On The Chopping Block: Colorado Public Investments

As more and more low- and middle-income Coloradans face growing costs of living and stagnant incomes, it’s an important time to look to public investments. Colorado public investments play a vital role in building and maintaining infrastructure, educating residents, and reducing the costs of services putting opportunities within reach of more families. A strong public sector could make postsecondary education more affordable, expand health insurance coverage, increase access to preschool, and lower the costs of child care — all ways to lessen the squeeze many families in Colorado feel today.

Today, the share of Colorado’s economy invested in public services aimed at expanding opportunity is a smaller portion than at almost any time in the past 40 years. This means Colorado’s state government is less able to be the strong public sector partner our communities need.

Colorado’s General Fund — the account that funds most of the services promoting opportunity — is comprised of two-thirds income taxes paid by individuals and businesses, while about one-third is made up by sales taxes. When Colorado grew and the economy expanded, the total amount of money spent on state government did increase, but the amount of government revenues as a share of the economy has shrunk by about 20 percent since the 1990s.

Colorado Public Investments Throughout History

From the mid-1970s through 2000, Colorado invested an average of 4.5 percent of the economy in state services each year (calculated as the ratio of General Fund revenues to total state personal income). The share has varied depending on the strength of the economy, but since 2000, Colorado has only invested, on average, 3.8 percent of the economy in state services.

At 3.7 percent this year, Colorado is investing almost a historically low percent of its economy in state services. This amount is only found in years when Colorado experienced a recession or the fallout of one: The share dropped to 3.9 percent in the middle of the shale oil bust and recession in 1983, then saw lows of 3.6 percent in 2002 following the dot-com crash, and 3.3 percent at the bottom of the Great Recession in 2009 and 2010.

However, Colorado’s current low rate of investment is not due to the effects of a recession; in fact, Colorado’s economy today is one of the fastest growing in the country. General Fund revenues in 2018 and 2019 are expected to be an even smaller portion of the economy than now.

To learn more about Colorado public investments, read the section on this topic in the Guide to Economic Mobility

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