State friendly to business; lags in training, study says


About the competitiveness study

This is the fifth consecutive year the Metro Denver Economic Development Corp. has released a competitiveness study. The study ranks the 50 states in areas such as export dollars, gross domestic product, school funding and performance, economic outlook and health care costs and needs.

The study’s authors, including research economists and Metro Denver Economic Development Corp. staff, use that data to evaluate how Colorado could improve its position in the competition to appeal to companies. Qwest sponsored the study.

The Metro Denver Economic Development Corp., an affiliate of the Denver Metro Chamber of Commerce, acts as an ambassador to companies looking to relocate to the metropolitan Denver area.

Low education funding and a discrepancy between the health of Coloradans and what they pay for health insurance may hold Colorado back from economic development in the future, according to a report released Tuesday by the Metro Denver Economic Development Corp.

The “Toward a More Competitive Colorado” report listed Colorado mostly in good standing as a place to attract and grow businesses. Among the 50 states, Colorado ranks third in venture capital investments, small innovation research grants and high-technology employment per 1,000 workers.

The American Legislative Exchange Council put the state second, behind Utah, in Economic Outlook, and it has the fourth best environment for businesses paying taxes, according to the Milken Institute. The state places fourth and eighth, respectively, in solar power installation capacity and wind energy capacity.

But there’s room for improvement, according to the study. Purchasing health insurance costs more in Colorado than it does in 43 other states, and Colorado ranks 15th in highest percentage of state residents without insurance. That’s despite the fact Colorado has the lowest obesity rate in the country, the second least prescriptions filled per person, the third fewest heart disease-caused deaths and fourth fewest cancer-caused and diabetes-caused deaths per 100,000 people.

“Coloradoans have not reaped the economic benefits of healthier lifestyles and weight management through lower health insurance costs,” the report says.

“There is less economic incentive for Coloradoans to continue their preoccupation with maintaining a healthy weight.”

The state also is plagued by the “Colorado Paradox.” The state ranks second, behind Massachusetts, in residents over the age of 25 with a bachelor’s degree and eighth in the percent of the work force holding science and engineering doctorates.

On the other hand, it is 17th for handing out high school diplomas and 36th for producing engineers, 40th in producing computer science degree holders and 50th in producing teachers.

The work force is smart, but educating the future work force in-state is becoming more difficult. Colorado ranked 48th in 2007, down from 42nd in 2000, for how much money it budgeted for higher education per capita.

And it was 48th in 2007, down from 46th in 2000, for the amount of state dollars going to K-12 public education per student.

The state invests less per capita, parents invest more in education. Thirty-two states ask parents to invest a smaller percentage of their income to send kids to in-state public colleges, and 42 do the same for private-college tuition.

“Can we sustain ourselves by relying on other states to send us smart parents with smart kids while we continue to increase the price of obtaining the training needed to compete in an intelligence-based economy?” the report’s authors ask.

Education is not the only area suffering.

Colorado has the third lowest per-capita state spending and ranks second for lowest amount of state and local spending on public welfare.

Meanwhile, Colorado has the sixth-lowest sales tax rate in the nation, and that’s because five states don’t have a state sales tax.

And although the state is 10th for state tax revenue per resident, helped by local taxes, Colorado state tax revenue is 43rd lowest in the United States.

Residential property taxes in Colorado are the second-lowest in the country.

Colorado’s Constitution makes changing this situation harder, according to the report, but no less necessary.

“Efficient government requires a balance between the cost of doing business and the services government provides.

If government services are delivered with some degree of efficiency and, therefore, lower unit costs with lower taxes to support those services, business will be attracted to the state,” according to the report.


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