![Page 1: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/1.jpg)
CML
NATALIE MULLIS (IN ABSENTIA)CHIEF ECONOMISTCOLORADO LEGISLATIVE COUNCILFEBRUARY 24, 2011
The Outlook for the Colorado Economy and State Budget
![Page 2: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/2.jpg)
“Worst Recession Since the Great Depression”
![Page 3: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/3.jpg)
“Freefall”
![Page 4: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/4.jpg)
We’re in Recovery!
![Page 5: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/5.jpg)
Recovery Is Here - ReallyContributions to Gross Domestic Product
Seasonally Adjusted Annual Rate
Source: Bureau of Economic Analysis.
![Page 6: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/6.jpg)
Nation’s Manufacturing Sector ExpandingIndices of Manufacturing Activity
Source: Institute for Supply Management. Source: Federal Reserve. Index 2007 = 100
ISM Purchasing Manufacturer’s Index
Expanding
Contracting
Industrial Production Index
![Page 7: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/7.jpg)
Nation: Business is Doing Better
Source: Bureau of Economic Analysis. Profits and income are with inventory valuation and capital consumption adjustments.
![Page 8: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/8.jpg)
Colorado’s Energy Industry Mending Slowly
Source: Baker Hughes.
![Page 9: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/9.jpg)
Consumers No Longer Running Scared(But Still Cautious)
Source: U.S. Bureau of Economic Analysis. Source: Colorado Department of Revenue.
ColoradoRetail Trade SalesThree-Month Moving Average, Seasonally Adjusted Monthly
Data
U.S. Real Personal Consumption Expenditures
![Page 10: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/10.jpg)
The Job Situation Is Improving
Total nonfarm employment saw small gains in 2010
Source: U.S. Bureau of Labor Statistics. Seasonally adjusted data through November 2010.
![Page 11: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/11.jpg)
CO Industries Losing Jobs Dec. ‘09 to Dec. ‘10
CO Industries Losing Jobs Dec. ‘09 to Dec. ‘10
CO Industries Gaining Jobs Dec. ‘09 to Dec. ’10
CO Industries Gaining Jobs Dec. ‘09 to Dec. ’10
Broader-Based Industries are Doing Better
Source: U.S. Bureau of Labor Statistics. Seasonally adjusted data through December 2010.
![Page 12: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/12.jpg)
However, Challenges Continue…
Financial Sector StrugglesHigh levels of Public & Private DebtHousing market woesLow levels of commercial constructionHigh unemployment Uncertain business climateRising input prices
![Page 13: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/13.jpg)
Debt Will Loom Large for A Long TimeU
.S.
Debt
as
a P
erc
en
t of
GD
P
Source: Federal Reserve Bank. Data through 2010 quarter one.
![Page 14: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/14.jpg)
Financial Industry Will Take Time to Heal
Source: Federal Deposit Insurance Corporation. Totals for all U.S. institutions. Data through 2010 quarter three.
![Page 15: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/15.jpg)
The Housing Market Will Also Require Time
Source: Colorado Department of Local Affairs. Seasonally adjusted data through October 2010.
Residential construction remains
at low levels
Colorado Single Family Permits
Total Permits
![Page 16: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/16.jpg)
Unemployment Will Remain High
Source: U.S. Bureau of Labor Statistics and Legislative Council Staff projections based on the December 2010 forecast.
8.8% Unemployed in December
Colo
rado U
nem
plo
ymen
t R
ate
![Page 17: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/17.jpg)
Colorado Nonfarm Employment
Sources: History, U.S. Bureau of Labor Statistics. Forecast, Legislative Council Staff December 2010.
Seasonally Adjusted
![Page 18: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/18.jpg)
What Does this Mean for the Budget?
?
![Page 19: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/19.jpg)
Sources of State Revenue
• Transportation taxes & fees• Severance tax• Gaming revenue
Three Major Sources • Medicaid funding• Transportation funds• Stimulus dollars
• Individual & corporate income tax• Sales & use tax• Liquor and alcohol taxes
![Page 20: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/20.jpg)
Individual Income Taxes
Sources: Colorado Department of Revenue. Annualized Data. Cash-accounting basis. Data through December 2010.
FY 2009-10-5.8%
FY 2008-09-12.9%
![Page 21: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/21.jpg)
Sales Taxes
Sources: Colorado Department of Revenue. Annualized Data. Cash-accounting basis. Data through December 2010.
FY 2009-10-5.5%
FY 2008-09-9.2%
![Page 22: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/22.jpg)
General Fund Revenue Outlook
Source: Colorado State Controllers Office and Legislative Council Staff projections based on the December 2010 forecast.
Drop in revenue of 12.9% between FY 2007-08 and FY 2008-09 and a drop of 4.3% between FY 2008-09 and FY 2009-10
![Page 23: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/23.jpg)
FY 2010-11 General Fund Budget
Source: Joint Budget Committee.
Total General Fund Budget: $7.0 billion
![Page 24: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/24.jpg)
FY 2010-11 General Fund Budget Shortfall
Total General Fund Budget: $7.0 billion
Source: Joint Budget Committee and Legislative Council Staff.
$ 348 million shortfall to fill 4% reserve (Governor’s Forecast)Supplemental Package:$156 M Education Refinance$103 M Cash Fund Transfers $64 M Medicaid Refinance $115 M Reduce Reserve($77) M Placeholders
(Medicaid, Human Services & 1% Personnel Reduction)($12) M Gaming Transfer Adjustments$349 Million - Total
![Page 25: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/25.jpg)
FY 2011-12 General Fund Budget Shortfall
Over $1.1 billion shortfall LCS Forecast
Total General Fund Budget: $7.0 billion
Source: Joint Budget Committee and Legislative Council Staff.
![Page 26: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/26.jpg)
FY 2011-12 General Fund Budget Shortfall
Over $1.1 billion shortfall*
Source: Joint Budget Committee, Legislative Council Staff, and Office of State Planning and Budgeting.
Carry Over FY 2010-11 Shortfall $204.2 Replace One-Time Sources of Funding Federal Stimulus for Medicaid $363.6 Federal Stimulus for Higher Education $89.2 Amendment 35 Funds for Medicaid $96.0 Caseload Increases $250.2K-12 Funding $150.0
Budget Shortfall$1,153.
2 *Assumes no salary increases and current levels of services as required under current law
![Page 27: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/27.jpg)
Actions to Balance the Budget
Cash fund transfers to the General FundReserve requirement reductions Increases in revenue
Suspended sales and income tax exemptions and credits Raising fees
Federal stimulus fundsSalary/hiring freezes for state employeesPermanent and one-time cuts to programs
K-12 Education: Budget Stabilization Factor Higher Education Other Programs
![Page 28: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/28.jpg)
Governor’s FY 2011-12 Budget Proposal
Combined Impact of Ritter & Hickenlooper Proposals: -$303.5 million
General Fund Expenditure Change: +$137 million Biggest Cut K-12: -$208 million Higher Education: -$20.3 million Health Care: +$388 million
Revenue Augmentation: +$440 million Cigarette Sales Taxes & Vendor Fee: +$89 Cash Fund Transfers: $193 million Suspend FPPA Payments: $25 million Reserve: $163.7 million
![Page 29: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/29.jpg)
Specific Items in Hickenlooper’s ProposalEliminate various programs:
K-12 Eliminate school leadership academy Eliminate interest on school loans program
Human Services: Pueblo Mental Health Institute Close 20-bed Therapeutic Residential Child Care Facility Close Circle Program
Corrections: Close Ft. Lyon Prison Eliminate Parole Wrap-around Program Cut education and community programs
Parks: “Repurpose” 4 state parks
![Page 30: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/30.jpg)
Total Appropriations
Source: JBC Staff
Does not adjust for double-counted appropriations.
![Page 31: The Outlook for the Colorado Economy and State Budget](https://reader035.vdocuments.net/reader035/viewer/2022081520/56814d53550346895dba8f55/html5/thumbnails/31.jpg)
TABOR and Referendum C