Presentation on theme: "CML NATALIE MULLIS (IN ABSENTIA) CHIEF ECONOMIST COLORADO LEGISLATIVE COUNCIL FEBRUARY 24, 2011 303-866-4778"— Presentation transcript:
CML NATALIE MULLIS (IN ABSENTIA) CHIEF ECONOMIST COLORADO LEGISLATIVE COUNCIL FEBRUARY 24, 2011 NATALIE.MULLIS@STATE.CO.US 303-866-4778 WWW.COLORADO.GOV/LCS The Outlook for the Colorado Economy and State Budget
Recovery Is Here - Really Contributions to Gross Domestic Product Seasonally Adjusted Annual Rate Source: Bureau of Economic Analysis.
Nation’s Manufacturing Sector Expanding Indices of Manufacturing Activity Source: Institute for Supply Management. Source: Federal Reserve. Index 2007 = 100 ISM Purchasing Manufacturer’s Index Expanding Contracting Industrial Production Index
Nation: Business is Doing Better Source: Bureau of Economic Analysis. Profits and income are with inventory valuation and capital consumption adjustments.
Colorado’s Energy Industry Mending Slowly Source: Baker Hughes.
Consumers No Longer Running Scared (But Still Cautious) Source: U.S. Bureau of Economic Analysis. Source: Colorado Department of Revenue. Colorado Retail Trade Sales Three-Month Moving Average, Seasonally Adjusted Monthly Data U.S. Real Personal Consumption Expenditures
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.
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.
However, Challenges Continue… Financial Sector Struggles High levels of Public & Private Debt Housing market woes Low levels of commercial construction High unemployment Uncertain business climate Rising input prices
Debt Will Loom Large for A Long Time U.S. Debt as a Percent of GDP Source: Federal Reserve Bank. Data through 2010 quarter one.
Financial Industry Will Take Time to Heal Source: Federal Deposit Insurance Corporation. Totals for all U.S. institutions. Data through 2010 quarter three.
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
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 Colorado Unemployment Rate
Colorado Nonfarm Employment Sources: History, U.S. Bureau of Labor Statistics. Forecast, Legislative Council Staff December 2010. Seasonally Adjusted
General Fund Cash Funds Federal Funds 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
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% General Fund
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% General Fund
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
FY 2010-11 General Fund Budget Source: Joint Budget Committee. Total General Fund Budget: $7.0 billion
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 MEducation Refinance $103 MCash Fund Transfers $64 MMedicaid Refinance $115 MReduce Reserve ($77) MPlaceholders (Medicaid, Human Services & 1% Personnel Reduction) ($12) MGaming Transfer Adjustments $349 Million - Total
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.
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$250.2 K-12 Funding$150.0 Budget Shortfall$1,153.2 *Assumes no salary increases and current levels of services as required under current law
Actions to Balance the Budget Cash fund transfers to the General Fund Reserve requirement reductions Increases in revenue Suspended sales and income tax exemptions and credits Raising fees Federal stimulus funds Salary/hiring freezes for state employees Permanent and one-time cuts to programs K-12 Education: Budget Stabilization Factor Higher Education Other Programs
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
Specific Items in Hickenlooper’s Proposal Eliminate 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
Total Appropriations Source: JBC Staff Does not adjust for double-counted appropriations.