With continuing movement of people to Colorado and revenue caps set by the state’s constitution, Colorado will face a budget crisis, said Vectra Bank Colorado President and CEO Bruce Alexander.
“If you look at the requirement for a [state] refund and the in-migration, we don’t really have the money to keep the roads up. We do have a budget crisis coming,” Alexander said.
Alexander addressed more than 200 people Tuesday morning for the Vectra Bank Colorado economic forecast breakfast.
Jason Schrock, chief economist of the Colorado Office of State Planning and Budgeting, and Tatiana Bailey, executive director of the Southern Colorado Economic Forum at UCCS, gave the keynote speeches.
The projected increase in population will harm Colorado’s roads and bridges and their maintenance budget, Schrock said. At the same time, limitations put on state spending by the Taxpayers’ Bill of Rights will further constrain spending.
“As the TABOR refund grows, there’s less money in the state for education, public safety and courts, Medicaid and all other programs,” he said. “It’s a difficult problem with a lot of political issues.”
Overall, the state’s economy is on an upswing, due in large part to the strong industries that rely on science, technology, engineering and math education and training, Schrock said. Unemployment rates of all Colorado cities now fall below the national level of 4.9 percent.
“It comes at a cost,” he said.
That cost includes higher housing prices and an increased difficulty for employers to find adequately trained people to fill job openings.
Amnet President and CEO Trevor Dierdorff agreed. Amnet made a $70,000 offer to someone who declined after being offered a $100,000 job at Lockheed Martin. The unemployment rate for IT positions is less than 1 percent, and those unemployed are “there for a reason,” Dierdorff said. “I can’t compete with Lockheed and their benefits package.”
“I talk to so many kids [at UCCS] who say Millennials get a bad rap and that they can’t get hired because they have no experience,” Bailey said, encouraging employers to hire and train younger people. “Yes, it takes more patience and training, but it pays off.”
Population growth, housing
“El Paso County is one of four counties in the state projected to have population growth of 300,000 or more,” Bailey said, citing figures from the Colorado State Demographer’s Office. The reason relates to affordable housing prices and the city’s diverse economy.
Colorado was sixth in Bloomberg News’ listings of the top 10 hottest housing markets for 2016 based on job growth, vacancies, affordability and demographics.
The number of home sales continues to climb from a low in 2008 of 8,339 sales to last year’s total of 13,250, Bailey said, citing Pikes Peak Association of Realtors figures. They’re also selling faster; single-family homes stayed on the market an average of 47 days in March, down from a high of 110 in February last year. The homes’ sales prices are also increasing, with the average in March 2013 of $240,000 increasing to $268,010 as of March.
Homeownership nationally is at a 50-year low of 63.8 percent, Bailey said, citing high student debt and demographics as reasons behind the decline.
Many economists predict a slight downturn in the national economy next year, Bailey said. But thanks to its strong health care and technical industries, Colorado is one of the best states to weather a downturn, she said.