A “faster-than-expected” rebound of income tax is expected to bring an additional $161.3 million into the state budget this fiscal year, according to Henry Sobanet, executive director of the Governor’s Office of State Planning and Budgeting (OSB).

That news was part of the March 2011 Colorado Outlook: Economic and Fiscal Review presented last Friday to the Joint Budget Committee (JBC).

The OSB believes that because much of the increase is from one-time sources from capital gains and higher profits, a gap in the budget’s structure remains and will require “tough work” to close.

The $161.3 million, coupled with spending cuts, means that the 2010-11 state budget is balanced. In addition, the improving revenues projected, along with additional budget cuts, mean that the $1 billion shortfall anticipated for the coming fiscal year could be reduced 50 percent.

No decisions have been made about how the $161.3 million will be spent; however, Sobanet said that Gov. John Hickenlooper’s first choice for scaling back budget reductions would be in K-12 education. The governor’s budget proposal calls for a 6.1 percent, or $332 million, net reduction for K-12.

With the March forecast in, the JBC has begun making final decisions on key program budgets as well as other bills that are required for budget balancing.