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2023 Colorado Legislative Session Report Card

Posted May 11, 2023 by Colorado Fiscal Institute

 

Every year, the Colorado Fiscal Institute (CFI) takes a moment to look back at the 120 days of legislative work accomplished by our Colorado Legislature. For the 2023 legislative session, we put together the 2023 Colorado Legislative Session Report Card, an assessment of the legislature’s work on four key subject areas – fiscal policy, worker justice, housing, and environment. In particular, CFI evaluated these areas based on their effectiveness in passing policies that 1) centered the needs of workers and working families, 2) aligned with CFI’s tax principles, and 3) moved the needle forward on true fiscal reform.   

Hot topics this session, including the rising cost of housing, the possibility of a looming recession, and the whopping $2.47 billion expected to be returned to taxpayers, dominated the conversations within the Capitol halls. But even with big topics to address, CFI was hopeful that legislators would advance policies that uplifted working families and our economy.  

Midway through the session, it was clear that CFI’s legislative policies were going to face a tough battle. With popular big-monied business groups stealing the show and community and stakeholder voices being left out of important decision-making conversations, many CFI and partner bills were taking the back burner.                     

Ultimately, the legislative class of 2023 failed to meet expectations. There were individual legislative champions who stood out and centered Colorado families, stood up for workers, and fought for a fair tax code, but in the end, CFI had to give this legislature an incomplete for their work during the legislative session.

Read the full report: CFI’s 2023 Legislative Session Report Card

Why Colorado Needs A Dependent Allowance

Posted May 3, 2023 by Chris Stiffler

Ever been in a home built in the 1970’s where everything — the toilet, tile, sink and tub — are all bubble gum pink? In the same way, our social safety net programs here in Colorado should be updated for the economy of 2023.

Specifically, it’s time we modernize the design of our Unemployment Insurance (UI) system. The goal of the UI program, which is nearly 100 years old, was intended to provide enough wage replacement so that a worker could continue to pay for basic needs while they were unemployed and looking for another job. This both boosts the labor market and the local economy.  UI also prevents people from turning to public benefits, like welfare, when they lose their job.

For much of the program’s history, 50 percent of a worker’s wages was an adequate UI benefit. It could cover housing, food, and gas in order to bridge that worker over until the economy recovered and they found another job. Fifty percent of wages might have worked 50 years ago, but that’s not the case anymore. In the world of 2023, 50 percent isn’t enough to cover basic needs. Housing alone takes up more than half of many people’s budget today. In addition, when UI was created, the workforce looked a lot different.  The design of UI never contemplated covering childcare or healthcare costs. Back then, when a man lost his job and he had kids, UI assumed he likely had a wife at home to take care of them. 

Today, families with children have higher housing, food and healthcare expenses relative to their income. And working people today, particularly single parents, have childcare expenses.  None of these costs go down when a worker loses their job; in fact, they often go up when they lose access to employer-sponsored health insurance. To be effective for these workers, meaning sufficient to cover basic needs while unemployed, UI must be enough to help families retain housing and childcare while they look for new work. It currently does not meet that standard, and workers with kids are hit hardest.

Childcare issues are cited as the number one reason that women take longer to become re-employed, work part-time rather than full-time, and leave the workforce altogether. The loss of childcare can be devastating, forcing sole breadwinners to rely on other forms of public assistance, impacting their lifetime earnings and employment.  The average monthly cost of childcare  in Colorado would take up nearly all of the average UI benefit for someone who had previously been making Colorado median wage.

One of the first steps states have taken to address the inadequacy of the UI benefit  has been to implement a dependent allowance, an additional weekly benefit added to the regular UI payment for parents and caregivers.

This year, CFI and partners ran HB23-1078, which would have implemented a dependent allowance of $35 per child per week in Colorado, to help update our UI system to match our modern workforce. And the bill’s fiscal impact would have been small — 2 percent the size of the trust fund by the time it would have gone into effect in 2026 — in comparison to its impact. HB-1078 would have helped thousands of parents across our state while not changing the amount that employers pay into the system or what employers must do. 

Colorado has updated and modernized our UI program before. Specifically, we’ve modified the rules for specific kinds of workers and created different rules for how long someone can claim UI if the region’s unemployment rate is higher than the national average. In the past, we have even exempted job search requirements for people who leave their jobs and look to start a business, and exempted certain kinds of income when calculating a worker’s benefit. We have changed quit provisions for workers who leave their jobs due to the deployment of a military spouse, a spouse that is transferred, domestic violence, severe illness. So small tweaks aren’t unusual. 

HB23-1078 would have been another small fix with a big payoff. Though it failed this year, CFI and partners will continue to fight for this change until our UI system works better for all Colorado workers.

Why is Public Transportation Extra Important For Colorado?

Posted April 19, 2023 by Pegah Jalali

Fall is one of the best seasons to experience Colorado with the changing of the leaves, the warm days and nights to experience camping, hiking and enjoying local and national parks. In 2022, high ozone levels and pollution took away the joy of the fall season. State officials recommended that residents stay inside and avoid any activities or prolonged exposure to the atmosphere.

Colorado administrators took action to bring ozone levels down and began to curb the damage of our state’s pollution problem. The same administrators decided to encourage public transit to get cars off the road, and they launched the Zero Fare for Better Air Program, which made services from Colorado’s Regional Transportation District (RTD) and other transit services free in August. Colorado’s legislature took action and passed (Senate Bill 22-180), which grants the Department of Transportation to provide free transit during high ozone seasons through 2026. 

Resulting from the success of the program and the need to respond to high ozone levels in Colorado –  especially along major corridors like the Front Range – a new bill was introduced, House Bill 23-1101, to increase the flexibility of the ozone season grant program by updating the eligibility requirements of the program. It allows any eligible transit agency to designate an alternate period different from June 1 through August 31 for its “ozone season.” The bill also establishes that if a transit association or regional transportation district receives a grant less than the maximum amount allowed in a year, in the following year, it may receive the total amount plus the difference between the full amount and the amount received the prior year. 

Large areas of Colorado, from the northern Front Range to Denver, experience “ozone nonattainment,” which means that ozone pollution contaminating the air we breathe exceeds federal safety standards. In the summer of 2021, Colorado recorded some of the worst air quality in the world. In Colorado, the transportation sector is the number one source of greenhouse gas emissions, and cars are the number one mode of transportation for most people. Public transportation is an excellent solution to reducing air pollution, road congestion, and greenhouse gas emissions.

High-quality and affordable public transit systems also help people find and keep jobs, conduct essential household trips (like going to the grocery store or doctor’s office), and participate in activities supporting local economies. Without access to affordable public transit, low-income residents begin to ration essential trips, which limits out-of-home activities that improves health, economic security, and mobility. 

CFI conducted research to evaluate the program’s effect on improving air quality in three of the counties that adopted the program. Overall, the program has reduced NO2 pollution by more than seven percent in Denver and Jefferson Counties and about four percent in Weld County. Denver and Weld counties have a more significant proportion of Hispanic residents and a larger share of the population who live in poverty compared to the state average. Improvement in air quality means health cost savings for these communities. 

CFI also surveyed 160 Coloradans using both email and some in-person surveys. Overall, travel time, reliability and cost are the significant barriers to public transit for our survey respondents. Most Coloradans rely on cars as their primary mode of transportation and most spend less than 30 minutes daily driving. Likewise, a lack of walkable and bike-able roads forces people to use cars even for short trips.

Despite these barriers, 65% of survey respondents say they would use public transit more if it were free, and this figure is higher among respondents with low and moderate incomes (those who earn under $80,000 a year). People with low and moderate incomes are also more likely to take public transportation, so expanding transit infrastructure and making it more affordable will benefit these groups most. 

 

 

Every day as Coloradans are warned about fire and ozone hazards, we are reminded of the critical role of public transit in reducing our carbon footprint. Available and accessible public transport systems help reduce the number of cars on the road ultimately reducing carbon emissions and air pollution. By supporting affordable and accessible public transport, we reduce our environmental impact and contribute to building a more inclusive and connected community.

Why are Noncompetes Bad for Working Women?

Posted April 13, 2023 by Sophie Mariam

 

Noncompete agreements create barriers to fair job opportunities and economic mobility for all workers, and have proven to be disproportionately harmful to Colorado’s working women– and most particularly for women of color.

CFI and WFCO have been policy partners for many years, and our shared commitment to reforming Colorado’s economic policies to promote equity at the intersection of gender, race, and economics makes for natural collaboration. While a strong body of research suggests that noncompete agreements are an anti-competitive practice that harms all Coloradan workers, we joined forces to examine this issue because we are particularly concerned about the impact of noncompetes on working women, workers of color, and Coloradans earning low wages. 

CFI and WFCO strongly support the Federal Trade Commission’s proposed rule banning noncompetes for all workers, which would promote competitive labor markets and economic opportunity for all workers by filling existing gaps in state policies. There is still time to submit a federal comment using this template from the National Employment Law Project; comments can be submitted here and are due April 19th. 

What’s a Noncompete? Why Have They Proliferated?

Noncompete agreements prohibit employees or contractors from sharing proprietary information or working with a competitor. They were intended to protect innovations in highly skilled or creative industries with trade secrets or intellectual property that was individually generated, but owned by the company. However, in recent years they have become ubiquitous across all fields and salary ranges. 

The purpose of noncompetes in fields outside those with trade secrets or intellectual property concerns is questionable; they have locked employees into poorer worker conditions by diminishing workers’ leverage to seek out better opportunities or bargain for higher wages. Moreover, the fundamental intent of noncompetes, to protect a firm’s innovations, can be carried out through alternative policy remedies (such as nonsolicitation agreements), which accomplish the same goals without harming competition and creating racial and gender inequities.

A Patchwork of State Policies: States Like Colorado Leave Some Workers Unprotected

The FTC’s recently proposed a full-federal ban, which is a critical step forward if Colorado and the nation hope to close gender pay gaps, ensure fair competition and economic dynamism, and encourage entrepreneurship amongst women and other historically marginalized groups. The proposed rule would build on the progress that Colorado has already made by limiting the enforceability of noncompetes for workers making under $101,250. 

However, states like Colorado still fail to protect women earning incomes over the determined threshold from the pervasive, chilling effects of noncompetes. This is particularly concerning since the most anticompetitive effects across industries occur at the high end of the income distribution, as a result of the higher propensity of these individuals to pursue entrepreneurship, particularly females earning higher incomes. A full ban would expand protections to those at the high end of the income distribution promoting female leadership entrepreneurial ventures and emerging industries in Colorado. 

A full ban for all states is necessary, and making non-competes unenforceable under state law does not prevent the harms outlined above because even if it has no real standing in the court, most workers aren’t lawyers; signing away your right to seek out other opportunities has a chilling effect on labor markets. Even in states like California where noncompetes are not enforceable, evidence suggests that when workers sign them, they still perceive them as binding and cannot afford the risk and costs of litigation. One study shows noncompetes are still used in 45.1% of establishments in California, allowing businesses to pressure employees into not seeking out better opportunities with competitors.

Why Are Noncompetes Harmful?

1. They Exacerbate Gender and Racial Wage Gaps, and Have Explicitly Racist Roots

The wage gap that exists in our country is only further expanded by inequitable tools that hold women, and other individuals, back from being economically successful. The wage gap in Colorado is evidenced by a research brief released by The Women’s Foundation of Colorado (WFCO) in partnership with the Institute for Women’s Policy Research. It found that “the average earnings for women in Colorado who work full-time, year-round are 83% of men’s average earnings for full-time work.” Moreover, “the gender wage gap persists in sectors where women are the majority of the workforce and the gap is even wider in sectors where most of the workers are men.” Given that a paper published in the SSRN discovered that “higher (noncompete) enforceability diminishes workers’ earnings and job mobility…and…exacerbates gender and racial wage gaps,” it’s vital that this rule is passed to address the harmful nature of non-compete agreements. 

Historical systems of gender, racial, and economic oppression have perversely impacted the ability of women, in particular women of color, and women with other marginalized identities to achieve economic success. A study conducted by NELP found that “banning non-competes would help alleviate racial and gender wage gaps because the underpaid workers who are most affected are disproportionately women and people of color.” In fact, Ayesha Bell Hardaway’s The Paradox of the Right to Contract: Noncompete Agreement as Thirteenth Amendment Violations asserts, “noncompete agreements for low-wage, unskilled labor are reminiscent of the Reconstruction Era’s wage-contract system that former slave owners used to exploit and subjugate African Americans.”

2. They Suppress Wages for Low-Wage Workers 

Noncompete agreements harm all Coloradans by suppressing macroeconomic growth and productivity, depressing wages for workers of all income levels, and stifling entrepreneurship. A full ban of noncompetes results in higher wages for workers in states leveraging this policy to ensure fair, competitive labor markets. Hourly workers in Oregon saw a 2-3% wage increase on average after the state banned noncompetes. 

3. They Discourage Female Entrepreneurship 

When workers are bound by noncompetes, they are less likely to go out on their own and start their own business, and women are disproportionately discouraged from entrepreneurship when bound by non-competes. One study shows that noncompetes increase the risk of entrepreneurship; for women, this acts as a “sharper break on startup activity than for men.” The gender gap in access to venture capital was closing prior to the pandemic, but COVID put a damper on this progress, which makes it all the more critical to ensure policies break down barriers to diversity in entrepreneurship. 

This is especially important for the economies of states like Colorado in light of the growing body of evidence showing that organizations with a higher percentage of women in leadership roles outperform male-dominated companies. Colorado, and in particular the Denver-Boulder region, has one of the highest startup-density rates in the country, meaning that our state is a growing hub for venture capital and new business. Simultaneously, only 5% of Colorado’s 122 public companies have a female CEO, and women’s leadership on corporate boards has stalled in recent years. Capitalizing on the growth of emerging sectors requires policies that support competition across industries and diverse leadership, not inhibiting female-led innovation.

Coloradan women are key in promoting sustained economic growth in our state, but our state’s newest revision of its noncompete statute does not reduce barriers to innovation for all women. Lower-wage women across our state cannot be legally bound by noncompetes under the current statute, which is critical to expanding entrepreneurial opportunities to lower-income women and women of color, who are starting businesses and creating jobs at high rates despite facing barriers to accessing startup capital. However, entrepreneurship is most prevalent at the lowest and highest income levels, and Coloradan women at the higher end of the income distribution can still be legally bound by noncompete agreements under current Colorado law.

4. They Are Anti-competitive, Creating Barriers to Shared Economic Growth 

The evidence suggests that economic dynamism and efficiency across our state’s economy also took a hit due to the proliferation of noncompetes. Not only do workers bound by non-competes stay in their jobs 11% longer, with no offsetting increase in pay or satisfaction, but they also slow the pace of innovation and force workers to seek jobs in industries outside their fields of expertise. Noncompetes not only reduce knowledge leakage across firms, but also lead to the stagnation of industries by discouraging “within-industry spinouts” that spur competition and innovation.

Advancing shared economic prosperity in Colorado requires a strong workforce and policies that create opportunities for mobility and entrepreneurship. While noncompetes may have the original intention of promoting innovation, by protecting trade secrets or encouraging investments in workforce training, many economists have argued that other policy options, like targeted nonsolicitation agreements or copyright rules, are more efficient tools to encourage firms to innovate. 

Scholars at Brookings have noted that by improving the ability of workers to switch jobs, policies banning noncompetes can produce both wage and productivity gains. It’s clear that the costs of noncompetes vastly outweigh their intention to protect trade secrets, which other policy approaches can more efficiently achieve. While Colorado’s existing statute has taken important steps to prevent noncompetes from suppressing dynamism and growth for low and middle-income residents of the state, a more robust federal ban would unlock our state’s full economic potential by dismantling unfair barriers to opportunity for all Coloradan workers and innovators, particularly female entrepreneurs and women of color. 

Take action now; submit a federal comment using this template from the National Employment Law Project by April 19th. Comments can be submitted here

How Rideshare Platforms are Lying to Everyone

Posted March 24, 2023 by Sophie Mariam

 

The last time I flew out of DIA, my Uber app showed a fare just short of 80 dollars for the 30 minute ride to the airport; my driver only kept 30 dollars of that fare, pre-tip. But neither the driver nor me knew the full story here. Until I asked him how much he was paid, I didn’t realize that over 60% of my money went to Uber’s corporate profits, not to the person who helped me with my luggage and got me to the airport on time.

If I hadn’t asked (risking my partner ditching me to make our flight on time) I wouldn’t have seen how little the driver actually kept; he probably would have thought I got a cheap ride, and I would have assumed he made a hefty profit off my 30-minute trip. The sliver of data that the rideshare platform lets us see paints a very different picture than the dirty truth of this app-based work. Drivers work around the clock to get us home safely when it’s 2am, or help us get where we need when our car unexpectedly gives out. Yet, their employers provide little to no transparency or accountability for them. Instead, big gig companies harvest on-the-job data to deploy algorithms and coercive incentives that deprive drivers of stable income, job security, discrimination protections, or informed consent when agreeing to the next gig.  

CFI’s recent analysis of local data, and a growing body of national studies, affirm that Colorado drivers and their families face high rates of economic insecurity and material hardship as a result of opaque, exploitative policies used by rideshare corporations to spike your fare while suppressing driver’s earnings. 

While platforms like Uber and Lyft promise drivers high pay, a recent CFI study found that Denver drivers make an average wage of just over $10.50 an hour once we account for the out-of-pocket expenses like gas and car maintenance, and uncompensated working time when drivers head to the next gig, or “deadheading time.” This runs contrary to the $30/hour in potential earnings touted by the industry, and a fraction of the state and local minimum wage. 

Most drivers aren’t part-time workers or college kids earning extra beer money; a 2022 survey found that 6 in 10 drive to support a child or adult at home. Drivers receive just under 80% of their weekly income from app-based work on average, and work a median of 38 hours a week; despite driving full-time, hourly wages fall woefully short of what’s necessary for a family to achieve economic self-sufficiency. 

A “take rate” is the portion of what consumers pay that goes directly to rideshare platforms. These can be between 50-70% of the rider’s fare, but this data isn’t publically available. Using local trip data, CFI’s new analysis estimates that if current take rates were 25% lower in the state, a rounding error relative to the rideshare company’s international profits, Colorado drivers would earn over $10 more per hour- that’s $20,000 more each year to care for their families and $769 million more in economic value that’s currently leaking out of our state.

High take rates and out-of-pocket costs eat away at drivers’ earning opportunities, but riders only see the total amount they pay. This creates an information gap that harms drivers when it comes time for consumers to decide how much to tip. Tips have a large impact on a driver’s ability to put food on the table; over one-fifth of the typical Denver driver’s income came from tips. 

Researcher Veena Dubal shows that corporations like Uber and Lyft use coercive incentives and hidden algorithms to differentiate fares and suppress wages in ways unknown to workers and riders, while the apps hide data to prevent consumers and workers from seeing the other side’s perspective so the public won’t catch onto the exploitation going on behind the curtain of these apps. The result is what scholars have called a “tacit oligopoly of high prices and low pay” that harms drivers and consumers alike, and we also know that the rideshare companies are claiming an increasing share of workers’ earnings. Coloradan workers and riders deserve full information, so they can decide for themselves if they’re getting a fair deal. 

In addition to the income volatility that drivers see as a result of high take rates, bearing the brunt of out-of-pocket costs, and the company’s covert methods of algorithmic wage discrimination, drivers are also at risk of being “deactivated” from the app (and therefore losing their livelihood) over discriminatory complaints, with no process for recourse. Over 1 in 5 Denver drivers report being discriminated against on the basis of their identity, and the majority of drivers are workers of color. We also know that 15% of Denver drivers report being terminated, with many facing predatory or unexplained termination from the platforms, and two-thirds of those drivers rely mainly on gig income to make ends meet. In other words, we may see that riders might rate drivers of color with lower stars or raise arbitrary complaints rooted more in biases than the realities of their service, which can result in unjust terminations. 

SB23-098 corrects the information asymmetry that is harming working families and consumers and stymying the potential of our state’s economy. I know exactly my salary at CFI and you probably know yours too. There isn’t any black box that dictates how much you make each day. If there was, you’d want to know how that black box works.

Forecast Five: March 2023 Revenue Estimates

Posted March 17, 2023 by Chris Stiffler

#1 — Is the Economy a Top Seed or an Underdog?

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In part due to high rates of inflation and interest, the US and Colorado continue to see positive, but slowing GDP growth. The slowdown in growth can be attributed to declining investment in residential real estate and business. The pace of business spending slowed from 9% in 2021 to about 4% in 2022, mostly as a result of significant decreases in residential investment because of high mortgage rates from the Fed.  Additionally, the pace of consumer spending slowed from 2021 to 2022 — particularly in goods. During the pandemic, consumers were spending more on goods, rather than services, which were largely shut-down or limited as a result of COVID-19. The balance of spending is returning to pre-pandemic ratios, when consumers spent more on services.  The Silicon Valley Bank failure raises some concerns about financial stability, which increases our risk of recession. However, Silicon Valley Bank is an outlier in the banking sector for many reasons, including niche clientele and its over-reliance on low-interest bonds that have suddenly become more expensive as the Fed continues to raise interest rates. It is unlikely that the Silicon Valley Bank run will have reverberating effects throughout the industry.

#2 — Labor Market Going Hard in the Paint

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Colorado’s unemployment rate sits at a very low rate of 2.8%, and is one of thirteen states that has an unemployment rate below the national average.   Colorado has the third highest labor force participation rate at 68.1%,  which is well above the national rate of 62.4%, and job openings still remain historically high. There were two job openings per person seeking employment in Colorado from March to December 2022. Rising job-quits and elevated job openings still means a strong labor market despite signs of a recession and tightening monetary policy. The leisure and hospitality sector led the way in job growth since last January.

#3 The Budgeting Playbook under TABOR is Simple, Yet Very Difficult

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Revenue projections were revised upward since the December Forecast, but that doesn’t mean more money for the General Fund– simply, it means higher TABOR rebates. Relative to the December forecast, revenue above the Ref C Cap has been increased from $2.47 billion to $2.75 billion in FY2022-23 and from $1.53 billion to $2.02 billion in FY2023-24.  Ironically, the TABOR revenue cap (Ref C), which makes it very difficult to adequately fund schools, roads, higher education, and healthcare, actually makes it very simple to plan since legislators can only budget to the Ref C cap. Because of this, we can already look at the budget picture for 2024 and 2025: and it doesn’t look good. Just maintaining current spending levels (i.e. keeping up with inflation and caseload growth) looks ominous in the out years.  The extra revenue available this year makes it a good time to do one-time budget spending, like capital construction, but adding on-going expenses (like hiring another teacher) is challenging this year since it’s unlikely it will be available the next year.

#4 — Have You Saved Anything for the Second-Half?

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Household personal savings jumped almost 30 percentage points during the pandemic as a result of federal and state action through direct cash transfer payments, as well as Colorado’s advanced rebate checks sent out last fall. As those transfers dwindled, household savings rates have fallen quickly from almost 35% in 2020 to 4.7% now. This is below the historical average rate of 7.5%; dropping savings rates indicate just how much high inflation is eating into household budgets.   As a result, many individuals and families are turning to credit cards to supplement their income and pay for necessities. Credit card payments as percent of disposable personal income increased in the first quarter of 2023 after falling year after year since the Great Recession. As far as savings goes for the state budget, it looks like we will finish this year’s budget (FY 2022-23) with a 16.6% General Fund Reserve.

#5 — Home Field Advantage?

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Colorado’s home prices peaked midway through 2022 as high household savings and low interest rates fueled the growth. But both interest rates and savings have quickly swung the other direction in 2023.  Home prices in the Denver Metro area are down 15.7% since the May 2022 peak. Two factors will moderate further drops in home prices though: new home listings are falling and new home construction is slowing. Colorado’s homebuilding permits are down 30% from the year prior. The average 30-year-mortgage rate jumped from 3.8% in March 2022 to 6.7% in March 2023 driven by the Federal Reserve’s eight interest rate hikes. This has had a huge impact on what homebuyers can afford. To put that into perspective, a $2,050 monthly mortgage got you a $550,000 home. Now that same monthly mortgage gets you a $427,500 house.

Measuring Adequacy: Funding and State Services

Posted March 13, 2023 by Kaylee Kaestle

 

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.

Forecast Five: December 2022 Revenue Estimates

Posted December 21, 2022 by Chris Stiffler

#1 — Monetary Policy Trickles Down

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With inflation still well above the Federal Reserve’s goal of 2%, the US central bank has been raising interest rates in an effort to cool rising prices. Over the course of 2022 the Fed has approved seven interest rate hikes, with more, albeit smaller, hikes still expected in the months ahead. These rate hikes, along with other factors like significantly cheaper gasoline, inflation has started to cool, but the cost of borrowing has skyrocketed. This has a particularly strong impact on hopeful homeowners, who saw their purchasing power dip 25% this year primarily because of rising interest rates. In addition to inflation, Fed policies also affect employment. Though competition for workers has remained high — there are 1.8 job openings for every job seeker in Colorado — and nominal wages have increased as a result, inflation has wiped out almost all wage gains made from the strong labor market. While wages have increased as much as 7.6% in parts of Colorado, that’s about the same percentage increase as headline inflation.

#2 — A Recession is still a Possibility

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It remains to be seen whether the Fed’s effort to cool inflation will wind up pushing our economy into a recession, but inflation (and rate hikes), along with global events like the continued war in Ukraine make it a distinct possibility. For Coloradans who are working hard but seeing their wage gains eaten by inflation, savings rates are taking a hit. Because consumer spending drives 70 percent of the economy, less spending is usually a recessionary warning sign.  For the state, which already operates fairly leanly and is required to spend set amounts on priorities like health care and education regardless of the economic climate, a recession can be devastating. For instance, Colorado’s General Fund Revenue saw a 17 percent drop during the 2001 and 2008 recessions.  The difference this time is our current 15% General Fund Reserve, which is significantly higher than the past, and should put Colorado in a better position to weather a recession without having to make giant cuts like in 2009-2011. The large TABOR surplus, also acts as a cushion against a recession since falling revenue would first come from those rebates instead of General Fund money available for the discretionary budget.

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

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Gross general fund revenue, which impacts the discretionary budget, is expected to fall by 3.8% between FY2021-22 and FY2022-23 largely driven by 2 ballot measures that passed in November.   The reduction of the income tax rate to 4.40% from 4.55% reduces revenue by $440 million each year. There was a 1.5 year impact on FY22-23—reducing revenue by $670 million—to account for the books on FY2021-22 already being close). Proposition 123 diverts $300 million to a fund for affordable housing. The half-year impact was $150 million for FY2022-23.  The bottom line for budget writers to consider as they write the next year’s budget: There’s $1.3 billion more than last year’s budget, but after inflation, caseload, reserve requirements, and some budget placeholders, revenue is still $58 million short of the governor’s proposed budget.

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

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Although TABOR rebates were revised downward relative from the September forecast, a whopping $2.47 billion will be returned to Coloradans next year. The first $400 million of that will cover the Senior Homestead Property Tax Exemption and the reduction in assessment rates from SB22-238. That leaves $2.2 billion to be refunded through the six-tier sales tax mechanism.  Last year, lawmakers decided to change the rebate mechanism for one year by issuing identical $750 checks (SB22-233). If lawmakers decide to do it again, every Coloradans will get around $600 refunds. If we don’t extend the identical payments, and sent the surplus through the six-tier sales tax mechanism, those in the top income category (making over $250,000) would get up to $2,600, while those in the bottom income category (making under $44,000) would get as little as $413.

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

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The biggest question for the education community is whether the annual shortfall in funding known as the budget stabilization factor will shrink in next year’s budget. The answer from the December forecast is: “Probably not by much and there’s a lot of maybes.”  K-12 enrollment was down 4,182 students from last year, but total assessed valuations for property tax are up 5.5% from 2021. Rising mortgage interest rates are dampening residential property value but they won’t be a school finance burden until FY2025-26 because of the gap in the reassessment 2-year cycle.  That means $92 million more in the local share than expected, which could be used to pay down the debt owed to K-12 education. Either that, or the state could just decrease the state share. Paying down the BS factor today might mean raising it again in the future if property taxes are lower or we dip into a recession.

Feds Must Act On New Oil and Gas Rules

Posted November 18, 2022 by Elliot Goldbaum

By Pegah Jalali

an oil derrick on a field at sunset

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.

Proposition FF: Healthy Kids, Better Food Economy, Part 3

Posted November 4, 2022 by Elliot Goldbaum
older elementary schoolchildren eating lunch, one is wearing glasses and smiling for the camera, Proposition FF would ensure all kids get free, healthy school meals.

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.

The cafeteria crew at Arvada K-8 (from left to right; Miriam, Lavonne, Melanie, and April) prepares hundreds of hoagies on short notice, racing against the clock to ensure that every sandwich was finished before the end of the workday so no kid goes hungry.

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. 

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