Colorado is at an inflection point in how the state balances revenues and expenditures. Policy architects cannot responsibly make budgeting decisions about a piece of the state budget without considering the holistic impacts or accounting for the broader universe of needs.

The Colorado Fiscal Institute and The Bell Policy Center have teamed up to estimate what it would take to adequately fund a spectrum of basic government functions from education to water to direct care, and more. The intent is to give policymakers a panoramic view of needs, and establish where Colorado is in meeting those needs.

Read the full report here.

#1 — Monetary Policy Trickles Down

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#2 — A Recession is still a Possibility

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 #3 — General Fund Revenues are Down because of the 2022 November Ballot Measures

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#4 — Still need to make TABOR Rebates Fairer for Working Coloradans

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#5 — Not Great News on Ability to Pay Down Budget Stabilization Factor in K-12

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By Pegah Jalali

Last month, the Department of the Interior announced that the Bureau of Ocean Energy Management (BOEM) and Bureau of Land Management (BLM) will be taking steps to comply with congressional direction on oil and gas leasing through the Inflation Reduction Act (IRA).

The IRA requires that any lease sales or permits issued for renewable energy, onshore or offshore, must be accompanied by lease sales for oil and gas. Additionally, DOI is required to hold a number of specific offshore lease sales regardless of any renewable energy leases. 

DOI is swiftly offering leases to on and offshore oil and gas developers. BOEM has prepared a Draft Supplemental Environmental Impact Statement (EIS) for two Gulf of Mexico sales: lease sales 259 and 261. Congress directed that Lease Sale 259 be held by March 31, 2023, and Lease Sale 261 by September 30, 2023. BLM also announced they will begin scoping for the next onshore oil and gas lease sales in New Mexico, Wyoming, Kansas, and Nebraska, with the majority of area under consideration in Wyoming.

Even though the IRA provided important modernization of BLM’s oil and gas leasing program, including increasing the minimum royalty rate, minimum bid, and rental rates; assessing a fee for the filing of Expressions of Interest (EOIs), and eliminating non-competitive leasing (a key policy win secured by Colorado U.S. Senator John Hickenlooper), the Biden administration has yet to initiate its rulemaking on the federal oil and gas program. Such rulemaking is necessary for implementing both the reform policies that were included in the IRA and other badly needed changes like bonding reform that DOI noted in its report last November. In order to ensure these reforms are implemented as soon as possible, DOI must get the rulemaking process started quickly, and with the announcement of these new sales, we need to push the administration to get a rule out.  

DOI should not move forward with any new leasing—including the sales announced in New Mexico and Wyoming—until the agency undertakes a rulemaking to, at a minimum: 

• Implement the vital policy changes included in the Inflation Reduction Act, which established the long-overdue increases to fiscal rates and terms for leasing and development on public lands, and eliminated the wasteful practice of leasing lands uncompetitively for just $1.50/acre; 
  
• Address all of the remaining core problems that DOI highlighted in its report from November of last year by: requiring oil and gas companies to fully pay for potential clean-up costs so that Coloradans and our communities aren’t stuck with the bill for well clean-up,  avoiding the massive leasing of areas with low potential for oil and gas development, and creating and ensuring a more transparent process that provides meaningful opportunity for public engagement and Tribal consultation.
  
• Utilize all available discretion to pursue additional changes that will move BLM’s stewardship of our public lands closer in line with the public’s broad interest in public lands.

While the IRA’s oil and gas provisions contained some major steps forward, we can’t benefit from them until DOI fulfills its responsibility and sets up the rules needed to implement this landmark law. Our communities, our public lands, and our local economies shouldn’t be forced to wait any longer.

How will Proposition FF support school nutrition workers?

On a mid-October afternoon, Melanie, April, Miriam, and Lavonne, the cafeteria crew at a Jefferson County middle school, are racing against the clock to feed all the students who were just a few hours away from sitting down for lunch. The problem? A last-minute shortage means a key ingredient won’t be available, and the powerhouse team is working together to prepare hundreds of Italian subs for students.

Melanie, the team’s manager and fearless leader, is optimistic, but clearly under pressure due to the “just-in-time” nature of the supply chain. The original plan was to serve meatball subs, which are a lighter lift for the team, but a shortage means they’ll need to find another way to use the thousands of buns sitting in a local warehouse. The pivot means a strain on the schedules of the women, who have working since 6:00 a.m. “Now we’re having to make 275 sandwiches, and three of the four of us are out of here in 15 minutes,” explains Melanie. 

Unfortunately, supply chain difficulties are a frequent struggle for the cafeteria team. Melanie acknowledged the reality of the situation, but the frustration was there. “This is a tough day…and I get it, but it’s a pain in the neck,” she says.

Despite their determination to get every kid the nutrition they need to learn, the underinvestment and long supply chains that characterize our current school lunch system often make the jobs of cafeteria workers like Melanie harder, stretching their resources and time thin, both as food preparation workers and moms providing for their own hungry kids. 

Will Proposition FF improve cafeteria staffing?

In addition to supply chain issues, Melanie says she and her team are often short staffed, making it hard for them to properly plan and ensure meals are cooked and delivered smoothly. Unfortunately, these staffing shortages could worsen soon: Jefferson County Schools may be heading over a fiscal cliff, largely due to declining local tax revenue and under-enrollment, just as billions in federal pandemic aid is running out. 

This looming financial crunch couldn’t come at a worse time. The pandemic left students behind on a number of achievement measures, and schools need resources to invest in helping students recover from Covid-related learning loss. Even though the district is closing schools this year and next as a cost saving measure, projections show staff layoffs are still likely. That would make a hard situation even worse for food service workers like Melanie’s crew. 

Even within the kitchen, despite having an all-star team at her side, Melanie’s team is tight-staffed and has trouble finding subs, meaning it’s hard for them to take off if they or their families are sick or they have another emergency. “I have a funeral to go to on Saturday, and in the back of my mind I’m thinking, I really hope it’s not during school because I can’t really (take off work) to go to it.” These workers are dedicated, working early hours and off the clock to ensure every kid at Arvada K-8 can eat; Melanie explained; “I’m supposed to be here at 6:15, but I personally come in a little early, because I feel like it’s needed.”

Obviously, that level of dedication is rare. Like other service jobs, they can be hard to fill because they’re tough, thankless, and come with some of the challenges already outlined. Still, Melanie is deeply loyal to her team. She advocates for her coworkers to get better compensation and more support to ensure they can take time off if they are sick. 

“I would like to know….that I’m not going to leave my [coworkers] in the lurch.” 

Melanie, Jefferson County School District nutrition worker

Though Proposition FF requires funds be used for raises rather than hiring new staff, it will help reduce turnover and other issues that lead to staffing issues. Proposition FF can make their jobs (and lives) easier, and make sure they can focus on the important part: preparing and serving healthy meals for children.

If Proposition FF passes, what will happen to cafeteria workers?

Despite the sick time provisions in the new JESPA contracts, the staff needs more support; Melanie explained that “I obviously don’t want to come to work sick, but it’s like…you come to work with that cough, or that slight headache that really you’re uncomfortable at work and miserable, it’s better than knowing your staff is sitting there without a sub.” 

April had knee surgery last spring, and for six weeks the team was left with the same amount of work, with no substitute for one of their most experienced team members. Melanie was proud of the team. We made it work, my girls are rockstars,” she says. But the stories of Arvada K-8’s dedicated cafeteria workers paint a clear picture: Colorado school food service workers are underpaid, overworked, and need more staff support. 

Luckily, voters have a chance to use their ballot this November to give Jefferson County workers, and those in cafeterias across our state, the dignity and respect they deserve. Proposition FF would help ensure these workers make living wages and have the tools and support they need to feed every child and take care of themselves and their own kids.

Not only is the team supportive of each other, even when the work gets hard, but they are also in this work to serve the kids. That’s why they support Proposition FF. Melanie explained that she is “100% for it,” especially after seeing firsthand the positive changes that happened when all students got meals during the time when the federal government paid for them.

What gets these women up in the morning is making sure every single child is fed and ready to learn and thrive, so it hurts these workers when current policies fall short and kids go hungry. Melanie explained that “I see a kid sitting at a table, picking off other kids’ trays….because I can’t find a way around it, we can’t feed that kid.” 

The women see Proposition FF as a victory for them on two fronts; both as workers who are passionate about serving kids, and as moms who work hard to put food on the table.  As a single mom, Lavonne explained that “money wise, it’s hard” to ensure her kids get what they need, and the pandemic and rising costs of living have only made this a tighter bind for workers like Lavonne.

Voters have the opportunity to take a stand for Coloradan children, families, and workers like the Arvada K-8 cafeteria crew who keep our communities running. Proposition FF presents a historic opportunity to invest in a school lunch economy that nourishes not only children, but Colorado’s workers and local economies. 

What’s in Gov. Polis’ latest budget proposal?

Every year, the governor is required by law to make a proposal to the legislature for the upcoming budget year. While this is not a binding document, it does give Coloradans their first look at what the next budget will look like, and what areas the governor and lawmakers may focus on when the legislature’s convenes in January. Here are our top five takeaways from this year’s budget proposal:

#1 – Some progress towards fully funding K-12 public schools

While inflation is top of mind for most Coloradans because it’s squeezing their family budgets, it has a big impact on the state budget too. Colorado’s constitution dictates that per-pupil funding must grow by inflation, which is over 8% this year. Gov. Polis’ budget proposal calls for a 9% increase in per-pupil funding, which means K-12 funding would increase even accounting for inflation.

The proposal asks for $704 million over what the state spent in Fiscal Year 2022-23, which amounts to an additional $35 million towards eliminating the Budget Stabilization Factor. If you’re not a Colorado fiscal policy nerd, the Budget Stabilization Factor (formerly called the Negative Factor) is the number that shows how much the state is underfunding public education relative to the amount approved by voters under Amendment 23. This would allow a slight reduction to the size of 3% of funding for K-12. For some context, ten years ago (FY2012-13), the Budget Stabilization Factor was 16 percent of K-12 funding.

#2 – General Fund Reserve should help Colorado weather the next recession

While Colorado does not have a true “rainy day” fund like some states, the General Fund Reserve acts as a sort of de facto rainy day fund. To give some context, during the 2001 and 2009 recessions Colorado’s General Fund dropped 13% in one year. A 15% reserve will provide a necessary cushion to brace for the next recession, which many economists think is on the horizon. 

Between 1986 and 2021, Colorado averaged a 4% General Fund Reserve.  With such a small reserve, when the Great Recession came in 2009 we had to make big cuts to our schools (see BS Factor above). A healthy reserve should prevent that from happening again, but given how many unprecedented economic challenges we’ve faced in the last few years, we can’t rule it out.

#3 – Post-Marshall Fire, climate investments get a bump

Higher temperatures, droughts, and wildfires have wreaked havoc on the state in the past decade. The three largest wildfires in Colorado history happened in 2020, and the Marshall Fire burned hundreds of homes in Boulder County in late 2021. This year, the budget continues to make wildfire mitigation, response, and climate preparedness a priority by investing $38.3 million to help mitigate and recover from wildfires, including $13.8 million to increase aerial resources to fight fires from above and additional staff to coordinate efforts, $7.2 million to support local firefighters and local mitigation efforts, and $3.2 million to establish a statewide fire data system.

Population growth and lower precipitation and drought associated with climate change have also placed pressure on Colorado’s water resources. Gov. Polis’ budget proposal asks for investments to protect the quantity and quality of water resources: $17.6 million for the Colorado Water Plan grant program to support partners advancing high-priority water projects across the state, $1.9 million to protect our water rights under the Colorado River compact, and approximately $30 million towards the State match requirement for the federal infrastructure bill’s supplement to the Clean Water and Drinking Water State Revolving Funds.

The legislature made it a priority to allocate money from the 2021 federal infrastucture law towards improving our state power. The governor’s budget proposal requests a $1.5 million match needed for phase 1 of Hydrogen Hubs—a partnership with neighboring states to design, construct and deliver a hydrogen hub facility for alternative energy. 

#4 – Another free month of transit in 2023

The Zero Fare for Better Air program passed this year offered free bus and light rail service in partnership with transit agencies in August 2022 and successfully increased RTD ridership by 36% year-over-year. This program saved riders more than $15 million in direct fare costs, on top of savings on gas. The governor’s budget proposal asks for $24.8 million to fund another month of free transit.

#5 – More investments in affordable housing

According to a 2022 Colorado Health Foundation poll, 88 percent of Coloradans say the rising cost of living is a serious problem in our state. In 2019, HB-1245 made changes to the vendor fee allowance, which resulted in $65 million of dedicated funding for affordable housing in 2022.

The Governor’s budget proposal allocates $15 million in affordable housing projects through the Public-Private Partnership Office, particularly focusing on building up workforce housing near transit and in rural areas. One major impact of this investment will be the construction of about 80 new workforce housing units in the Vail Valley. 

Last session, the legislature invested over $200 million in homelessness reduction and solutions. The Governor’s budget increases those resources, including putting more money towards foster youth, at-risk adults, and the Fort Lyon Supportive Housing Program.

Proposition 123 is a measure on this year’s ballot that intends to expand the availability of affordable housing in Colorado. Investments in affordable housing are long overdue. Half of renters in Colorado are cost-burdened––which is when the cost of housing exceeds 30% or more of a household’s income––and minimum wage workers need to work 75 hours a week in order to afford an average modest one-bedroom apartment. Colorado is the ninth-least affordable state in the country, and the state is a staggering 500,000 housing units short of where it should be. 

Proposition 123 will fund needed housing investments by funneling 0.1% of all state income tax revenue to create a State Affordable Housing Fund. 60% of the funds will go to the Office of Economic Development and International Trade (OEDIT) and 40% will go to the Department of Local Affairs (DOLA). The measure outlines specific programs that the funds can be used for—including building more affordable housing, providing rental assistance, and supporting first-time homebuyers. 

While these investments are both necessary and important, there are several long-term considerations that complicate how effective this measure will be towards materially expanding the supply of affordable housing in Colorado.

One of Proposition 123’s biggest long-term obstacles lies in the measure’s funding source. Proposition 123 will not create a new revenue source to fund its affordable housing investments in years when Colorado is not issuing TABOR rebates. Non-rebate years may come sooner than expected due to the threat of recession—Colorado’s state Legislative Council finds that from June to September of this year, the risk of a near-term recession has escalated considerably. 

In years when Colorado tax revenue is not above the TABOR limit, affordable housing will compete for revenue dollar-for-dollar with existing public services including Colorado’s already underfunded K-12 education system. 
That underfunding means school districts will continue to struggle to pay teachers. Colorado has the highest teacher pay penalty in the country. This means Colorado teachers make almost 36% less income than similarly-educated workers. Additionally, only one in five homes are affordably priced for teachers. Nationally, Colorado also ranks near the bottom for per-pupil funding. Our state’s General Fund budget is already struggling—and at times, even failing—to provide proper resources for students and educators. Colorado needs a funding source for affordable housing that is truly sustainable and does not make Colordans choose between education or affordable housing.

Pay Discrepancy Between Teachers and Similarly-Educated Workers in Each State as a Percentage of Wages

With these caveats in mind, CFI chose to support Proposition 123 knowing that in years when Colorado’s TABOR surplus is large—like this past year when it reached  $3.7 billion—the measure’s State Affordable Housing Fund would receive considerable funds, and these investments are a good use of TABOR rebate money that would otherwise be refunded in ways that are not as equitable as they could be. However, achieving the goal of materially expanding the supply of affordable housing in Colorado is a long-term investment that needs a reliable and sustainable funding source.

Sustainable solutions include implementing a real estate transaction tax or fee. In most states, when the title of a property is transferred between owners, the parties involved must pay a fee or tax that is then used to fund things like affordable housing. To make it equitable, the amount  could be based on the property’s value, and some amount could be exempted to ensure it falls on higher income earners, instead of lower income earners who are disproportionately people of color. Colorado is one of only thirteen states that do not have any kind of real estate transaction tax, due in large part to the fact that TABOR specifically prohibits them (though some local governments with already established taxes are exempted from this ban).

Under the current funding mechanism for Proposition 123, the State Affordable Housing Fund is estimated to collect $145 million for the upcoming state budget year of 2022-23 and $290 million the following year. However, a 0.5% real estate transaction tax that exempts the first $200,000 value of a home could generate $375 million in tax revenue in just one state budget year.

Whether Proposition 123 passes or not, establishing a dedicated funding source to invest in affordable housing is necessary to ensure that the state has the revenue to meaningfully expand Colorado’s housing supply, uplift renters, and support first-time homebuyers. If it passes, we’re hopeful Proposition 123 can be another step towards removing barriers to affordable housing in Colorado. 

Note: This is the second part of a blog on Proposition FF and its economic and health benefits. Click here to read the first part.

How will schools make sure the Proposition FF money is used properly?

Proposition FF empowers participating school food authorities to create parent and student advisory committees to make major decisions on their own food purchasing, supported by local food purchasing grants which allow them to purchase Colorado-grown, raised, or processed products for school meals (SB22-087). Local communities would be empowered to co-create a school food supply chain that aligns with the values and needs of students and families. The bill opens the door for communities to connect with farmers like Roberto Meza to help feed our kids with healthy, locally sourced food. “It’ll give us a chance to build up our infrastructure…. that we know we have secured markets, and potential contracts, we’d be much more able to find a loan, feel secure in investing in our infrastructure or scaling our operations.”

This requires that we give schools the budget power to pay a fair price; while it takes some investment to serve quality food that helps kids learn their best, it beats the cheap and easy status quo, which only benefits the pocketbooks of big food corporations. 

“On a systemic level, in order to address food access, we have to pay the fair price, so farm owners don’t have to cut corners by underpaying their workers, mistreating their livestock, or undermining the sustainability of their land.”

Roberto Meza, farmer

Does Proposition FF make our food system more reliable?

Proposition FF also increases the resilience and stability of our food system at large in the event that a crisis like Covid leads to the breakdown of fragile, long supply chains. School’s over-reliance on a few suppliers with a monopoly on schools lunches puts our access to food into a precarious balance, with climate change shifting weather patterns and the threat of extreme weather events like drought increasing, this is sorely needed. 

Covid must serve as a lesson; “it’s not in our best interest to support that type of model or system in the future—it’s not sustainable, and we place ourselves at risk by only depending on those larger players, whose supply chains will break down in the event of another pandemic.” Meza and other local, sustainable farming operations are the key to bolstering food security in our state, by keeping our supply chain local. Meza says localizing the school lunch supply chain will create economic stability and resilience.

Participating school food authorities would also receive additional funds to increase the wages for individuals employed to prepare and serve food. These workers are currently making much less than a living wage; for example, Denver is raising its starting pay for food service workers to $18 this year, but we know that inflation is eating away at wage gains. One estimate by MIT places a living wage for an adult living in Denver with no children at roughly $20 an hour, $39.48 for an adult with one child, and ​​$21.52 and 2 working adults with one child. In less highly resourced school districts such as Pueblo, these gaps are even wider; 2022-2023 base pay for a school cook is $13.98, falling far short of a living wage for an adult with one child ($30.95).

These workers are feeding Colorado’s children, but lack the economic security to feed their own families; Colorado voters have the power to change this by giving schools the funding they need to pay these essential workers a living wage. 

How will Proposition FF promote tax and racial equity?

Not only does this bill proactively create a more just food economy, but it also takes a major step to address our upside-down tax code. The bill is financed by placing a cap on state income tax deductions for the top 3% of Colorado income earners. By ensuring the wealthiest folks in our state pay what they owe in taxes, Healthy School Meals for all will help us to invest in building a more human-centered local food system where every child has access to fresh, healthy food. 

Meza’s farm, Emerald Gardens, prides itself on the dignity and sustainability its model of business creates, and how they are able to advance “the values of racial equity, dignity for farm workers, food security, and sustainability.” Promoting these values in a public institution that kids interact with every day allows our state to reimagine how we see food; not just as consumers, but as a part of an ecosystem and community that prioritizes shared prosperity for all Coloradans.

“It’s in our best interest to promote these values, not just for our own well-being but for that of future generations as well……As eaters, we’ll begin to think of ourselves not as passive consumers, but as active participants in co-creating and designing a food economy that promotes equity and dignity for all of our communities.

Roberto Meza

All communities and families should have a say in which food makes its way to kids’ plates, and how it affects our local economy as it travels from the farm to the lunch counter. A vote for Proposition FF is a vote to reinvest in Coloradan people, providing a historic opportunity for Colorado’s families, schools, and communities to come together for school lunches to meet the nutritional, social, and economic needs and priorities of Colorado’s children and the workers who help feed them. 

The economy is not an intangible institution. It is the families, farmers, and workers who make up our. economy. Let’s demand that our taxpayer dollars are used to build food systems and a local economy that works for all Coloradans.

Look for Part 3 of this series out soon!

By Sophie Mariam

What is Proposition FF?

This November, Colorado voters have the opportunity to begin rebuilding our state’s food economy to put our children, workers, and families first. Proposition FF presents an opportunity not only to ensure all students get the nutrition to reach their full potential, it’s also a chance to harness the full capabilities of our local food economy by shifting decision-making power back into the hands of the students, families, and communities who are most affected.

Proposition FF would allow communities across the state to reinvest public money in ways that create opportunities for the hardworking Colorado farmers and food service workers who grow and prepare the food our kids eat. The measure is paid for by capping a tax break for people who earn over $300,000 a year. Recently, over 100 local nonprofit organizations came out in support of Proposition FF.

How will Proposition FF help schools and local farmers?

We all believe Colorado should be a place where our food systems are built by Coloradans, for Coloradans, in a way that promotes widely shared economic prosperity. However, our current food policies are falling woefully short. Colorado’s existing school lunch program allows the vast majority of public money we set aside to feed kids to flow into the pockets of wealthy, out-of-state agribusiness corporations.

Many large food corporations are able to provide cheap products only by cutting corners like underpaying their employees, often pushing workers and their families into food insecurity and sacrificing the long-term viability of the land. Moreover, long supply chains from farm to fork can often feel out of reach, making it hard for Coloradans to understand the economic impact that the food on our plate has the power to make. 

Meanwhile, many Colorado farm owners are struggling to compete with these corporations. Roberto Meza is a first-generation farmer who co-founded Emerald Gardens, a 35-acre, year-round agricultural operation right outside Denver. Current policies at the U.S Department of Agriculture, coupled with the meager budgets many Colorado public schools are given for food procurement, push schools towards buying cheap, often highly processed foods from big suppliers.

The deck is stacked against small farmers like Roberto due to what says are “intentional barriers set up to incentivize larger corporate farm producers and suppliers, and to de-incentivize values-based, small and midsize scale producers and suppliers.” 

The dominance of big agribusinesses over local farming operations is insidious. Not only does it dominate our state’s school lunch program, but insufficient food budgets and capacity for local sourcing mean this is the status quo for how other public and semi-public institutions like hospitals interact with the agricultural sector more broadly. Meza is building an alternative model, which emerged from a time when many food suppliers in Colorado were experiencing an unforeseeable crisis.

How did the pandemic play a role?

At the height of the pandemic in spring 2020, many farms lost their main sources of revenue as local restaurants shut down for the public health emergency. Levels of food insecurity across the state skyrocketed as families struggled to make ends meet, and donations to local food banks couldn’t keep up with demand. But a creative solution emerged to address both these problems: food banks received emergency federal funds, which allowed them to supplement donations by buying food directly from Colorado farmers like Meza. 

“Covid allowed us to experiment with those things because of the state and federal funding that came in to address food insecurity”

Roberto Meza, Emerald Gardens farm

Instead of letting small farming operations go under and Colorado kids go hungry, farmers like Meza stepped up to meet the needs of local communities by forming a new organization called the East Denver Food Hub. Meza, both as a farmer himself and the leader of multiple cooperative farming operations, is creating a local, values-based supply chain to, as he says, “work with farmers that honor the land and support worker dignity.” He’s linking small farmers with the demand for fresh food in local communities to create a new model for addressing community food needs while keeping farmers’ business models viable.

But these farmers can’t keep this effort to advance food justice going alone, and public policies aren’t currently built to support local, family farmers. Proposition FF would help scale up Roberto’s model for food justice to more communities by breaking down some of the barriers preventing local farmers from contracting with schools, creating what Roberto calls an “equitable supply chain from seed to table.”

This blog is the first part of a two-part series exploring some of the impacts of Proposition FF. Stay tuned for part two next week!

#1 — Are we headed towards a recession?

After almost two years of quick recovery after the 2020 lockdowns and ensuing demand and supply disruptions, our economic output is slowing down. Due in no small part to the Federal Reserve’s response to high inflation, the first two quarters of 2022 saw a reduction of 1.6% and 0.6%. The current economic outlook is cloudy, and despite lots of available jobs and high demand, several indicators show a recession could be on the horizon.  That uncertainty clouds all future budget and TABOR refund outlooks.

#2 — Inflation has hopefully peaked, but costs are still way up (and wages aren’t keeping pace)

 #3 — Not an optimistic outlook for next year’s budget

#4 — Huge TABOR rebates will favor the wealthy

#5 — The data has economists scratching their heads

By Sophie Mariam

The most recent jobs report showed modest growth, but digging into the numbers, our analysis found we still haven’t caught back up to 2020 job levels. This is especially true for working Coloradans in some of the industries that were hardest hit by the pandemic, such as leisure and hospitality, education, health care, and state and local governments. 

Working Coloradans, especially workers in these industries, have been facing the highest exposure to the virus, while simultaneously dealing with the biggest economic consequences. These workers also happen to be disproportionately workers of color and women, who have long faced some of the biggest barriers to economic opportunity. 

Now, they’re facing a second wave of economic hardship caused by the pandemic in the form of inflation, which is largely being driven by artificially high international shipping costs, a broken “just-in-time” supply chain, and high fuel prices (though we’ve gotten some relief from record high prices recently). Our economy can’t truly be successful unless those people who work low- and middle-income jobs can get ahead. 

Check out all the details in our newest monthly feature: JobWatch.

Meager short-term job growth masks the harm of inflation, sluggish long-run recovery

Colorado’s economy grew by 4,500 new non-farm payroll jobs in June and only 2,200 new jobs in July, according to the most recent jobs report. While these numbers seem to indicate modest economic growth, these short-term gains may mask the harms of the lagging long-run recovery in state and local governments, education and health, and the leisure and hospitality sectors. 

Recent inflation has been driven largely by a broken, unsustainable, inequitable “just-in-time” supply chain that was never fair for workers. Meanwhile, wages have been lagging behind rising prices. While Colorado’s working people bear the brunt of persistent inflation at gas pumps and grocery stores across the state, billion-dollar corporations are pulling in “astronomical profits” using inflation as an excuse to keep shareholders rich at all our expense. 

While job growth may have supported a small drop in the unemployment rate from 3.5% in May to 3.3% in July, zooming out of the monthly data paints a new picture. Colorado’s unemployment rate is still 0.5 percentage points higher than it was in February 2020, ranking 5th worst in the nation for overall recovery.

Workers, especially immigrant workers, in Southern Colorado and other rural areas of the state are also being hit the hardest by the slow growth. The Colorado counties with the highest unemployment rates in June were Huerfano, Pueblo, Las Animas, Fremont, and Rio Grande. These industries and rural regions tend to employ low-wage workers, immigrants, women, and workers of color at high rates, indicating that even throughout the recovery, the pandemic has exacerbated pre-existing barriers to economic opportunity for these groups.

Colorado is still suffering economically from the COVID recession

Colorado has added 43,300 new jobs since the pandemic began in February 2020. However, the state’s economy needed to expand by 74,300 new jobs to have kept up with the booming 2.6% population growth during that time. Despite recovering the initial pandemic-related job losses, Colorado’s economy is still experiencing a “jobs deficit” of 31,000 jobs. The Colorado Department of Labor and Employment reports that Colorado’s job growth rate over the past year is 3.6 percent, lagging behind the U.S. rate of 4.2 percent. (One note: while CDLE reports a job recovery rate of over 110%, this figure does not factor in population growth.)

One bright spot, which should come as no surprise to most Coloradans: people want to work. The share of Coloradans participating in the labor force jumped to 69.5 percent in June, the highest since March 2020, and held steady in July.

Workers are struggling to keep up as wages get eaten up by high inflation

Workers are seeing their wages go up, but inflation is eating up most of the gains, forcing many hardworking Coloradans to draw down their savings or take on debt to keep up with spiking prices. CDLE establishment survey numbers indicate that average hourly earnings grew from $31.60 to $34.21 in June and $34.60 in July, placing Colorado $2.23 above the national average hourly earnings of $32.37. 

Inflation isn’t being driven by wage growth, according to the Economic Policy Institute. Their study hows that while nominal wage growth over the past year has been faster than recent decades, it has lagged far behind historical inflation. 

Some help may be on the way for the lowest-paid workers: Colorado’s minimum wage is expected to get a hefty increase due to high inflation, and local governments like Denver are also expecting to see raises for workers. Increasing local minimum wages to reflect rising living costs has been shown to protect households without stoking inflation, empowering working people to put food on the table for their families and afford gas at the pump. 

Denver is set to increase its minimum wage by 9% to $17.29 in 2023, and Colorado’s state minimum wage will increase to ​​an estimated $13.68 this January. It’s good policy to protect working Coloradans from rising prices instead of forcing them to foot the bill for the real culprits behind inflation: corporate price gouging, a broken supply chain that was designed to put profits over service, and global political turmoil.

Unemployment still exceeds pre-pandemic rates

The economy is a far cry from the days of double digit employment like we saw for much of 2020, but not all Coloradans who are looking for jobs have been able to find them. The state unemployment rate is still 0.5 percentage points higher than in February 2020, when it was 2.8%. 

While the July jobs report estimates a 3.3% unemployment rate, placing Colorado 0.2 percentage points below the current U.S average, the change in long-run unemployment levels since pre-pandemic times tells a different story about Colorado’s recovery. The U.S unemployment rate has recovered to its pre-pandemic levels, while Colorado is still 0.5 percentage points behind, indicating that the state’s economy is lagging the national trend.

This is especially concerning once we account for the current barriers to accessing jobless benefits in Colorado. As of August 16th, CDLE estimated a 10- to 12-week backlog in processing unemployment claims, leaving many workers who lost their jobs through no fault of their own in the dark. Recent economic evidence from the National Bureau of Economic Research suggests unemployment benefits help bolster spending power, contributing to a growing economy that benefits all Coloradans. Simultaneously, these benefits do not have a significant impact on job-finding behaviors, empowering working families during tough times without disincentivizing work more broadly.