Transcript US Bureau of Economic Analysis. - the Special District Association

Economic Outlook
Special District Association of Colorado
September, 2010
Real Gross Domestic Product Growth
5%
4.1%
3.6%
4%
3.1%
3%
2.5%
1.8%
2%
2.9%
2.7%
1.9%
1.1%
1%
0.0%
0%
-1%
-2%
-2.6%
-3%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010f
Source: U.S. Bureau of Economic Analysis.
Colorado Personal Income Growth Rate
Sources: U.S. Bureau of Economic Analysis.
U.S. Personal Savings Rate
(quarterly through 3Q09)
Sources: U.S. Bureau of Economic Analysis.
140
Jan-00
May-00
Sep-00
Jan-01
May-01
Sep-01
Jan-02
May-02
Sep-02
Jan-03
May-03
Sep-03
Jan-04
May-04
Sep-04
Jan-05
May-05
Sep-05
Jan-06
May-06
Sep-06
Jan-07
May-07
Sep-07
Jan-08
May-08
Sep-08
Jan-09
May-09
Sep-09
Jan-10
May-10
Consumer Confidence Index
160
Mountain Region
U.S.
120
100
80
60
40
20
Source: The Conference Board.
Dow Jones Industrial Average
2007: 18% of U.S. families have stocks; 53% have retirement accounts
Jul-10
Jan-10
Jul-09
Jan-09
Jul-08
Jan-08
Jul-07
Jan-07
Jul-06
Jan-06
Jul-05
Jan-05
Jul-04
Jan-04
Jul-03
Jan-03
Jul-02
Jan-02
Jul-01
Jan-01
Jul-00
Jan-00
18,000
16,000
14,000
12,000
10,000
8,000
6,000
Residential Mortgage Loans in
Foreclosure or Delinquent
Sources: Mortgage Bankers Association, National Delinquency Survey
Where We Are Today
• Colorado’s economy is the in the top three or
four states for diversification. Result of 25 years
of effort to more resemble the U.S. economy
(world’s most diverse). Coefficient of correlation
today is .82 (very high).
Where We Are Today
• Still facing another year of state and local budget
cuts. Government is a “lagging indicator” of
economic health.
• Higher education and K-12 will take the biggest
hits in State’s budget again this year.
• Biggest challenge is to find and lock-down a
permanent funding source for our research
universities.
The Federal Government
• Federal government continues to deliver “uncertainty”
into the marketplace. November elections might help
sort this out.
• D.C. policies that will help or hurt Colorado economy
▫ Hurt – aerospace and bioscience
▫ “commercialization of space” is code word for “funding
cuts.”
▫ Bioscience/instruments taking big regulatory hit.
Time to market for instruments is moving from four
years to 10 years. This compares to 12-14 years for
pharma products.
▫ These bio industries grew at 3.4% annually for past
five years.
Help from Washington in Clean Tech
• Clean Tech: Employment growth at 3.6%
annually for past five years. “A” in wind, “B+” in
solar. Texas is best in wind and Arizona is best
in solar.
• Big attraction is 30% RPS. Colorado is 8th in
installed wind capacity and 8th in solar capacity.
Regulations will increase….
• Increased regulation in banking is now, and will
in the future make borrowing more difficult –
“Get ready to start paying checking fees again.”
Employment growth “up”
• Workers are being stressed to the max – new
hires across the board are occurring but in small
numbers
“Movin’ to…well, maybe not…”
• Less mobile labor force (older and can’t sell
houses to make a move) has resulted in fewer
people “moving to where they think the jobs will
be”.
Outlook still looks good….not great
• Colorado will rank among the fastest growing
states in this recession.
Our Competitive Position
1982
• 9th in per student funding of K-12
• 13th in higher ed funding
• Highways ranked in Top Ten for age,
productivity and condition
• Income tax was “progressive” ranging from 5%6% based on “federally adjusted income”
• Sales tax was 3.0%
Today
• Income tax has been cut four times
• Sales tax cut once
• Residential property has been reassessed 14
times; 12 times the assessment ratio has been
cut (from 27% to 7.9%)
• 24th in per student funding of K-12
• 49th in per student funding for higher education
• “Bottom 10” in road quality with over 50% of
roads in ”Poor” condition
Colorado has become a low cost place
for state taxes, but not local
• Lowest income tax rate of any state that has one
• Lowest sales tax rate of any state that has one (5
states don’t)
• 2nd lowest per capita welfare payments (no
“welfare cheaters” allowed)
• 2nd lowest in state revenue per capita
• 3rd lowest in state expenditures per capita
• 2nd lowest residential property tax
Question is: “With dropping
government revenues are we still
competitive?”
Per Capita Personal Income
U.S. Bureau of Economic Analysis
0
12th
Highest
5
10
15
20
2000
2003
2008
Rank 25
30
35
40
45
50
CT
NJ
MA
MD
NY
CO
MT
NM
AR
WV
MS
Colorado’s high personal income level is due mainly to its ability to attract and retain highly educated
people with high-paying jobs. Strong population growth in Colorado in 2008 contributed to Colorado’s
Employment Growth
U.S. Department of Labor, Bureau of Labor Statistics
33rd
Highest
Employment growth in Colorado improved from 2003 - 2008, then slipped again in 2009. The
employment growth rate in Colorado from 2008-2009 (-4.7%) was better than all of its competitors
except Texas (-2.9%) and New Mexico (-4.2%).
Annual Population Growth
U.S. Census Bureau, Population Estimates
4th
Highest
Population growth tends to be higher in those states where jobs are perceived to be more available.
Although Colorado’s job growth rate slipped in 2009, the state remained a magnet for job-seekers.
Strong population growth in the state is also linked to an inflow of baby boomer parents.
Venture Capital Investments per $1,000 of SGDP
PriceWaterhouseCoopers MoneyTree Survey
3rd
Highest
Venture capital investments made in a state are an indicator of an economy with strong entrepreneurial
and inventive elements. With 100 completed deals in 2008, venture capital investment in Colorado was
Fig. 9
Small Business Innovation Research Grants
U.S. Small Business Administration; U.S. Bureau of Labor Statistics
2nd
Highest
Colorado’s strong research and development sector is a major contributor to its high ranking compared
to its competitors.
Fig. 4
Economic Outlook
American Legislative Exchange Council
2nd
Best
Economically competitive states attract people from less competitive regions around the nation.
High ranking states are projected to have positive levels of in-migration, employment growth,
and higher personal incomes due to their competitive tax environments, fiscal health, and
strong legal systems.
High-Tech Employment per 1,000 Workers
TechAmerica
3rd
Highest
Colorado’s favorable wage structure, high quality of life, and diverse technology-based
industries lead to one of the highest concentrations of high-tech employees in the country.
State Business Tax Climate Index
The Tax Foundation
13th
Best
The State Business Tax Climate Index Rank published by the Tax Foundation offers a holistic
measure of state business tax burdens and climate than is measured in many other studies.
Colorado has the 13th-best tax climate in the country, meaning taxes are lower.
State Tax Revenue per Capita
U.S. Census Bureau, Government Finance Series
10th
Lowest
Colorado has a decentralized tax structure with low levels of state government taxation.
State Sales Tax Rates
The Sales Tax Institute
6th
Lowest
The state sales tax rate in Colorado (2.9 percent) is among the lowest in the country. States
ranked higher than Colorado charge no sales tax. States ranked in the bottom four have rates
of seven percent or higher.
Residential Property
Tax Rate in Largest City in Each State
District of Columbia, Office of the Chief Financial Officer
2nd
Lowest
Passed in 1982, the Gallagher Amendment has kept the assessment ratio of residential property
in Colorado low, resulting in the second-lowest residential property tax rate in the nation.
Fig. 49
Lowest Total State Expenditures per Capita
Includes General Fund, Federal Funds, Other State Funds, and Bonds
Kaiser State Health Facts
3rd
Lowest
State spending in Colorado, like the state’s tax burden, tends to be low compared to the rest of
the nation.
Lowest per Capita State and Local Government
Expenditures for Public Welfare Programs
U.S. Census Bureau, Government Finance Series
3rd
Lowest
New Mexico has one of the nation’s lowest per capita personal income levels. As a result, the
state spends high amounts on welfare-related programs.
Basic Building Blocks of an
Economy
• Education
• Infrastructure/transportation
• Health Care
Percent of Public School Fourth Graders
Proficient or Better in Reading
National Center for Education Statistics
6th
Highest
Colorado not only has a high percentage of proficient fourth grade readers, it exceeds every other
western state in the percent of fourth graders who read at advanced levels.
Fig. 69
Highest ACT (25 or above) and SAT (1780 or above)
Scores per 1,000 High School Graduates
NCHEMS Information Center
1st
Highest
Colorado excels at educating bright students and offers outstanding public college prep schools.
Student/Teacher Ratio in Public Elementary
and Secondary Schools
National Education Association
10th
Highest
With an average of 16.8 students per teacher throughout the state, Colorado’s student-teacher
ratio ranks as one of the 10 highest in the country. The national average is 15.2.
Percent of Public School Eighth Graders
Proficient or Better in Reading
National Center for Education Statistics
26th
Highest
Colorado’s eight grade reading rankings have not been as consistent as its fourth grade
rankings since 2003. Colorado’s rank has fluctuated in the second quartile, but the state’s
percent of eighth graders proficient or better in reading has been trending down since 2003.
Public High School Graduation Rates
NCHEMS Information Center
29th
Highest
The north central states continue to graduate the largest shares of high school students.
Colorado’s rank has shifted slightly from 27th highest in 2000 to 29th in 2006. Colorado’s
graduation rate was 70.4 percent in 2006.
State and Local Public Higher Education Support
per Full-Time Student
NCHEMS Information Center
3rd
Lowest
Colorado continues to offer one of the lowest levels of support per full-time higher education
student. Colorado spends 6.4 percent less than its 2001 peak in the level of support per student.
Health…..
Lowest Obesity Prevalence Among Adults
1st
Lowest
Trust for America’s Health
Colorado was the only state in 2008 and 2009 with obesity rates below 20 percent. Healthy
workers are more productive, require fewer health services, and enjoy longer working lives.
Fig. 95
Fewest Retail Prescriptions Filled per Capita
Kaiser State Health Facts
2nd
Fewest
With low rates of obesity, cancer, diabetes, and other diseases, Colorado residents require
fewer drug prescriptions than any other state except Alaska.
Fig. 99
Fewest Cancer Deaths per 100,000 Population
Kaiser State Health Facts; United Health Foundation
4th
Fewest
Western states–including Colorado–have the lowest incidence of cancer deaths in the nation.
Fewest Diabetes Deaths per
100,000 Population
Kaiser State Health Facts
4th
Fewest
Colorado’s low obesity rate is reflected in the low number of diabetes deaths. Louisiana and
West Virginia are among the nation’s most-obese states.
Health Insurance Costs
Penton Media, Inc.
7th
Highest
Colorado’s health insurance costs rank as some of the highest in the nation. While Colorado is one of the nation’s
healthier states, its low affordability may reflect the higher number of physicians per 100,000 residents or the
increased demands on the medical industry made by Colorado’s well-educated and comparatively wealthy citizens.
Infrastructure/Transportation
Percentage of State Funding for
Transportation (1980 vs. 2010)
1980 Transportation Funding: 12.7%
Transportation Funding
Other State Funding
2010 Transportation Funding: 5.3%
Transportation Funding
Other State Funding
8th Lowest State in
Federal Highway
Funding
Clusters and Where They’re
Headed in 2011
• Aerospace – job loss, waiting on D.C.
• Aviation – growth in passengers, drop in freight
• Energy – Fossils –
▫ some growth in NE Colorado with big discovery
▫ Clean tech – continued growth
•
•
•
•
•
•
Bio Science – waiting on D.C.
Financial Services – job loss, waiting on D.C.
Broadcast/Telecom – slow growth
Software/IT – increasing growth with small firms
Tourism – continuing, but slow growth
Ag – another year of solid growth as prices hold
Public Policy and Taxes Matter
• Over 50 corporate headquarters have moved to
Colorado since 2003. Over 80% have been in
“innovation” clusters
• Clean tech companies have expended over $1.2
billion on Front Range for new facilities
• What changed?
▫ Income tax apportionment formulas
▫ Increased incentives
▫ Policies that eliminated “uncertainty” in the
market
Wind and Solar are good examples
• From nowhere in national and international
leaders
• Bill Owens and Ken Salazar create “CoLaboratory” – federal funds create research
incentives
• 30% Renewable Portfolio Standard ensures
market within state borders
• Income tax changes increase profitability for
“export” companies
• Income tax “credits” make Colorado competitive
Percent of Electricity Generated through
Renewable Sources
U.S. Energy Information Administration
14th
Highest
Increased private and public sector interest and a renewable energy portfolio standard have
improved Colorado’s ranking. Colorado’s percent of electricity generated through renewable
resources increased 75 percent from 5.7 percent in 2007 to 10 percent in 2008.
Fig. 119
Total Wind Energy Net Generation
U.S. Energy Information Administration
Top 10 States and Colorado
7th
Highest
Only 11 states reported energy generated from wind in 2000. That number jumped to 35 states
in 2009, with Colorado ranking seventh.
*2009 data is preliminary.
Fig. 123
Total Solar Energy Installed Capacity
SNL Financial Operating Capacity Dataset
Top 10 States
6th
Highest
0
5
10
2010
Rank 15
20
25
30
CA
NV
FL
NJ
NC
CO
TX
AZ
OH
Large scale solar operations are still new in the United States and require significant amounts of
land and sunshine. In 2010, 27 states had quantifiable solar operations.
Fig. 127
When Will It End?
• All signs point to a “good” 2012, but last half of
2011 should point the way
• Major construction projects from AARA will be
either underway or nearing completion
• Governments’ budget slashing completed and
near the end of “washing out”
• Strong sales tax recovery
• Housing industry finally sees its own recovery
• Congress will have sent the tax bill to business
and citizens – reformulating balance sheets
But……………there’s these things on
the ballot…..
•Proposition 101
•Amendments 60 and 61
Will voters decide to “send a
message” and start a “voter
approved” recession?