Colorful Commentary

Forecast Five: September 2017 Revenue Estimates

Posted September 20, 2017 by Chris Stiffler

1. The devil is in the details

The budget that legislators will begin writing this January (FY2018-19) is projected to be $666 million (or 6 percent) larger than this year’s budget (FY2017-19).  Not all the increased revenue is from economic growth, as $116 million comes from accounting adjustments in this year’s budget, resulting in more money in carryover from FY 16-17.  About $350 million of the increase will be needed to keep pace with growth in students and growth in mandated Medicaid expenses.

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2. SB17-267 created some flexibility for the General Fund

SB17-267, which exempted the Hospital Provider Fee revenue from the TABOR revenue cap, reduced the FY 2018-19 TABOR rebate obligation by $180 million making that money available for General Fund investments. With the passage of SB17-267, there are no TABOR rebates projected though FY2019-20.

3. Colorado’s tax code is amplifying the urban-rural divide

Many rural areas in Colorado aren’t benefiting from the same rapid growth happening in the Front Range. Rural districts have a harder time funding local governments and schools because their property value isn’t growing like it is in the metro area. The Gallagher amendment, a constitutional component of our tax code, aggravated the problem by requiring an automatic drop in the state residential assessment rate (the portion of housing property that is subject to property tax) from 7.96% to the 7.2%.  The rapid growth in property value around Denver is constraining local governments whose area hasn’t seen the same growth.

4. Colorado’s economy is booming, but wage growth hasn’t kept up

Unemployment in Colorado is 2.4 percent—2 percent lower than the national average and a clear sign of our state’s strong labor market. Colorado workers are in high demand, but salaries and wages aren’t growing as expected. Employers have not yet started to increase wages, despite huge gains in profit. Corporate profits in the U.S. are at historic highs while employee compensation as a portion of the economy is at a historic low. Jobs are more readily available than ever in the Front Range, but a high cost of living and stagnant wages mean making ends meet is still a challenge for many Coloradans.

 

5. The aging population continues to have a larger and larger impact on the state budget

200w_dAs more Baby Boomers continue to age and leave the workforce, Colorado’s budgetary and employment landscapes change. The Medicaid caseload increases, which means more spending just to maintain current levels of service. Costs associated with an aging population mean more state revenue is spoken for, and that $666 million shrinks. The cost of Colorado’s homestead property tax exemption alone, a property tax break to seniors, is growing at 8.5% from FY 17-18 to FY 18-19, creating a General Fund obligation of $145 million for next year. Aging demographics may also explain some of the sluggish wage growth in Colorado. Older, higher-paid employees are leaving the workforce and being replaced by an influx of younger, lower-wage workers. This trend can contribute to lower average wages and constrain growth.

New Blog Series: The Real Path to State Prosperity

Posted September 11, 2017 by Esther Turcios

prosperity

Business rankings have long been used as a method to examine which states are implementing policies that court and help thriving businesses and ultimately the state’s overall economic prosperity. Chambers of Commerce, elected offiicials, and economic development agencies often use such rankings to tout their states. But do these rankings truly reflect what helps workers, business, and state economies flourish? We’re not so sure.

Two large proponents of these rankings are the Tax Foundation and the American Legislative Exchange Council (ALEC). For example, ALEC’s Rich States, Poor States is an economic outlook ranking that ranks states based on 15 state policy variables. The overall argument in their reports is that states that tax and spend less see higher growth rates than do states that tax and spend more. However, relying solely on a state’s tax system is a poor indicator of whether or not businesses will locate in a specific state and will therefore help a state’s economy prosper. In fact, evidence shows productivity of workers and local economies, investments in human and physical capital, and many other factors play a much bigger role in leading states to a prosperous economy.

A well known example of a tax cut experiment gone wrong came out of our neighboring state, Kansas. In 2012, Governor Sam Brownback signed legislation which sharply cut income taxes across the board that leaned towards the wealthy, and that ultimately cut the state budget by 13 percent. The Brownback administration, much like ALEC members, believed that drastic cuts to state income taxes would generate thousands of jobs and encourage the growth of small businesses. However, not only did Kansas not see a growth in its economy, but its bond rating went down and they cut funding for vital services and programs including education.  Five years later, the experiment proved to be such a failure that the Republican-lead Kansas legislature voted to raise taxes overriding a Governor veto. Kansas has since served as a prime example of the negative effects of supply-side tax cuts as a method for measuring economic prosperity for the rest of the nation.

As Colorado enters its third longest economic expansion since 1900 and our unemployment rate – 2.3% – is at an all-time low (the lowest in the country to be exact), it is a good time to talk about what has really led our state to this time of economic prosperity. In particular, what strategies have worked, what policies have been passed, and/or what programs have been implemented that have allowed Colorado’s economy to continue to grow since 2009.

That is why we are creating a new blog series titled the “Real Path to State Prosperity.”  This six part series, beginning in October, will focus on six distinct areas that create long term shared prosperity, not just in Colorado but in all states. Within each blog we will highlight our work, as well as the work of our partner organizations whose commitment to economic prosperity has created a thriving Colorado.

Using framework from Peter Fisher’s, Grading the States, Business Climate Ranking and the Real Path to Prosperity, which is dedicated to explaining how states can truly promote long term growth and broadly shared prosperity, we will focus on the following topics:

  1. The Importance of Productivity, Wages, and Shared Prosperity
  2. How Education & Job Training Boost Productivity
  3. Investments in Infrastructure Bring High Returns
  4. Healthy Workers Are More Productive
  5. Innovation and Entrepreneurial Activity are Key to Economic Growth
  6. Making Sure Productivity Gains Lead to Higher Wages

It is our hope that the “Real Path to State Prosperity” blog series will provide us an opportunity to rexamine and redefine what investments in our communities actually lead to thriving businesses and broadly shared economic prosperity for all Coloradans, as well highlight the progress we’ve made in Colorado.

Stay tuned for our first report coming in October.  Follow us on Facebook or subscribe to our email list to receive updates about the blog as soon as it becomes available.

A Look at Low-Wage Employment in Colorado

Posted September 4, 2017 by Caitlin Schneider

As Colorado celebrates Labor Day and the important progress made over time for working families here and throughout the country, it’s worth taking a fresh look at a central factor in employment growth and the economic well-being of workers: wages. More specifically, there’s a persistent need to examine the share of low-wage jobs in our economy, who holds those jobs, how Colorado compares to other states, and how low-wage employment affects workers’ ability to afford basic needs like housing.

As economic policy discussions inevitably turn to job and wage growth, this type of analysis can shed light on what trends are actually emerging with employment, what communities are most affected by low wages, and what that might mean over time for economic growth and equality. Rather than rely on assumptions, myths, and stereotypes to inform policy, we look to the data and facts.

In Colorado, the data and facts point to a few key insights. The first is that low-wage earners have regained some of what was lost since the Great Recession. However, these gains are a fraction of what the wealthiest 1% gained since then. The second is that women, Hispanics, and African-Americans are likelier to hold low-wage jobs, which reinforces the need to address systemic barriers such as racial discrimination, gender bias, and persistent pay gaps when considering economic and wage policies. The third is that while the portion of low-wage jobs is smaller in Colorado than in other states, the share of low-wage jobs has grown over the last 15 years. And the fourth is that stagnation in low-wage job is putting Colorado workers at a severe disadvantage when it comes to affordability of basic needs like housing.

While workers have made considerable progress over time across many indicators, the facts and data around low-wage jobs are essential to understand and critical in shaping policy decisions going forward. Because, while it’s important to celebrate past progress, there is no guarantee of future success without a fuller comprehension of how we got here.

Key Findings

  • The bottom 20 percent of wage earners have seen their wages rebound in the last two years, regaining the loss from the Great Recession, though these gains are far outpaced by income growth for the richest 1%.
  • Women, Hispanics, and African-Americans are likelier to hold low-wage jobs than other demographic groups.
  • The portion of Colorado’s total jobs that are classified as “low wage” is smaller than most states, particularly when comparing cost of living and wages across states.
  • For some of the largest low wage jobs, the cost of housing consumes more than half of the paycheck of those workers particularly in the Denver Metro Area and resort communities.

Read CFI’s full report here

President’s Paid Leave Proposal Doesn’t Do Enough For Working Families

Posted July 27, 2017 by Esther Turcios

By Esther Turcios, CFI Policy Analyst

3It goes without saying that a federal paid family leave program is long overdue. Too many low-income families find themselves between a rock and a hard place, having to decide between losing their jobs or taking unpaid time off to care for themselves, a new child or an ill family member. So, when President Trump rolled out his 2018 budget, I was quite surprised to see a proposal for a paid parental leave program, given his huge cuts to many other programs that support working families. Clearly, I needed to break down his budget to see exactly what he was proposing.

Currently, under the federal Family and Medical Leave Act (FMLA) workers are provided with job-protected unpaid leave for qualified medical and family reasons. But, this is available to less than fifty percent of workers, most of whom cannot afford to take it, according to the National Partnership for Women & Families. In Colorado, sixty percent of employees don’t have access to FMLA. The unfortunate reality is that parents, most notably women, end up leaving their jobs to care for their families.

At the moment, five states (California, New Jersey, Rhode Island, New York, and Washington) and D.C have enacted statewide paid leave insurance programs. These states provide great models of paid family leave. A 2011 report revealed that after six years of implementing a state-wide program, both employers and employees in California reported positive effects of paid leave. During the 2017 legislative session, CFI worked with coalition partner, 9to5, to sponsor HB 17-1307, which would have created a statewide family and medical leave insurance program, providing partial wage replacement for employees who need to care for a new child, themselves or an ill family member. The bill passed out of a chamber for the first time in its history, but unfortunately it died in the Senate State Affairs committee.

Last month first daughter, Ivanka Trump, wrote an op-ed for the Wall Street Journal in which she showed her support for paid leave, stating that, “Providing a national guaranteed paid-leave program — with a reasonable time limit and benefit cap — isn’t an entitlement, it’s an investment in America’s working families.” She further supported her stance by highlighting her father’s budget proposal in which he included a national paid leave program.

So, who would be covered under this proposed program? How much would it cost? How much would families receive? Well according to Analytical Perspectives, an analysis of the president’s proposed budget, the paid parental leave program is a benefit within the Unemployment Insurance (UI) program that would provide up to 6 weeks of paid leave to mothers, fathers, and adoptive parents. The benefit is set to cost about $25 billion over the next 10 years according to a recent Vox article, which would be paid for by the states. Under the plan, states have broad power over the design and financing of the program, but they would be required to maintain a certain amount in their unemployment trust funds. This would mean that states below the minimum standard, would have to increase their UI premiums to build up their funds.

The president also included a bundle of reforms that, apparently, will help states fund this program. These reforms include eliminating improper unemployment payments; mandatory funding for reemployment services to get people back to work more quickly; and closing a loophole that currently allows individuals to receive both UI and Disability Insurance (DI) benefits for the same period of joblessness, forcing them to choose between the two programs.

However, still unanswered is how much states would have to raise unemployment insurance premiums, clearly placing the burden of cost on state governments. There is also no way of knowing how much families will receive and whether that amount will be enough for parents to take time off. It is particularly important to point out how the program neglects to include paid time off so employees can care for themselves or a family member when they are ill.

I agree with Ivanka Trump’s statement that a paid family leave program is an investment in America’s working families. However, it is ironic that the rest of the President’s budget also calls for $1.9 trillion in health care cuts, $193 billion in SNAP cuts, and $400 billion in cuts to discretionary programs for low-and moderate-income people, according to the Center on Budget and Policy Priorities. In total, this would amount to $2.5 trillion in cuts to programs that working families rely on.

Paid time off has shown to produce countless benefits. From improving health outcomes for children, ill adults and seniors, to strengthening a family’s economic stability and, ultimately, creating a stronger national economy. Support from any president for paid federal leave is welcomed, but this proposed program raises more unanswered questions than solutions. This coupled with the president’s cuts to SNAP, programs that reduce funding for job training and education, the Earned Income Tax Credit and the Child Tax Credit, are clear indications that President Trump’s proposed paid leave program will not benefit families. Instead, taken together with his other proposed budget cuts, the plan will have dire consequences for low and moderate-income families.

The True Cost of Medicaid Cuts: Hope’s Story

Posted July 19, 2017 by Dominica Gonzalez

“I’m not helpless, but I need help.”

Hope Krause was born with cerebral palsy. She depends on Medicaid and other state programs to help her pay for her medical necessities, like her caregiver and wheelchair. If her Medicaid allotment were to be cut, she would not be able to afford to live independently. She is worried that she would have to go to cheap nursing home.

Her condition makes her unable to move her legs on her own and impairs her body movement. Her caretaker helps her adjust her body when she requests it so that she can manage her pain. Without this proper attention, she will need to start taking strong painkillers regularly and move out of her own home into a nursing home. In a nursing home, Hope would have to wait for help from attendants who are juggling several patients. No human being wants to wait around in a dirty Depend.

Her caregiver and other state-funded services allow Hope to be active in her community. She is the Colorado Cross-Disability Coalition Coordinator and is an advocate for people with disabilities in Ft Morgan, Brush, and Sterling. As an advocate for people with disabilities, she empowers people and helps them navigate services so that they can live more fulfilling lives. But with Medicaid cuts on the table, Hope is also worried about her ability to live the life she wants to live.

There have been several ‘repeal and replace’ health care bills in 2017, and they all impose a per capita cap on Medicaid spending. Research shows that a per capita cap will not be able to keep up with increasing healthcare costs, reducing the federal dollars that go to states to provide care for people like Hope. States depend on these federal dollars to fund Medicaid, Medicare, and other state medical services; with a per capita cap, states will be forced to choose between cutting schools and roads, or cutting services, like in home care and lifesaving prescription drug coverage for the elderly and disabled.

Call you Senators and Representatives and tell them that you want people who rely on Medicaid to live healthy and humane lives!

Video produced by Dominica Gonzalez

Before you graduate, understand graduation

Posted June 28, 2017 by Chris Stiffler

By Chris Stiffler  

CFI Economist

When I lecture on taxes to college students I’m always surprised by how little students understand taxes, particularly how graduated, or progressive, income tax structures work. To see what I mean, consider the following question:  Pretend that somewhere, there is a graduated income tax structure as follows:

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So, under this system, if you made $25, how much would you pay in income taxes?

Most students say, “Well, $25 multiplied by 5 percent is $1.25.” And most students are wrong.

This happens because they haven’t learned the distinction between “marginal tax rates” and “effective tax rates.” They generally assume that all income is taxed at the top rate. This makes sense because a lot of people always tell of the story of the individual who earned more this year and got “bumped into a higher tax bracket.” But this doesn’t mean that all income is now taxed at that higher rate.

The correct answer is $0.95. Here’s the math  black board tax

They paid 3 percent on the first $10 then 4 percent on the next $10 then 5 percent on the last $5. Yes, that person paid 5 percent on the last dollar earned (the marginal rate), but their effective tax rate was 3.8 percent.

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The federal income tax is a graduated structure, and most states also utilize a graduated tax code. But Colorado is one of the few states with a flat income tax rate — a flat 4.63 percent. This means that every taxpayer in Colorado pays the same rate, 4.63 percent, on every dollar they earn.  Colorado used to have a graduated income tax structure before 1986.

To teach students about graduated rates, I have them calculate how much extra someone in Colorado would pay if Colorado had the same tax brackets as Montana. Like the majority of states, Montana has a graduated income tax structure. The first $2,900 dollars earned is taxed at 1 percent. Income above $2,900 and below $5,200 is taxed at 2 percent. Income above $5,200 and below $7,900 is taxed at 3 percent. Income above $7,900 and below $10,600 is taxed at 4 percent. Income between $10,600 and $13,600 is taxed at 5 percent, and income between $13,600 and $17,600 at 6 percent. Any income above $17,600 is taxed at 6.9 percent.

Colorado would generate $2.5 billion more in income taxes under Montana’s income tax rates. That would increase income tax collections by a third.  The average Colorado family would end up paying $350 more in income taxes annually under Montana’s income tax structure. Such a structure would generate a lot more income from upper income earners and give a tax break to lower income Coloradans, who already pay a significantly greater portion of their earnings in taxes when you account for sales, gasoline and other consumption-based taxes.

For example, a Coloradan whose income puts them in the top 1 percent of earners in the state would end up paying $30,000 more annually while a Colorado household making $30,000 would see its income taxes drop by $60 a year.

If Colorado adopted Montana’s graduated income tax structure, 25 percent of taxpayers would see their income taxes fall while income taxes on upper income Coloradans would increase.

After this exercise, students are normally curious to know what Colorado would buy if the state budget had an additional $2.5 billion. Those students also have suggestions on what the revenue should be used for (higher education and roads are usually on top of the list). If you have the same curiosity, you can build your own state budget here:

https://www.greateducation.org/advocates-corner/mission-possible/

Tax Breaks for Working Families Face Dire Cuts in President’s Proposed Budget

Posted June 27, 2017 by Carol Hedges

By Esther Turcios

 

As Americans focus attention on the proposed cuts and changes to our health care system, less attention has been given to other changes to our tax system that will hit working families hard. incomeineq

As two of the best mechanisms to lift individuals and families out of poverty, the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC) are facing large cuts and changes under the president’s proposed budget.

The federal EITC and CTC are refundable tax credits that support low- to moderate-income individuals and families. In 2014, 377,000 Colorado households benefited from the federal EITC, and in 2015, the state EITC went into effect for the first time since 2001.

Throughout the years these programs have supplemented the wages of many low-wage workers across the nation. According to the Center on Budget and Policy Priorities, in 2015, these programs helped lift a total of 9.3 million people out of poverty, 4.9 million of who were children. The extra support has allowed many individuals and families to pay for things such as home repairs or vehicle maintenance, while it also helps to pay for educational opportunities, ultimately increasing people’s employability and earning power.

Unfortunately, the president’s proposed budget includes a $40 billion reduction to the Earned Income and Child Tax Credits over the next decade, as reported by the Center on Budget and Policy Priorities. This is in addition to the president’s proposed cuts to SNAP and TANF and in addition to the House-passed American Health Care Act to repeal the Affordable Care Act, which also supports working families across the country.

Under the proposed changes to the child care and earned income credits, in order for taxpayers to claim these tax credits, all adults in the household would be required to provide a Social Security number (SSN) that is valid for work. Under current law, people who don’t have SSNs that are valid for work can claim the CTC and its refundable portion as long as they have an Individual Taxpayer Identification Number, and families can claim the EITC if one adult has a Social Security number, but not every adult in the household must have one.

So, what exactly does this mean? According to the president’s “2018 Major Savings and Reforms” document, in order to claim the EITC, the CTC, taxpayers, their spouses, and all qualifying children (child, stepchild, foster child, sibling or step-sibling or grandchild) must have Social Security numbers that are valid for work. This will effectively exclude millions of undocumented individuals and families who file taxes using their Individual Taxpayer Identification Number. These are folks who work, pay sales taxes and property taxes, and contribute to our economy but who don’t get to reap the same benefits other taxpayers do. This also leaves approximately 5 million children of undocumented parents, the vast majority of these children who are U.S. citizens, without CTC benefits as found by the Center for Law and Social Policy.

Research shows that unlike other programs intended to assist low- and moderate-income communities, the EITC and CTC are better in the long run at lifting people out of poverty and reducing poverty rates than programs such as SNAP and TANF. Clearly, the Earned Income Tax Credit and Child Tax Credit are programs that are crucial for both low- and moderate-income individuals, families and our economy.

This change, and many other changes included in the president’s budget are harmful to Colorado communities, especially those with undocumented populations.

 

Young undocumented immigrants’ tax contributions would drop by nearly half if DACA protections were rescinded

Posted June 23, 2017 by Carol Hedges

A report from the Institute on Taxation and Economic Policy examined the state and local tax contributions of young immigrants eligible for DACA (deferred action for childhood arrivals) and found that, collectively, they annually contribute $2 billion in state and local taxes, but this number would drop by nearly half without DACA protection. The Trump Administration has sent mixed signals on whether it intends to honor the DACA executive order in the long term.

In Colorado, DACA-eligible individuals now pay nearly $34 million in state and local taxes, a number that would be nearly cut in half if DACA protections are lost.

Nationally, the 1.3 million DACA-eligible population pays an average effective tax rate of 8.9 percent, which is on par with the state and local tax rate paid by the middle 20 percent of Americans. The report (State and Local Tax Contributions of Young Undocumented Immigrants) analyzed taxes paid by working immigrants eligible for and receiving DACA (852,000 people), as well as taxes paid by those eligible for but not receiving DACA (453,000 people).

“Within the last year, immigration policy has become a far more divisive political issue with public discourse often overlooking the tremendous economic, fiscal and societal contributions of immigrants, and in particular young immigrants,” said Meg Wiehe, deputy director of ITEP. “We produced this report and our larger report on undocumented immigrants’ tax contributions to help ensure the debate is more fact-driven.

“The fact is that the overwhelming majority of young, undocumented immigrants are working or pursuing education,” Wiehe said. “They also are contributing to their communities and paying state and local taxes.”

Since 2013, ITEP has produced regular analyses examining the state and local tax contributions of the nation’s estimated 11 million undocumented immigrants.

DACA recipients’ state and local tax contributions increase substantially in part because they can legally work and are required to file income taxes using the Social Security number granted by their DACA enrollment.

The report notes that employment rates go up for young immigrants receiving DACA protection (from 51 percent to 87 percent), and they experience increased wages. The report estimates that young immigrants’ state and local tax contributions would drop from $2 billion to $1.2 billion without DACA protection. Further, the report finds their collective tax contributions would increase by $504 million if they were granted full citizenship.

The report concludes: “If the Trump administration fails to protect this population from deportation, the nation risks forcing them back into the shadows and losing the economic and societal contributions these engaged young people are making in their communities.”

Colorado State and Local Tax Contributions of DACA-eligible individuals

  • Current state and local taxes: $33,977,000 (7.8% effective tax rate)
  • Taxes if all eligible receiving: $37,631,000
    • Change if all eligible are receiving: +$3,654,000
    • New effective tax rate: 7.9%
  • Taxes if all eligible granted citizenship: $38,845,000
    • Change if all granted citizenship: +$4,868,000
    • New effective tax rate: 7.9%
  • Taxes if DACA protections lost: $17,479,000
    • Change if DACA protections are lost: -$16,498,000
    • New effective tax rate: 6.7%
  • Estimated Population in Colorado Immediately Eligible for DACA: 23,000
  • Estimated Population in Colorado Enrolled in DACA: 18,830
  • Estimated Population in Colorado Eligible for DACA but not Enrolled: 4,170
  • Share of Est. Undocumented Immigrant Population: 14%

Forecast Five: June 2017 Revenue Estimates

Posted June 20, 2017 by Chris Stiffler

 

Chris Stiffler- CFI Economist

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1. The Complexity of SB17-267 on the State Budget

The comprehensive bill that made the Hospital Provider Fee an “enterprise” under TABOR, provided money for transportation projects, changed the automatic transfers to roads and capital construction and adjusted the marijuana taxes (among other things) created more General Fund flexibility this year and next.  Without SB17-267 Colorado would be giving $214 million in rebates in FY2018-19. Because of SB17-267, Colorado is $430 million below the TABOR cap in FY2017-18 and $420 million below the cap in FY2018-19.  In other words, because of SB17-267, there are no TABOR rebates in the forecast period.

 

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2. Greatest Job Market Ever, Ever!

Colorado is currently in the 3rd longest economic expansion since 1900. The Colorado economy has been growing since 2009.  The unemployment rate in Colorado is 2.3%, well below the national rate of 4.3%.  It is also the lowest since the unemployment series began in 1976 and the lowest in the county.  The tight labor market is finally translating to wage growth. Colorado has also been able to weather the downturn in the oil and gas industry.

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3. Struggling to Save

The state’s General Fund Reserve (rainy day fund) is below the 6.5 percent rate required in statute.  The FY2016-17 budget will finish with a 4.6 percent reserve. The FY2017-18 budget is expected to end with a 4.8 percent reserve, which is $172 million below the 6.5 percent target.  Normally, Colorado should be saving for the next economic downturn when the state is experiencing rapid economic growth, not reducing our statutory reserve level.

 

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4. Still Can’t Recover from Cuts Made During Great Recession

Even with the best economy in the country and the budget flexibility provided by SB17-267, the state isn’t able to make up for the cuts it made during the Great Recession.  The state is still $830 million below the level of school funding required by Amendment 23.  The General Assembly will have $510 million more to spend in next year’s budget (FY2018-19) than what was budgeted for in FY2017-18.  This sounds like a lot until we account for the increase in caseload of students and Medicaid enrollees every year.  Last year the state had to pay an additional $200 million to schools just to keep up with per pupil growth and inflation.  In other words, the “Negative Factor” (henceforth “Budget Adjustment”) isn’t going away any time soon under our current tax code.

 

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5. Waiting for the World (of Federal Tax Policy) to Change

There was a slight reduction in General Fund Revenue expectations compared to the March forecast. The downward revision was made because of some unexpected surprises on income tax returns in March and April.  It seems that taxpayers are delaying the sale of certain assets and delaying reporting certain income in hopes of seeing lower tax rates at the federal level in the future.

Five Factors to Consider When Looking at Colorado’s Record-low Unemployment Rate

Posted June 16, 2017 by Carol Hedges

By Dominica Gonzalez

CFI Intern

tim-gouw-79563In April, Colorado’s unemployment rate fell to 2.3 percent which is the lowest it has ever been in the last 40 years, the lowest in the nation and well below the national average of 4.3 percent. However, there is still work to be done so that all Colorado communities can thrive. Here are five things to consider when looking at that record low unemployment rate.

1. The job market is unequal across race, gender and different regions of the state.

Statewide average unemployment rates aren’t the whole story. Huerfano County has an unemployment rate of 4.5 percent as opposed to Denver, where the unemployment in April was 2.1 percent. In Colorado, the African-American unemployment rate is 4.8 percent and the Latino/a unemployment rate is 4.7 percent. The unemployment rate for Latina women is 6.2 percent.

2. Underemployment vs. unemployment

Our economy is at its best when we utilize the full skillset of all citizens. However, 35 percent of minimum wage workers in Colorado have attended college. Also, the unemployment rate does not include workers who work part-time for economic reasons, such as those who cannot work full time in order to take care of a family member. In addition, this rate does not include those who have struggled to find a job, so they give up seeking work. Adding in these two factors, the underemployment rate is 6.9 percent

3. Wages are not keeping pace with cost of living.

Not all jobs are created equal. The unemployment rate looks only at Coloradans with a job; it makes no distinction between a job that pays $10 an hour or one that pays $30 per hour. The record low unemployment rate belies the struggle to afford the cost of living for many Coloradans. This is particularly apparent in the Denver area. The high cost of living in Denver makes it unaffordable for home healthcare workers, janitors and much of the service industry from affording Denver. The average rent for a two-bedroom apartment in the Denver metro area was $940 in 2013 and increased to $1,227 at the end of 2016. That is a 31 percent increase in 3 years. But the average wages for healthcare workers in Denver only increased 3 percent over that same period. More than 25 percent of the Colorado workforce makes less than $12 per hour. That means those workers make between $1,488 to $1,920 a month before tax, which makes it difficult for them to afford the average monthly rent.

4. Minimum wage increase 2017

Due to a vote on November’s ballot, the minimum wage jumped from $8.31 to $9.30 in 2017 and will increase to $12 by 2020. Despite cries that the bump in the state minimum wage will cause businesses to fire workers, this doesn’t seem to be slowing the Colorado job market down. According to a recent Denver Post article, Colorado has a highly competitive employee market, and recruiters are advising companies to hire quickly. With rapidly rising rents, a minimum wage increase was a big help for low-income Colorado families, but money is still tight.

5. Full employment is no longer the only goal

Since the Great Recession in 2009, the focus has been on getting back to full employment. We are there! Now we should turn our effort to making sure all Coloradans have a livable wage and aren’t one illness, birth or parent sickness away from losing their jobs.

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