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The Colorado Economy

Nov 17, 2010 | 2010 Research, Jobs & Our Economy

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Potential for growth, challenges and solutions

A World Class Workforce. Colorado has a highly educated workforce. 35.6% of Coloradans are college graduates, the second highest percentage in the nation. And Colorado ranks third in scientists/engineers as a percent of labor force.1

Tourism. Visitors are drawn to Colorado by world class skiing, spectacular parks, rugged public lands and a host of other cultural and recreational attractions. Denver International Airport — the 5th busiest airport in the U.S. and the 10th busiest in the world — served over 50 million passengers last year, and has shown increased passenger traffic in every month of 2010. Colorado’s travel and tourism industry generated nearly $14 billion in 2009,2 and for every dollar the state invests in tourism promoting itself, it receives $6 to $13 in return.3

Manufacturing. The manufacturing sector employs over 130,000 workers in Colorado, and Colorado exports to world markets reached nearly $8 billion in 2008. High tech products make up about half of Colorado’s total exports.4

Agriculture. Colorado agriculture contributes more than $20 billion to the state economy annually, supporting more than 100,000 jobs. Colorado also hosts some of the nation’s largest processed food companies, and wine tourism in the state generates another $50 million each year in economic activity.5

Aerospace. Colorado is home to four military commands with over 28,000 personnel, and more than 300 aerospace companies. These companies directly employ more than 25,000, and another 167,000 statewide.6

High-Tech. 86 of every 1,000 private sector workers in Colorado is classified as high-tech, giving Colorado the third highest concentration of high-tech workers. In total, there are more than 166,000 high-tech workers employed in our state.7

Bioscience / Biotechnology. Bioscience is a growing industry sector in Colorado, accounting for some 17,000 direct jobs with average salaries of more than $60,000. The sector generates around $400 million in total taxes, and has attracted around $600 million in venture capital investment in the past five years.8 9

Energy. The energy sector, historically a backbone of Colorado’s economy, supports over 137,000 jobs in Colorado10 with average salaries topping $60,000 per year.11 The natural gas industry represents 7.3% of Colorado’s economy.12

“Colorado has great economic potential. Higher taxes and excessive regulation take capital away from growing business and prevent job creation.”

Tax and Fee Increases. In 2009 the Legislature approved more than $1 billion in new tax and fee increases13 14, and in 2010 they approved $300 million in sales tax hikes on everything from candy and soda to e-commerce and agricultural products.15

Sales Tax Hikes. Legislative leaders have proposed additional tax hikes as well, calling for the elimination of all but three16 of the state’s many job sustaining sales tax exemptions — a staggering tax hike of more than $1 billion that would raise taxes on everything from eyeglasses and hearing aids to gasoline and groceries.

The state’s Business Personal Property Tax (BPPT) sucks hundreds of millions of dollars out of the Colorado economy each year. The tax has made Colorado a less attractive place to do business for many years17 and hampers economic growth.18

One of the tax hikes approved by the Legislature this year raised sales taxes on energy used for industrial and manufacturing purposes. The more than $100 million tax hike will hit a number of employers hard, including one company in Pueblo that will pay $2 million in higher taxes as a result of the change.19

State regulators implemented new oil and gas drilling rules in 2009 that have been described as the most far-reaching and burdensome in the nation,20 earning Colorado a reputation as the worst state in the nation for energy development and investment,21 and prompting a huge decline in drilling activity.

Legislators made it easier for trial lawyers to sue homebuilders in 2007,22 driving up construction costs in an already battered housing sector.

State policymakers have also signaled their intention to consider raising caps on malpractice lawsuits by as much as 60 percent.23 The measure promises to further increase health care costs for employers and consumers at a time they can least afford it.

“Incentivize businesses to grow responsibly through tax cuts and thoughtful regulation to create jobs and increase government revenues.”

The Way Ahead

  • Incentivize large-scale business investment in manufacturing, aerospace and other high-wage sectors by phasing out the Business Personal Property Tax.
  • Improve the state commitment to biotechnology and biosciences by building on a 2008 package that provided some $26 million assistance for Colorado start-up companies24 and research institutions seeking to commercialize new technology.
  • Revisit and revise the new oil and gas regulations that have contributed to a steeper decline for the natural gas industry in Colorado than in nearby states.
  • Review Colorado’s regulatory environment, and support sensible expansion of Colorado’s coal production.
  • Prioritize infrastructure investment which coordinates government and free enterprise initiatives to ensure a cutting edge multi-model transportation system — an essential component to a thriving economy.
  • Grow the tourism industry by investing in tourism promotion, advertising Colorado as a site for conventions and meetings for out of state businesses and civic groups, and encouraging Colorado-based groups to stay in Colorado for their events.
  • Protect employers and consumers by enhancing Colorado’s protections against junk lawsuits.
    • Require plaintiffs in medical malpractice suits to demonstrate a bona fide medical and legal issue before a lawsuit can proceed to the cost-intensive trial phase.
    • Reinstate the Construction Defect Reforms affirmed by the voters earlier this decade.
  • Expand access to affordable health care choices by lifting restrictions on the purchase of health insurance across state lines.
  • Ensure a world-class workforce by prioritizing investment in our higher education system with an emphasis on research and trades programs.
  • Review effectiveness of state services, and look for free enterprise alternatives.
  1. Colorado Economic Development Databook, 2010-2011
  2. Colorado Economic Development Databook, 2010-2011
  3. E. Sealover, “State Spending on Tourism a Hot Potato,” The Rocky Mountain News, January 12, 2009
  4. Colorado Economic Development Databook, 2010-2011
  5. Colo. Dept. of Agriculture, “A Snapshot of Colorado’s Agriculture Industry,” Mar. 19, 2009
  6. Colorado Economic Development Databook, 2010-2011
  7. Ibid
  8. Colorado Economic Development Databook
  9. Fact Sheet, Colorado Bioscience Association http://www.cobioscience.com/factsheet.php
  10. IHS Global Insight, 2009 Economic Analysis
  11. S. Simon, “Colorado Tightens Reins on Energy Extraction,” The Wall Street Journal, Dec. 23, 2008
  12. ANGA Study with data from Bureau of Labor Statistics and U.S. Bureau of Economic Analysis, Sept. 2009
  13. Colorado Legislative Council, “CLCS Memo: Fee Bills 2009 Session,” Jul. 29, 2009
  14. Colorado Legislative Council, “CLCS Memo: 2009 Legislation that Affects General Fund Revenue,” Jul. 13, 2009
  15. Colorado Legislative Council, “CLCS Memo: Revenue Impact of House Bills 10-1189 through 10-1200,” Jan. 26, 2010
  16. C. Slevin, “Colorado Lawmakers Look at Tax Changes”, Associated Press, Apr. 8, 2009
  17. “The Colorado Business Personal Property Tax,” Colorado Association of Commerce and Industry, Jul. 1999
  18. Interim Committee on Economic Development – Business Personal Property Tax, “2005 Report to the General Assembly,” Nov. 2004
  19. “Consequences,” The Pueblo Chieftain, Feb.12, 2010
  20. J. Kohler, “Feds, Colorado hash out agreement on oil and gas,” Associated Press, Jul. 1, 2009“
  21. 2009 Global Petroleum Survey,” The Fraser Institute, Jun. 24, 2009 http://www.reuters.com/article/pressRelease/idUS87148+24-Jun-2009+BW20090624
  22. J. Wolf, “Ritter Signs Bill Protecting Homeowners Right to Sue,” Associated Press, Mar. 2007
  23. T. Hoover, “Bill on Malpractice-suit Cap Returns,” The Denver Post, Apr. 6, 2009
  24. Colorado Economic Development Databook, 2010-2011