Cloudy with a chance of a surplus
Colorado’s Economic Forecast
On Sept. 21, 2015 the Colorado Legislative Council and the Governor’s Office of State Planning and Budgeting presented their forecast for Colorado’s economy to the Joint Budget Committee.
Here is what you might have missed!
In 2014, the state GDP increased 6.4 percent, making Colorado one of the top five fastest growing states in the nation. Additionally, at 4.3 percent, Colorado’s unemployment rate is at its lowest since the great recession, outpacing the national rate of 5.1 percent. The state has mostly added jobs in the hospitality and food services industries. With tourism booming, consumer spending remains high to help support jobs in this sector.
There’s still work to be done to keep the unemployment rate low and increase economic diversity in our job market. Coloradans that work hard and play by the rules deserve every chance to get ahead. Unfortunately, the biggest job losses were seen in industries tied to oil and gas development — namely administrative and support service jobs due to the falling price of gasoline.
Moreover, wage growth remains stagnant and workers are still struggling to find good paying jobs.
We can do more to recognize the hard work of Coloradans through the most recent economic crisis by fighting for a fair wage for a fair day’s work across all industries.
Coloradans that work hard and play by the rules deserve every chance to get ahead.
Anyone who has tried to rent or buy in the Denver metro area knows the housing market statistics all too well. Low inventory and increased demand have created a tricky market. The “state median sales price of a single-family home” increased 10.7% since July 2014. Not to mention, the “state vacancy rate declined from 4.9% in the first quarter of the year to 4.4% in the second quarter,” according to Legislative Council.
Affordable housing is important to a thriving middle class. Innovative ideas, like reauthorizing the state low-income housing tax credit to help build affordable housing is one step towards making sure every Coloradan has access to the housing they need.
The Taxpayer Bill of Rights (TABOR) dilemma
The economic forecast also included a unique-to-Colorado conundrum. Legislative Council estimated the state would be about $220.4 million short of the current budget (FY2015–16), meaning state agencies can expect funding cuts in the upcoming year. But, interestingly, the current estimate of the TABOR refund — money the state has but must give back to taxpayers — is estimated to be about $154 million. It appears we have a deficit and a surplus at the same time!
The TABOR limit is adjusted for inflation and population growth, but any money collected above the limit must be refunded. Alas, state institutions will not be able to use any of the money. Legislative Council predicts there may be a surplus in FY 2015–16 and FY 2016–17 — again, triggering refunds.
“It is concerning the state may not be able to met its budget obligations,” said Sen. Pat Steadman, a critic of TABOR, “especially given Colorado’s promising economic growth over the past year.”
And finally, Legislative Council noted that while Colorado is rapidly growing, uncontrollable factors could have significant impacts on the local and state economy in the long term. For example, the lowering of gas prices and fluctuations in the global economy can also affect local Colorado growth.
Fortunately, Colorado remains a prosperous state with endless opportunities for expansion and development, outpacing the nation in almost every statistic! Legislative Council predicts continued success as more jobs are created, people continue to move here, and consumer spending remains high. However, there are always improvements that can be made to further give the middle class a fair shot, and give Coloradans access to the tools they need to achieve their own American Dream.
Source: Focus Colorado: Economic and Revenue Forecast, Colorado Legislative Council Staff Economic Section
