By Alex Meyer

CFI Research Fellow

When voters passed Amendment 64 in 2012 legalizing recreational marijuana, a lucrative industry opened in the state, and Colorado gained a new stream of revenue. But how much revenue does the state actually collect from recreational marijuana sales, and what kind of impact does it really have?

The answer is, “relatively little,” compared to revenue from income and sales taxes. While marijuana taxes are certainly helpful for funding some school construction and a few other programs, marijuana tax revenue is far from the silver bullet to Colorado’s budget problems. In reality, the marijuana revenues comprise just a drop in the bucket when compared to the overall size of Colorado’s budget and cannot solve the looming fiscal problems Colorado’s legislators will face in the coming years.

And while much has been made of the fact that more tax revenue is now collected from the sale of marijuana in Colorado than the sale of alcoholic beverages, that overlooks the fact that marijuana taxes are relatively high compared to other “sin tax” goods while taxes on alcohol in Colorado are among the very lowest in the country.

Taxes on Marijuana

Recreational marijuana is subject to the state’s regular 2.9 percent sales tax as well as a 15 percent excise tax levied on the wholesaler and a special 10 percent sales tax. In addition, cities and counties can collect their regular local sales tax on recreational marijuana and have the option to apply their own special sales tax on marijuana.

Marijuana’s Budget Contribution

The revenue from marijuana taxes was $77.9 million in FY 2014-2015, with $66.1 million approved as part of Proposition AA. Eighty-five percent of the recreational marijuana taxes generated each year from the special sales tax goes into the Marijuana Tax Cash Fund. The remaining 15 percent goes to local governments.

Meanwhile, the first $40 million generated by the 15 percent excise tax on recreational marijuana each year goes to the Building Excellent Schools Today (BEST) Program, which is a dedicated fund that helps pay for capital construction for schools. In FY 2014-2015, marijuana taxes provided just under $24 million for BEST, making up about 18.5 percent of the program’s approximately $130 million total. The BEST program awarded about $68 million in capital construction grants to 25 schools, but there is still a lot of unmet capital construction need.

For instance, there were 23 other schools in 2014 that were not approved for grants. It’s important to note that the marijuana revenue for schools is used for capital construction (new buildings and repairs and renovations to existing ones); none of the dollars are used for operating costs. But to give the marijuana revenue some further context, the state’s share of funding for K-12 education in FY 2014-15 (which is for operating) was $4.1 billion.

Any marijuana tax revenue not allocated to the BEST program that is sent to the Marijuana Tax Cash Fund, and distributed to marijuana-related enforcement, education, prevention and treatment programs. Additionally, $11.8 million was raised as part of the regular state sales tax collected on recreational marijuana sales. Contextually, Colorado’s Gross General Fund Revenue in FY 2014-2015 was $9.7 billion. Thus, the $77.9 million in marijuana revenue represents less than 1 percent of the state’s general fund collections. While the revenue helps, it does not begin to approach the level of funding necessary to support the essential services the state provides.

Marijuana Taxation in Other States

Colorado is one of four states to have legalized recreational marijuana, each of which has a different system for taxation. Colorado’s marijuana tax revenue is comparable to Washington’s, but is higher than the states with more recent implementation of marijuana regulatory systems.

Alaska has an excise tax on Marijuana levied at $50 an ounce, but does not have a special sales tax on pot. The excise tax is estimated to bring in between 5.1 and $19.2 million in 2016.[1]

Washington levies a 37 percent excise tax at the point of sale, effectively operating as a sales tax. This is a change from Washington’s original three-tier tax structure that included a 25 percent tax on the producer, a 25 percent tax on the processor and a 25 percent tax on the retailer. This excise tax brought in $70 million in revenue in its first year.[2]

Ranking “Sin” Taxes FY 2014-15

The $77.9 million in revenue from marijuana sales is actually relatively closer to the revenue contributions of alcohol and tobacco. But again, this belies the fact that taxes on recreational marijuana are relatively high in Colorado, while the state imposes relatively low taxes on alcohol and tobacco. (Medical marijuana is subject only to regular state and local sales tax.)

The sale of all alcoholic beverages brought in about $42.1 million in tax revenue in 2014-15, while tobacco products generated $197 million. Recreational marijuana has a high excise tax (at 15 percent of wholesale price) and a special 10 percent sales tax (in addition to recreational pot being subject to regular state and local taxes and any special local taxes). Colorado’s taxes on alcohol have not been raised in decades, and while voters approved a tax increase on cigarettes in 2004, the state’s rates on cigarettes are still among the lowest in the country.

From a fiscal standpoint, the lesson to draw from the state’s marijuana experiment is that it is not a cure-all for the state’s budget woes, not even close to one. The revenue is helping some schools repair roofs, build new additions and replace boilers, and it’s helping to regulate marijuana itself.

But there is no substitute for a thoughtful, balanced revenue system that has the flexibility to adapt over time to changing economic circumstances.

[1] http://www.adn.com/article/20150707/state-weighs-how-much-money-will-marijuana-bring-alaska

[2] http://www.cnn.com/2015/07/10/us/washington-marijuana-70-million-tax-dollars/

2016 Fiscal Forum Agenda

2016 Fiscal Forum Speakers’ Bio

Colorado Fiscal Institute Resource List

Presentations:

Kansas: “A Real Live Experiment” that went Horribly Wrong , Wint Winter Jr. and Stephanie Clayton

2016 Fiscal Forum “Kansas: ‘A Real Live Experiment’ that Went Horribly Wrong”

Engaging Coloradans on Tax, Budget and Government, Axel Aubrun, Topos Partnership

2016 Fiscal Forum “Engaging Coloradans on Tax, Budget and Government “

Looking Forward: Equity and Sustainable Prosperity, Dr. Manuel Pastor

2016 Fiscal Forum “Looking Forward Equity and Sustainable Prosperity”

Extras

Colorado Fiscal Institute’s Budget Basics 2016

Colorado Fiscal Institute’s Tax Basics 2016

Genuine Progress Indicator, Update
 

A fantastic piece in The New York Times about how income inequality is increasingly the most talked about topic among economists:

“In the last few years, there’s been a huge change in the mainstream of the profession,” said Steven Fazzari, an economics professor at Washington University in St. Louis who first came to the conference as a job-hunting graduate student in 1982. “The issue of income inequality was a backwater in the economics field, and it was largely ignored.”

Click here to read it.

Five important takeaways from the Dec. 21 quarterly revenue forecasts:

1. Cutting during good times.

Colorado has one of the best economies among states in the country, but that economic growth doesn’t translate into increased state budget flexibility. Colorado had the fifth fastest-growing state economy (measured by GDP) from 2013 to 2014, and the state’s job market is outperforming most states, with unemployment at 3.6 percent compared to 5 percent nationally. This is the lowest unemployment in Colorado since Spring 2007. Nonetheless, Colorado’s state budget which ranks 49^th largest among states (only Texas has a smaller state budget relative to its economy than Colorado) can’t harness that economic growth, which is resulting in cuts to state services this budget year.

2. The General Fund Reserve was meant for times like these.

When the current fiscal year’s budget (FY 2015-16) was adopted in March 2015, our elected officials relied on projections of state taxes and fees. They also relied on projections for local property taxes and student enrollment. These have all changed since March. The end result is that the current budget is between $207.8 million and $156.6 million short of what was adopted in March. But because of lower enrollment growth among students in Colorado’s schools and increases in local property taxes, $159 million more in school funding was available than what was expected when the 2015-16 budget was passed. Legislators could use those additional local dollars to increase the K-12 budget and help reduce the $855 million shortfall in school funding known as the “negative factor.” This would also require tapping into the General Fund Reserve. But that’s what it’s for.

3. There’s now a “Butterfly Effect” on the budget.

The complicated interactions between fee revenue, tax collections, constitutionally mandated rebates and money transferred to transportation and capital construction projects have really become apparent again this forecast period. When preparing next year’s state budget, elected officials essentially must make a gamble on a variety of scenarios based on very marginal changes in tax collections. Very small changes in forecasted state revenue can result in large changes in the amount of money available for budgeting this year and next.

4. Gallagher and TABOR don’t play nice together.

The residential assessment rate (which is applied to home values to determine property taxes) is projected to fall in 2017, which will further erode local support for schools and increase the reliance on state funding for education. The often conflicting and always confusing interaction between the Gallagher amendment and the TABOR amendment is once again working against well-funded public services. Gallagher provisions will drive down the residential assessment rate in 2017 after years of the TABOR amendment keeping the residential assessment rate lower than required by the Gallagher Amendment. Weird, huh?

5. Small TABOR rebate in 2016, none the next year.

In Fiscal Year 2014-15, Colorado collected $156.5 million more in taxes and fees than TABOR’s revenue limit allows. When taxpayers fill out their taxes in early 2016 for the 2015 tax year, the average Colorado taxpayer will get an extra $18 from the state. The current revenue projections for Fiscal Year 2015-16 indicate that Colorado will not collect more in taxes and fees than the TABOR revenue cap allows, which means no rebates for taxpayers next year.

The Colorado Fiscal Institute presents the 2016 Fiscal Forum

“The Road to Prosperity Starts with Equity”

Friday, Jan. 15, 2016  |  8:30 a.m. – 1 p.m.

History Colorado Center

We are pleased to announce the 2016 Fiscal Forum. This year’s forum is a must-attend event to get the latest on the Colorado budget and how we can advance equity and widespread prosperity.

Get your tickets today!

We are excited for this year’s lineup of speakers, including our keynote speaker, Dr. Manuel Pastor. Pastor directs the Program for Environmental and Regional Equity at the University of Southern California. He is a national expert on race, equity and the economy.

Click here to get more details for the day’s events!

If just 1,200 more Coloradans bike to work each day, Colorado would become the No. 2 bicycle commuting state in the U.S.

With Bike to Work Day on Wednesday, the Colorado Fiscal Institute decided to run the numbers to see where Colorado ranks among other states in share of residents biking to work.

In our state, 35,000 people bike to work each day, ranking the state third in the nation on bike commuters per capita behind Oregon and Montana, according to CFI’s analysis of 2013 U.S. Census data.  Coloradans are just barely behind Montana on a per-capita biking basis. If 1,200 more Coloradans would bike to work, Colorado would overtake Montana and capture the second place spot.

To put that challenge in other terms, since Colorado has more than 2.5 million workers, if only one of every 2,000 workers decided to take up biking to work, Colorado would surpass Montana.

But we have a long way to go to be ranked No. 1. CFI calculates that 19,000 more Coloradans would need to take up biking to work in order to surpass Oregon’s per capita biking share. Oregon’s biking superiority is largely driven by cycling commuters in Portland, which has the highest share of bicycle commuters of any U.S. city.

Biking in Colorado’s largest city has been increasing in past years as well. In the city of Denver, the share of bicycle commuters has more than doubled since 2000. While Colorado itself is No. 3, Denver ranks 13^th in share of biking commuters out of the 70 largest cities in the U.S.

It’s time we overtake Montana in biking. Will you be one of the 1,200?

By Chris Stiffler

CFI Economist

On Friday, state economists released quarterly estimates about how much the state is expected to collect in fees and taxes in the upcoming years. Two forecasts were released; one by Legislative Council and one by the governor’s Office of State Planning and Budgeting (OSPB). Legislative Council made some large changes relative to its predictions in March by increasing revenue predictions for Fiscal Year 2014-15, which ends in June 30, and decreasing estimates for FY 2015-16, which begins July 1.

OSPB’s forecast didn’t change much from its March figures. Both forecasts agree that TABOR rebates will be triggered by revenue growth in the current fiscal year, but disagree about whether there will be TABOR rebates in the 2015-16 fiscal year that begins July 1.

Here’s a quick overview of the changes since the March revenue estimates and how these changes affect money returned to taxpayers, money available for roads and money available for the rest of the state budget.

EITC takes effect a year earlier: TABOR rebates will be large enough to trigger on the state Earned Income Tax Credit (EITC) in the current 2014-15 fiscal year, which means low- and moderate-income Colorado families can take advantage of the state credit on their 2015 taxes. This is one year earlier than predicted in the March Legislative Councilestimates. Once triggered on, the EITC becomes permanent. So the size of future TABOR rebates doesn’t matter; this tax credit will still be available and help augment the wages of over 350,000 low- and moderate-income working families.

More money to transportation and capital construction: Full transfers to roads and capital construction under Senate Bill 09-228 are expected in Fiscal Year 2015-16. This is a change from the March revenue estimate when transfers of only 50 percent were predicted for 2015-16. This means, if current estimates hold, $50.5 million will get transferred to the Capital Construction Fund and $201.8 to the Highway Users Tax Fund in FY 2015-16.

Increase in TABOR rebate amounts in the current fiscal year: Legislative Council, whose forecast state legislators used when creating the FY 2015-16 budget, estimates that TABOR rebates for the 2015 tax year will increase by $151.2 million to $220.9 million from what was estimated in March. This has doubled the amount the average taxpayer should receive in 2015 from TABOR rebates, with the average rebate of around $40 instead of the $20 estimated in March. Taxpayers who are eligible for an EITC will see an even bigger increase since the TABOR rebates are large enough to trigger on the state EITC. The average EITC recipients, many of whom are the same workers who have seen their inflation-adjusted wages fall by 8 percent since 2000 and still haven’t fully felt the benefits of the economic recovery, are expected to see an extra $244 on their 2015 tax return now.

Budget shortfall on the horizon: Revenue for the FY 2015-16 budget, (which begins on July 1, 2015) is currently estimated to be between $69 million and $180.7 million short of what was budgeted to be spent or held in reserves. (Legislative Council, which predicts the $180.7 million figure, estimates slower tax growth next year and thus projects a higher budget shortfall than OSPB’s $69 million figure). Several factors are causing the shortfall. First, the June revenue estimates for FY 15-16 are below what was estimated when the budget was created, and full transfers to transportation and capital construction are now expected instead of the half transfers that were predicted in March.

Growing economy doesn’t mean increased state budget flexibility: When the state is in a TABOR rebate situation, increases in revenue don’t translate into more dollars available to fund things like K-12 education, it means more money gets returned through TABOR rebates.

By Ali Mickelson

CFI Director of Legislative and Tax Policy

As an organization that fights for widespread prosperity for all Coloradans, we were initially pleased to see the 2015 legislative session begin with pledges to lift up Colorado’s struggling middle class. Unfortunately, talk never translated into action, and bills that targeted middle-class families and priorities were ultimately denied in lieu of partisan squabbles and special interest giveaways.

TABOR rebates on the horizon created a new narrative, pitting funding for state priorities against $20 rebates for Colorado taxpayers. The twisted implications of TABOR and the “fiscal thicket” were on display more than ever, whether it was through the inability of lawmakers to enact policies that would have saved money for the state without a vote of the people, or the rejection of new fees that would have increased revenue, but which also would have increased TABOR obligations on the General Fund.

As often expected with a split House and Senate, this year’s legislative session was ultimately a party-line struggle over both substance and statement. Many bills moved rapidly through one chamber only to face immediate death when crossing over to the other body, often with little fanfare. CFI was disappointed to see so many good policy ideas die in the stalemate.

The Giving Spree: CFI defensive battles  

Never to disappoint, legislators introduced nearly 30 new tax credits and incentives, some new and some revivals of bad ideas from previous years. CFI worked tirelessly to fight against these bad tax policies and poorly targeted special interest giveaways.

House Bill 15-1158 would have created a refundable tax credit for data centers — you may know them as “server farms” — that locate in Colorado. CFI worked to remind legislators that data centers don’t create jobs and that Colorado was already considered a top contender for data center placement. We were encouraged to see this bill killed on the Senate floor in the final days of the session.

House Bill 15-1219 allowed for renewable energy companies with unused enterprise zone investment tax credits to receive a refund from the state for the amount of the credit up to $750,000 per year. CFI opposed this bill on the grounds that monetizing business tax credits is bad tax policy and this creates a slippery slope for other tax credits. However, this bill passed swiftly through both the House and the Senate.

CFI also fought against one of the worst tax policies we have seen in a long time, Senate Bill 15-282, a.k.a. “Tax-Free Colorado.” This bill, introduced by the governor’s office, was inspired by a program in New York that was intended to bring jobs to upstate New York but which has been widely lampooned as costly and ineffective. The Colorado version would allow owners and employees of companies that locate in rural areas of the state and partner with a university to avoid paying income taxes for four years and a sales tax refund on all equipment they purchase within that time. That bill is headed to the governor’s desk.

Hidden agenda: HB 15-1205 (Reps. K.C. Becker & Lori Saine, Sens. Michael Johnston & Owen Hill)

One of the most disappointing losses during this year’s session was the death of House Bill 15-1205. The bill, which would have created a first-ever tax process to measure tax expenditures — credits, deductions and exemptions — was killed on a party line vote in Senate Appropriations with all Republicans voting against the bill. But the legislation, which had bipartisan co-sponsors and which had previously passed unanimously through the House, even clearing two Senate committees before inexplicably being added to the hit list by Senate leadership and dying in a third committee. This may have been the result of result of lurking opposition from special interest groups whose tax expenditures were to be evaluated.

After editorializing in support of this bill, The Denver Post agreed with our disappointment over 1205’s death. Calling “corporate welfare recipients” the big winner on this bill, The Denver Post said “the inexcusable defeat in a Senate committee of a bill that would have merely studied whether tax credits, deductions and exemptions were well spent ensures that lawmakers can continue to extend or multiply these breaks while remaining blissfully ignorant as to whether they actually work. Even business groups supported this doomed bipartisan measure.”

Inexcusable, indeed.

CFI worked closely with the sponsors and the National Federation of Independent Businesses to support this important step towards greater transparency and accountability in the state tax code. We were disappointed by the death of this common-sense legislation but hope to see the bill revived and passed in the future.

Middle Class Pass:  Senate Bill 15-118 (Sen. Michael Merrifield)/House Bill 15-1347 (Reps. Brittany Pettersen and Dave Young)

Another bill that CFI worked on from the ground floor was Senate Bill 15-118. This bill would have increased the incentive for middle-class families to save for college using 529 savings plans. By increasing the amount of the state tax deduction available for families making less than $250,000 per year, this bill would have increased the amount college savings by current savers as well as increase the number of savers in the “doughnut hole” — those who make too much to qualify for financial aid, but too little to afford college outright.

After a robust discussion in the Senate Finance Committee, the bill was killed on a party-line vote with all of the Republicans voting against the bill. However, not to be deterred, the bill was revived by Reps. Brittany Pettersen and Dave Young in the House. Appropriately retitled, “The Middle-Class College Savings Act,” House Bill 15-1347 moved swiftly through the House only to be killed again in the Senate State Affairs Committee.

FAMLI ties: House Bill 15-1258 (Reps. Joe Salazar and Faith Winter, Sen. Jessie Ulibarri)

For the second year in a row, a bill allowing employees to contribute to and participate in a family and medical leave program was denied by the General Assembly. House Bill 15-1258, known as the Family and Medical Leave Insurance Act (or FAMLI) would create a family and medical leave program that offered partial wage replacement to eligible families. CFI worked closely with our partners to develop the insurance structure and estimate the costs and benefits of this program in Colorado.

Despite widespread support for the concept, the bill was ultimately killed on the House floor in a vote that included all Republicans and two Democrats.

Invest in Success: House Bill 15-1317 (Rep. Alex Garnett & Sen. Michael Johnston)

Another innovative idea that CFI worked on this year was House Bill 15-1317, which enables Pay-for-Success Contracts. This bill failed last year, but CFI worked with a large coalition to refine and improve it. HB 1317 would allow the state to enter into contracts with eligible investors to create performance-based program outcomes. Examples of these program outcomes include improvements in early childhood education, family health and economic opportunity.

With support from business, service providers and advocates, this bill moved quickly through both the House and Senate and is on its way to the governor’s desk. We look forward to being further involved in the development of this program as it is implemented.

ICE holds: House Bill 15-1356 (Rep. Joe Salazar, Sen. Lucia Guzman)

CFI supported House Bill 15-1356, which would have created a uniform statewide standard for ICE detainers and bond procedures, ensuring that immigrants were advised of their rights under administrative hold requests and of the right to post bond. While the bill received bipartisan support in the House and was supported by the Colorado Sheriffs Association, the Colorado Association of Chiefs of Police, the Colorado ACLU, CFI, CIRC and many immigrant rights advocates, the Senate State Affairs Committee killed the bill in the waning days of the session.

Declaration of Independents: Senate Bill 15-269 (Sen. Ellen Roberts, Rep. J. Paul Brown)

Senate Bill 269 would have created a new test for determining whether a worker was an employee or an independent contractor for purposes of receiving unemployment insurance. The bill would have removed the presumption in current law of an employment relationship making it easier for employers to misclassify workers as independent contractors, thereby denying them access to unemployment insurance.

CFI opposed SB 15-269 because it would undermine the effectiveness of the unemployment insurance system as an economic stabilizer in times of recession, weaken an important protection for workers, and negatively affect the size of the unemployment insurance trust fund increasing risks for all employers and the economy.

We were pleased to see this late Senate bill die in the final days of the session in House Local Government Committee, but are sure it will be an issue of interest to business and labor groups next year.

By Thamanna Vasan

Economic Policy Analyst

Colorado immigrants are a crucial – and growing – part of the state’s economy, with many industries relying on their labor. In addition, many immigrants are entrepreneurs, bringing new businesses and jobs to Colorado.

Foreign-born Coloradans are often overlooked by policymakers despite being a growing proportion of our state’s population. In 2013, 9.5 percent of Coloradans were foreign-born compared to 8.6 percent in 2000. In addition, the growth of the immigrant population in Colorado outpaces national growth. From 2000 to 2013, Colorado’s immigrant population grew by 35.4 percent compared to 32.9 percent nationally.

Meanwhile, Colorado’s total population grew by 967,106 people from 2000 to 2013, and 13.5 percent of that population growth can be attributed to the foreign-born Coloradan. In comparison, only 8.9 percent of the national growth in total population was due to an increase in the immigrant population.

This report provides a snapshot of immigrants’ economic contributions and the industries that depend on them. Using American Community Survey and Bureau of Economic Analysis data, the Colorado Fiscal Institute finds that:

• Immigrants are a growing proportion of Colorado’s population. In 2013, immigrants were 9.5 percent of the total population, compared to 8.6 percent in 2000.
• Colorado’s industries depend on immigrant work. Compared to their U.S.-born counterparts, immigrants are more likely to work in blue-collar and service industry jobs. However, the largest share of immigrants works in the white-collar industry.
• Immigrant labor accounted for 21.5 percent of the construction industry;15.3 percent of the arts, entertainment, recreation and food services industries; and 13.9 percent of the manufacturing industry.
• Immigrants start businesses at the same rate as U.S.-born Coloradans. Immigrants account for 9.7 percent of Colorado’s entrepreneurs.
• Immigrants in Colorado are more likely to have jobs than U.S.-born Colorado workers. While only one in 10 Coloradans is foreign-born, immigrants make up a greater share of the labor force at 13.1 percent

Immigrants have a big influence on Colorado’s workforce

In 2013, 68.9 percent of foreign-born Coloradans were working, compared to 67.9 percent of native-born Coloradans. In addition, while only one in 10 Coloradans is foreign-born, immigrants make up 13.1 percent of the total labor force. Immigrants also work in a wide range of industries, including retail, education, manufacturing, construction and finance. Approximately 49.9 percent of immigrants work in white-collar jobs compared to 64.1 percent of U.S.-born workers in Colorado. The greatest share of immigrants are employed in jobs in education, health care and social assistance. However, immigrants are more likely to work in blue-collar and service jobs than Coloradans born in the U.S., with the largest share working in construction (Table 1).

The construction industry is most dependent on immigrant labor. In 2013, 21.5 percent of construction workers in Colorado were immigrants (Table 2). The construction industry currently employs 187,884 Coloradans, of which 40,370 are foreign-born. Before the recession, 19.4 percent of the construction industry was foreign-born.

Immigrant workers are also important to Colorado’s large tourism, manufacturing and agricultural industries. The arts, entertainment, recreation, and food services industry employs 43,683 immigrants, while manufacturing and agriculture employ approximately 26,000 and 9,000 immigrants, respectively.

A Growing Share of Colorado’s Entrepreneurs Are Immigrants

Immigrants also contribute to our community by establishing businesses. Approximately 9.7 percent of Colorado’s entrepreneurs are foreign-born, a rate similar to their U.S.-born counterparts. In 2013, 7.9

percent of foreign-born Coloradans were entrepreneurs.[1]  In 2000, only 5.5 percent of foreign-born Coloradans were self-employed. In comparison, 7.6 percent of U.S.-born Coloradans were self-employed in both 2013 and 2000. This means that, now more than ever, immigrants are creating small businesses and taking the risk of directly creating jobs for Colorado at the same rate as the native-born population. [2]

Construction, real estate and household services provide the new business opportunities for immigrants in Colorado (Table 3).

Immigrants make a critical contribution to Colorado’s economy

Immigrants paid $3.5 billion in taxes to Colorado in 2010, with undocumented immigrants contributing approximately $1.3 billion, according to estimates by the Center for American Progress. In addition, they estimated that immigrants added $21.6 billion to the Gross State Product and generated $43.8 billion in the way of goods and services for the state.[1]

These contributions to the state’s economy are significant, but economic participation of immigrants is still limited. Allowing for the expansion of visa programs and allowing undocumented immigrants to enroll in a legal path to citizenship will generate increased output of services and goods and thousands of new jobs. Undocumented immigrants who enroll in a legal path to citizenship will generate more than 9,800 new jobs and more than $840 million for the state by 2020, The Regional Economic Model, Inc. (REMI) Expansion of visa programs would result in 5,600 new jobs and add $2.7 billion to Gross State Product by 2020, REMI estimates.[1]

[1]For this analysis an entrepreneur is defined as self-employed in an incorporated and not incorporated businesses, professional practices, or farms

[2] Colorado Fiscal Institute analysis of Colorado-specific IPUMS-USA, American Community Survey, 1 year estimates, University of Minnesota, www.ipums.orga

[3] “The Consequences of Legalization Versus Mass Deportation in Colorado”, August 2012, Raúl Hinojosa-Ojeda, Center for American Progress, https://cdn.americanprogress.org/wp-content/uploads/2012/08/Colorado-2.pdf

[4] “Economic Effects of Key Components of Immigration Reform, Colorado”, Regional Economic Models, Inc., 2013

By Kathy White

CFI Deputy Director

In case you missed it, last week the Institute on Taxation and Economic Policy (ITEP) released a report that showed that the estimated 180,000 undocumented immigrants who call Colorado home paid $144 million in state and local taxes in 2012 and would contribute another $17 million if given a path to citizenship and lawful permanent residence.

ITEP’s report showed that undocumented Coloradans working and living in the state pay sales and excise taxes when they purchase goods and services, such as clothing and gas, as well as property taxes and income taxes. Each year, undocumented residents pay $85 million in sales and excise taxes, $22 million in income taxes and $37 million in property taxes either as homeowners themselves or renters.

ITEP also calculated what the benefit to Colorado would be if Congress were to pass comprehensive immigration reform, giving those 180,000 people a path to citizenship and full participation in our economy. They estimated that Colorado and its local governments could see $182 million, an additional $38 million per year for schools, roads and other critical priorities, if all undocumented Coloradans were granted lawful permanent residence.

Short of comprehensive reform, President Obama’s executive action of November 2014 would also have big benefits in Colorado. ITEP estimates that it would allow up to half of Colorado’s undocumented residents, 90,000 people, to more fully integrate into our communities and contribute to our local economies to the tune of an additional $17 million in revenues for state and local governments.

The president’s executive action allowed some undocumented immigrants with children to apply for a temporary reprieve from deportation or “deferred action” and a three-year renewable work permit. This is the Deferred Action for Parents of Americans and Lawful Permanent Residents (DAPA). It also expanded the Deferred Action for Childhood Arrivals (DACA) program of 2012, increasing the number of immigrants who came to the country as children who can apply for lawful work status and permanent residency.

ITEP’s analysis showed that in Colorado, the executive action would affect about 50 percent of the undocumented population, higher than most states and the nation as a whole. Those 90,000 people currently pay an estimated $72 million in state and local taxes. If they were allowed come out of the shadows and fully participate in our economy and our tax system, Colorado would see economic growth across the state and enjoy an additional $17 million in state and local taxes.

ITEP’s report comes just as a stay issued on the Executive Action goes before a federal court. Despite the uncertainties of current immigration reforms, ITEP’s report shows that one thing is certain — fully integrating immigrant workers and families into our communities is good for our economy and good for Colorado.