Someone once said, “There’s nothing more vulnerable than entrenched success.” Here in Colorado, our economy has had a great run over the last decade. After the 2008 financial crisis, our state bounced back quicker and better than any other state — which is why our economy has been ranked #1 for several years in a row.
But now, as we face another nationwide recession, Colorado’s success is indeed vulnerable. And looking at our state’s response so far, the signs are clear: we’re headed in the wrong direction.
A recent study ranked Colorado 50th when comparing which state’s unemployment rate is bouncing back most during the pandemic. Unfortunately, our unemployment rate jumped all the way up to 8.4% last month. At the same time, however, neighboring states like South Dakota (3%) and Utah (3.6%) saw their unemployment rates drop. Currently, over 300,000 Coloradans are out of work, and almost half of Colorado households report that they have less income than before the pandemic started.
One theory is that this is just a blip — and our economy will recover better than ever once the virus is gone. But if we look a little closer under the hood, there are some major concerns for small businesses — and for our economy in general.
The most obvious concern is the small businesses that have permanently closed during the pandemic. While a majority of these closures have come in the restaurant and hospitality sectors, many other industries have also been deeply impacted. Because of the difficulty of starting new businesses, the impacts of these permanent closures will be felt for a long time.
Another consequence of the pandemic is that Colorado’s unemployment trust fund will eventually have to be refilled. That means Colorado businesses will have to pay more in order to replenish it. At the same time, the new family leave program will be implemented — which increases taxes on businesses with 10 or more employees. And once that program inevitably heads towards insolvency, taxes will be pushed even higher.
On top of that, Colorado already has the highest commercial property tax rates in our region. It’s why our organization is proposing a ballot issue to drop the property tax assessment rate for both businesses and families in 2022. But legislators are still always looking for more revenue – and this year is no exception. After “closing loopholes” (raising taxes) on businesses with SB-1420 last year, they are planning to do more of it this year.
And only months after voters approved the “Vote on Fees” ballot issue, legislators are already planning to ignore it by passing a “gas fee” without voter approval. Increasing gas taxes not only hurts Coloradans at the pump, but also hurts Colorado businesses that receive or ship goods and supplies. If Democrats want to push this bad idea, Republicans should have nothing to do with it.
The hostility that the legislature has for the oil and gas industry is also starting to have a big impact on jobs and education. Oil and gas revenue is a significant local piece of the funding for schools in many parts of the state. And speaking of schools, we have yet to fully understand the long-term effects of remote learning on students – which will have an economic impact on top of the social and mental impacts that we are already seeing.
Needless to say, from small business closures to tax hikes to threats on our oil and gas industry, Colorado is on track to face drastic economic effects as we recover from the coronavirus outbreak. The fundamental question is: how seriously will Governor Polis and the legislature take these problems? Their goal should be to ease the burdens on small businesses, not increase them.
With the legislative session coming up soon, the ball is in their court.
Michael Fields is the Executive Director of Colorado Rising State Action