Revenue Forecast: More Bad News

Here's the full statement from COFPI on today's revenue projections:

The Colorado Legislative Council announced today that the state faces a $631 million shortfall—or 9 percent of the General Fund—in the Fiscal Year 2008-2009 budget that was approved by the 2008 legislative session. The severity of any cuts to the FY 2008-2009 budget would be magnified because the timeline is compressed into the final six months of this fiscal year, which ends June 30, 2009. The Colorado Fiscal Policy Institute (COFPI) released the following statement from Kathy White, Program Director at COFPI, on the December state revenue forecast announced today:

“Cuts in state services have a negative effect on the economy and a very real impact in the lives of Coloradans. People lose jobs, people lose benefits like health care and child care, people struggle even more to buy and access goods and services, and more and more families struggle to make ends meet. If the legislature chooses to cut the state budget by $631 million, the people of Colorado must brace themselves for an additional economic shock.

We hope to work with the legislature to come up with one-time revenue and strategic revenue enhancements that help protect Coloradans and avoid further reductions in our revenue base. The legislature must work to avoid cuts that will drive lower-income Coloradans deeper into poverty. We also hope state leaders work to maximize the benefits of any federal economic stimulus package that comes out of Congress. We must leave nothing on the table. Lastly, we hope state lawmakers have learned from past mistakes at the federal level, when long-term growth and stability was sacrificed for short-term, politically-popular tax cuts.

Yesterday, we released the State of Working Colorado 2008 report that painted a picture of working families in peril, entering this economic downturn in vulnerable circumstances, with rising unemployment and poverty and decreasing wages and health care coverage.

Today, not only do we hear news of this growing budget shortfall, but it was also reported that the unemployment rate in Colorado has increased again, to 5.8 percent, with 8,900 more Coloradans without work in November.

The revenue projections confirm that Colorado is in a recession now and that families will certainly face greater hardships ahead. This is not a time for timid, piecemeal approaches. This is a time for real leadership from the statehouse.”

NEW REPORT: State of Working Colorado 2008

COFPI released its State of Working Colorado 2008 report today, which includes data on employment, wages and income, poverty, insurance, and other economic indicators.

This year’s report examines how Colorado workers fared over the last business cycle, from 2000 to 2007. In the broader context, the news is not good. Low- and middle-income workers ended 2007 in worse shape than they were in prior to the 2001 recession. In the short-term context, the news is no less troubling: unemployment and poverty are on the rise, fewer families have health insurance, and wages and income levels are stagnating or declining.

“The bottom line is that the last expansion left many Colorado families worse off than they were eight years ago,” said Kathy White, Program Director of COFPI. “All of the data points to serious challenges for working Coloradans now and into the future, unless bold steps are taken by state leaders.”

Basically, the economic recovery that ended in 2007 left many Coloradans worse off than in 2000. Which is not good, considering we're heading into a serious economic downturn.

Here's the link to the press release and to the full report.

Denver Post: Fix it!

The Denver Post editorialized today about the desperate need to fix the broken fiscal system in Colorado. This is what we're all about.

Every solution to every single major problem the state faces is in handcuffs because of the insane fiscal

We have the most complex tax system in the country, that relies heavily on revenue from investment income and sales taxes (perfect for a recession brought on by a meltdown in the financial markets and a crisis in consumer confidence). We have collect among the lowest levels of revenue in the country. We have the most restrictive revenue and spending set up in the country. We have conflicting constitutional and statutory provisions that are simply unsustainable. And we have among the lowest levels of public investment in key areas in the country.

We've said it before, and we'll say it again: Colorado has a Model T fiscal system in a hybrid world.

So, something has to give, right? Someone has to step up and lead, right? There's an answer out there for how to fix this, right?

Public Investment = Economic Growth

We've been saying this for years: bold public investments can lead to robust economic growth. In bad economic times, increasing or speeding up public investments, rather than cutting those investments, is a sound economic strategy.

Don't believe us? Check out what Mayor Hickenlooper is doing in Denver.

Or for a longer read, check out this CCLP research paper that explores six historical case studies. The executive summary is here, and the complete paper is here.

Slow Tide, Sinking Boats: Economic data tells troubling story

Earlier this week the Denver Post had an article about conflicting county-level economic data, that showed while unemployment fell in some areas, poverty rose.

This is similar to what COFPI found in the Censusu poverty data that was released in August, for the years leading up to 2007. It was the first economic cycle where low- and middle-income people were worse off at the end of it, than at the beginning.

There are numerous factors for why poverty would rise as unemployment falls, but some of the key issues are stagnant or declining wages, businesses offering fewer benefits, and more employers dropping health care coverage.

The article also touches on the broader issue of income inequality. Check out this report from earlier this year to find out more about the income gap.

CU forecasts more job losses in Colorado

A CU forecast says that Colorado could lose 4,000 jobs in 2009, with large losses in the construction sector bouyed by some gains in energy, health care, and government.

While Colorado's economic landscape is not as bad as some other states, it's still not good. Constitutional and statutory constrictions exacerbate the problem by handcuffing policymakers who could otherwise use effective public investments as economic stimulus. The fact that Colorado has some of the lowest public revenues in the country doesn't help either.

Increasing public investments during difficult economic times, as opposed to decreasing such investments, is an effective strategy for economic progress. Pulling public investments out of the economy during a recession can have drastic and negative consequences. While we understand and admire the Governor's cautious approach on the budget in uncertain times, and we also understand the stifling constitutional and statutory restrictions on state investments, we also hope Governor Ritter recognizes that bold public investments can and do propel broader economic growth.

SAVE THE DATE: Budget Works 2009

It's that time again: Budget Works 2009 is just around the corner.

Last year, we had so much interest and engagement in budget matters, and we expect that to increase even more with all the economic and fiscal uncertainty. So we're actually expanding the program this year to a full day, including a morning budget forum, a lunch time speaker, and an afternoon panel discussions.

WHAT: Budget Works

WHEN: Friday, January 9th, 2009

WHERE: Colorado History Museum, 1300 Broadway, Denver, CO

Stay tuned for more details about the agenda and registration information.

Self-Sufficiency Standard Discussed in Loveland

CCLP Self-Sufficiency Program Coordinator Tracey Stewart was in Loveland yesterday where she delivered a presentation on the Self-Sufficiency Standard.

“The (self-sufficiency) standard is an evaluation tool of how economically healthy Colorado is,” said Tracey Stewart of the Center on Law and Policy. "And when you apply it, we’re not actually all that healthy.”

The Self-Sufficiency Standard is a bare-bones budget of everyday vital expenses, customized by family size and county location. Unlike the outdated Federal Poverty Level, the Self-Sufficiency Standard gives a more accurate indication of the economic security of families, based on real world conditions.

We're Back....

We're back.

After a little post-election sabbatical from the new media world, we're back with a new blog dedicated to informing policymakers, advocates, coalition partners, opinion leaders, media, and others about what's going on in public policy in Colorado.

We'll be focusing most of our posts on four key areas: fiscal reform, health care reform, economic security, and government watchdog issues.

Bells and whistles and techy upgrades will be forthcoming. But for now, we're primarily focused on generating content to help you help Colorado.