The BLS estimates that Colorado’s unemployment rate in December 2017 was 3.0 percent, while Denver’s unemployment rate was 2.9 percent . Earlier in 2017, the state unemployment reached a record low of 2.3 percent. This is among the lowest unemployment rates recorded by any state in recent decades. The other six metropolitan statistical areas tracked by the BLS averaged an unemployment rate of 3.4 percent. Fort Collins had the lowest unemployment rate at 2.5 percent. Only two cities had an unemployment rate greater than the national unemployment rate of 4.1 percent—Grand Junction and Pueblo . Personal income growth among state residents reached nearly 8 percent in 2014, but growth slowed over the next two years. This trend reversed in 2017 as personal income growth increased to 5.4 percent. This growth rate exceeds the national rate by more than 2 percentage points . According to the OSPB, per capita income and wage growth in Colorado over the past year also outpaced the national figures. With regard to party registration in Colorado, voters were nearly evenly divided among Democratic, Republican, and unaffiliated categories at the time of the 2016 election. According to voter registration data from the Secretary of State’s office, the state had nearly 3.3 million active voters in November 2016. A plurality of these voters registered as unaffiliated , hydroponic nft while the share of Democratic and Republican were nearly equivalent. In February 2018, the number of active voters decreased relative to November 2016 by about 1.7 percent.
This may be partially attributable to controversy surrounding President Donald Trump’s Commission on Voter Fraud, which made data privacy a concern after the commission requested, “voluminous information on voters, including names, addresses, dates of birth, political affiliations and the last four digits of Social Security numbers, along with voting history” . Fifteen months after the 2016 election, the proportion of unaffiliated voters in the state increased to 36.3 percent, while the share of Democrats and Republicans decreased to 31.1 percent and 30.8 percent, respectively . This change is likely driven by primary election reforms approved by voters in the 2016 election. Voters overwhelmingly approved Proposition 107, which adopted a presidential primary in lieu of the existing caucus system, and Proposition 108, which allowed unaffiliated voters to participate in the party primary of their choice. Previously, unaffiliated voters were prohibited from participating in any primary elections or caucus meetings. Because this reform allows unaffiliated voters to participate in the primary of their choosing, it appears that a substantial number of Coloradans changed their party registration status to take advantage of this new opportunity. Colorado’s economic trajectory remains generally positive. In late March, the Governor’s Office of State Planning and Budgeting released its revised economic forecast. The report summarized the condition of Colorado’s economy by stating, “Colorado’s economy is on solid footing with strong employment growth and expectations of an ongoing expansion. New business formation continues to grow, while Colorado oil production is at record levels. Although much of the state’s economic growth has occurred along the Front Range, stabilizing farmland values and increases in energy prices and production have recently supported rural areas as well. Looking forward, higher costs of living and tight labor market conditions are expected to constrain further growth through the forecast period” .
The OSPB characterized the 3.1 percent increase in General Fund revenue in the 2016–2017 fiscal year as“modest,” while projecting a larger revenue increase for the 2017–2018 fiscal year of 12.9 percent. According to the OSPB, the revenue forecast for the 2018–2019 fiscal year is projected to grow from $11.6 to $12.0 billion. The more substantial increase during the 2017–2018 fiscal year is attributable to “strong economic growth, a rebound in corporate income tax receipts, robust investment income gains, and federal tax changes” . Regarding the latter, the $1.5 trillion tax reform package signed into law by President Trump in December 2017, among other things, lowered individual income tax rates and nearly doubled the standard deduction for individuals and families. Increasing the standard deduction makes it likely that more tax returns would be filed using the standard deduction instead of itemized deductions. This, combined with reduced tax rates, mean that individuals are likely paying less in federal taxes despite having a larger taxable income. Because Colorado state taxes are 4.63 percent of each individual’s federal taxable income, the state projects to receive greater tax revenue while most state residents can expect to pay less in federal taxes. This is particularly notable in Colorado where TABOR requires any tax increases to go before the electorate for approval in a general election. Accordingly, while the state income tax rate remains unchanged, the tax cut at the federal level in effect imposes a tax increase at the state level as a result of many tax returns reporting a greater taxable income. Most of the state’s General Fund revenue comes from individual and corporate taxes. The OSPB reports that income tax with holdings increased by more than 9 percent over the past year . Partly because of the new federal tax law, the OSBP claims that there is a “high degree of uncertainty surrounding the forecast for individual income tax collections” . While individual income tax revenues increased by 3.6 percent in the prior fiscal year, the state projects further increases in excess of 13 percent in the current fiscal year. Income tax revenue is projected to grow by an additional 1.7 percent in the next fiscal year.
Further good news regarding state revenue collection is that corporate income taxes are projected to grow by 38.6 percent in the current fiscal year after a 21.9 percent decrease last year. This would be the first time in the last five years that corporate tax revenues increased. Likewise, sales tax revenues are projected to grow by 9.6 percent in the current fiscal year and 4.8 percent the following year . Part of this increase in sales tax revenue is attributable to the increased special sales tax on recreational marijuana purchases, which increased from 10 percent to 15 percent following the passage of Senate Bill 17-267 in 2017. According to the OSPB forecast, individual income taxes constitute $7.65 billion of the expected $11.6 billion in general fund revenue for the 2017–2018 fiscal year. Sales and use tax revenue are projected at $3.5 billion. Corporate income tax revenue is expected to provide an additional $0.71 billion . These three revenue sources constitute 95 percent of total General Fund revenue. State revenues were relatively stable around the $10 billion mark over the past three years. The $11.6 billion revenue estimate for the upcoming fiscal year represents a 12.6 percent increase, which would be the largest growth in state revenue since 2005 when revenues increased 13.1 percent. Such an increase would be similar in magnitude to the percentage of lost revenue that occurred during the Great Recession . Since 2009, individual income tax revenue has increased each year, hydroponic channel although not in a strictly linear pattern. Sales and use tax revenue has also increased each year over the past decade. Corporate tax revenue has exhibited greater volatility. Since the Great Recession when corporate income tax revenue fell to less than $300 million, corporate taxes rebounded over the next five years to greater than $700 million in the 2013–2014 fiscal year. The OSPB cites global economic factors, such as a strong dollar and decreases in oil, gas, and other commodity prices as the catalysts for the three-year decline in corporate tax revenue beginning in 2014. After falling 21.9 percent in the third year of this recent decline, corporate tax revenue is estimated to increase by 38.6 percent in the current fiscal year. In addressing how federal tax reform may affect state corporate tax revenue, the OSPB projects continued growth in corporate tax revenue, but cautions that “future increases will be constrained by higher business costs, especially for employee compensation, which will reduce profit margins and result in lower tax liabilities” . Taxes from the state’s legal marijuana market continue to grow. According to data released by the Colorado Department of Revenue, total marijuana sales surpassed $1.5 billion in 2017 . Of this total, $1.09 billion in sales came from the retail market, while medical marijuana sales were approximately $0.42 billion. Table 2 reports annual marijuana sales and tax revenue data. Sales have increased each calendar year since the retail market began operation on January 1, 2014, but the growth rate has gradually declined each year. In 2014, marijuana sales totaled nearly $680 million. This figure increased by 45.7 percent in 2015 to $990 million. Sales increased by 31.3 percent and surpassed the $1 billion mark for the first time in 2016 to reach a total of $1.3 billion. Total sales in 2017 amounted to $1.5 billion, which represents a 15.3 percent increase. If the trend continues, Colorado could expect to see sales numbers plateau since the growth rate has decreased by an average of 15 percentage points each year. Sales data through September 2018 indicate sales of nearly $1.16 billion. The monthly sales average for 2018 puts the state on track for an annual marijuana sales total of about $1.54 billion, which would be the largest sales amount to date and constitute a slight increase of 2.4 percent from 2017. State revenue from the medical and retail marijuana markets in the form of taxes and fees reached nearly $250 million in 2017. This is a 27.8 percent increase from 2016 following a 48.5 percent increase in tax revenue from 2015 to 2016. During the first 10 months of 2018, the state reported tax and fee revenues of $223 million. A linear projection of tax revenue for the remainder of the year suggests that the annual tax revenue would reach nearly $268 million, an increase of about 8 percent from the prior year. The largest annual increase in marijuana taxrevenue occurred in the second year after retail sales became legal when tax revenue nearly doubled . Increasing sales have driven greater tax revenue, and the state legislature modified the marijuana tax structure in the prior session with the passage of Senate Bill 17-267. From January 1, 2014 through June 30, 2017, retail marijuana sales were subject to the state’s 2.9 percent sales tax and a special 10 percent sales tax in addition to local sales taxes.
Beginning on July 1, 2017, marijuana sales are exempt from the state sales tax and are instead taxed at a special tax rate of 15 percent. A 15 percent excise tax also applies to retail marijuana sale from cultivation facilities to dispensaries for manufacturers. According to the Joint Budget Committee, marijuana tax revenue from the most recent fiscal year was allocated as follows: 49.4 percent to the marijuana tax cash fund, 39 percent to several K-12 education funds, 6.7 percent to local governments, and 4.9 percent to the General Fund.Relative to last year’s budget, Governor Hickenlooper’s budget request for the 2018– 2019 fiscal year is much more optimistic. This positive tone is a product of a good economic climate and the successful passage of a major budgetary reform in the prior session. Transitioning hospital provider fees into a government enterprise fund made these funds TABOR exempt. In the 2016–2017 fiscal year, hospital provider fee revenue was $654.4 million. In future years, these funds do not count toward the TABOR revenue cap. The governor emphasized the importance of this reform by noting that “The passage of S.B. 17-267 has materially and positively changed the State’s financial outlook compared with one year ago, when the request had to close a $500 million funding gap in the General Fund” . Beyond this important budgetary reform, Governor Hickenlooper also lauded the strong upward trajectory of the state’s economy by claiming, “Colorado’s economy continues to outperform nearly every state and the national economy overall” . Statewide unemployment remains low and job creation numbers are strong—approximately 53,000 new jobs are projected for 2018. As the state’s population continues to grow, Hickenlooper’s budget request reflects spending priorities to address increased demand for certain state services. K-12 spending is proposed to increase by $84.6 million, which represents an increase of $343.38 per student. According to state estimates, the 178 school districts in Colorado currently serve the educational needs of more than 865,000 students.