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Colorado legislators say they won’t have to continue cutting services or raising fees to balance the state budget for the next year, and bills proposing further revenue increases from businesses could be tabled, after receiving a favorable economic forecast Friday.

According to the quarterly economic forecast by the non-partisan Legislative Council, sales- and income-tax revenues have picked up to the point where Colorado could finish with $148 million more in revenue than expenditures this fiscal year and $262 million more next year — as long as it continues with previously planned budget cuts.

Friday’s report comes after more than a year of recession-fueled dwindling forecasts led the state to cut $2 billion from the current year’s budget and another $1.3 billion from the budget for the year that begins on July 1.

In a statement, Gov. Bill Ritter called the latest revenue forecast "hopeful and promising. It’s the best forecast we’ve seen in almost two years, and it indicates that our strategies are working and the economy is slowly beginning to stabilize."

But, he added, "one improved forecast does not stability make. The economy remains volatile, and we need to continue to be responsible stewards of taxpayer dollars and hold the line on the fair, balanced and responsible decisions we’ve been making since 2008 when the recession took hold in Colorado."

The forecast for excess revenues is predicated on the idea that the economy will continue to recover rather than veer into a double-dip recession. And, rather than restoring programs or tax credits that have been cut to balance the budget, the state likely will have to save the money for a predicted revenue shortfall in the 2011-12 fiscal year, when federal stimulus money that has helped to prop up the state will run out.

But the immediate impact of Friday’s forecast, according to members of the Joint Budget Committee, is that the state will stop looking to cut more programs or find more new sources of revenue in the short term. That means that while the state proposed to cut about $148 million in tax exemptions this year — including about $118 million in eliminations or suspensions that already have been signed into law — it is not likely to go after any more tax breaks.

Rep. Jack Pommer, D-Boulder, said, for example, that he probably will kill his House Bill 1263, which proposed capping at $250,000 the amount of each worker’s salary that can be written off as operating expenses for corporate income tax purposes. Business groups had said that the measure, which was predicted to raise $19 million for the state, could damage Colorado’s ability to recruit corporate headquarters and jobs in high-paying sectors like aerospace.

“Part of the thinking for me was: If we need to do more to find money, that was a place where we could go,” said Pommer, chairman of the Joint Budget Committee, of HB 1263. “Now it doesn’t look like we need it and there frankly doesn’t seem to be much appetite for that kind of thing ... I don’t think it’s going to go forward.”

While debt levels remain up and unemployment continues to be “painfully high,” there are several reasons why state revenues should come in better than they were predicted during the most recent forecast in December, said Fiona Sigalla of the Legislative Council. Signs of economic recovery abound, from exports being up to businesses now purchasing high-tech goods that they’d previously put off, and income- and sales-tax revenues have come in at higher than expected rates in the past three months, she said.

Assuming that the Legislature passes budget-cutting measures that have been proposed for this year and a budget that closed a previously expected $1.3 billion shortfall for next year, this will give some cushion to its revenue in the next year. However, the state is likely to face a $100.8 million general-fund revenue gap in the 2011-12 year because of the loss of American Recovery and Reinvestment Act funds, and both Democrats and Republicans on the JBC said the increased revenue will have to be saved for then.

“This is still something for which we need to start rebuilding our reserves,” said Rep. Kent Lambert, R-Colorado Springs, noting that the emergency reserves in the state budget have fallen to 2 percent of the general fund rather than the usual 4 percent.

Added Rep. Mark Ferrandino, D-Denver: “If we have extra revenue, I think we need to look at saving that revenue for 2011-12 ... We need to be fiscally conservative.”