark recession.

Education alone continues to face a $1 billion gap in funding. And the Colorado Department of Transportation recently released a report that highlighted infrastructure needs in the tens of billions of dollars.

Most economic indicators point to a blossoming economy in Colorado:

Consumer spending is up.

Government spending has contributed to the economy.

The state is experiencing rapid job growth.

Unemployment is down 1.7 percent over the national average.

The housing market is outperforming the rest of the country.

Economists predict wages in Colorado will grow at about 6.3 percent for 2014 when final numbers are in, representing the most robust growth since the start of the economic downturn in 2008.

“While there is growth at the national level, the thesis for our economic outlook for December is that the Colorado economy and the national economy are at different points in their respective business cycles,” said Greg Sobetski, an economist for Colorado Legislative Council, who briefed lawmakers at the Capitol last week. “The Colorado economy is outpacing the national economy.”

But lawmakers face a bit of uncertainty in crafting future budgets. The Taxpayer’s Bill of Rights, or TABOR, requires refunds when tax revenue exceeds the combined rate of inflation and population growth.

TABOR revenue is projected to exceed the cap in upcoming budgets, meaning a refund to taxpayers would occur for budgets in the immediate future.

Lawmakers could, however, ask voters to allow the state to retain the revenue. But if refunds are provided, then transportation would take the hit under Colorado law.

Lawmakers also are grappling with a separate refund that would trigger from marijuana taxes, a 25 percent total tax assessed on sales and excise.

Economists expect the state to bring in $58.7 million this year from marijuana taxes when the final numbers are in, less than the $67 million estimated to voters when they approved the tax in 2013.

But because revenue subject to TABOR requirements is expected to be $219 million higher than presented to voters, economists have suggested that lawmakers refund the $58.7 million from marijuana for budget planning purposes.

There is no guidance, however, for how to refund that money, which could come in the form of tax credits, sales-tax refunds or income-tax rate reductions.

Sen. Pat Steadman, D-Denver, a member of the Joint Budget Committee, pointed out that the state is in a situation where some of the money coming in is causing a refund, yet that money is constitutionally earmarked for schools.

“That money coming in is constitutionally earmarked to a program we can’t take it from, while we must pay its refund,” Steadman said of the conundrum.

Henry Sobanet, Gov. John Hickenlooper’s budget director, said, “We’re not proposing taking money away from schools, as voted on by the public. We will see how to finance this liability in the absence of a voter approval of its retention.”

Some groups say the dilemma could offer an opportunity to have a serious discussion on the constitutional conflicts.

“Today’s economic forecasts make one thing abundantly clear – despite the fact that Colorado has one of the fastest-growing economies in the country, TABOR still prevents public investments from benefiting from the recovery,” said Carol Hedges, executive director of the Colorado Fiscal Institute. “While lawmakers in other states are considering innovations that benefit middle-class families, Colorado lawmakers are being cautioned not to be optimistic about restoring cuts made during the recession.”

Given the uncertainty, economists warn against promising too much money.

“It’s not a bad budget because we’re not cutting or anything like that,” said Natalie Mullis, chief economist for Colorado Legislative Council. “But it’s not like that’s enough to fund everything that every interest group is going to want to bring to you this year.”

pmarcus@durangoherald.com