CSPR – Did You Know?

Dynamic Model  |  Energy in Colorado  |  Colorado Medicaid  |  Trust Taxes


Dynamic Model

Did you know?

❖ A dynamic model is a tool that is able to measure the economic impact of policy changes beyond simple revenue changes to government budgets. A dynamic model allows for a deeper analysis of economic impacts to businesses as well as government by measuring the multiplier effect that results from changes in public policy.

❖ All legislation that has a potential fiscal impact to the state is assigned a fiscal note from the Office of Legislative Council. Currently, these fiscal notes are generated using a static model that fails to accurately reflect the full impact of the proposed bill.

❖ Twice in the past six years lawmakers have passed legislation directing the Office of Legislative Council to begin the process of creating a dynamic model in order to gain a more complete assessment of the fiscal impact a piece of legislation would have.

Solutions for Colorado: Dynamic Model

❖ Lawmakers should explore the various options for housing a dynamic model and develop a protocol to determine which measures are ran each year.

❖ One possible option would be to require the Office of Legislative Council to follow through on the effort to design and implement a dynamic model tailored for Colorado.

❖ A second option would be to partner with an academic institution to craft a model that would be made available to policymakers to measure the impact of major policy changes.


Energy in Colorado

Did you know?

✦ The Colorado oil and gas industry employs over 50,000 people directly (roughly 6% of the state’s total employment).

✦ In addition to the 50,000 direct jobs, Colorado’s oil and gas industry supports over 190,000 indirect jobs throughout the state.

✦ The oil and gas industry provides $12.4 billion in total labor income and $24 billion in value added economic output annually for the state.

✦ Colorado ranks 7th among states in natural gas production and 12th in the nation for crude oil production.

Solutions for Colorado: Energy

As a leading job creator and significant source of revenue, Colorado’s energy economy should be protected and fostered to maximize the state’s full potential.

✦ State lawmakers should eliminate the uncertainty created by local governments who are enacting their own set of regulations. These new regulations are preempted by state rules and go beyond the current regulations that are widely considered the most restrictive in the nation.

✦ Resist efforts by national anti-fossil fuel interest groups to ban the practice of hydraulic fracturing. Colorado has strong disclosure laws – an outright ban on fracing would cost thousands of jobs.

✦ Request greater public lands access from the federal government – appoint a federal lands advocate to ensure Colorado is receiving maximum value from energy development on public lands.

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*Source: Colorado Oil and Gas Association website www.coga.org.


Colorado Medicaid

Did you know?

➤ Medicaid spending consumes more than 20% of Colorado’s annual General Fund budget, and enrollment is now over 651,000.

➤ Colorado’s Medicaid enrollment is projected to grow 44% by 2014 if state lawmakers opt-in and accept the expansion proposed as part of the Patient Protection and Affordable Care Act.

➤ From FY2011-12 to FY2024-25, Medicaid expenses are expected to grow by $2.5 billion dollars and will consume over 27% of the Colorado General Fund.

➤ Nationally, states will increase Medicaid spending by $15.9 billion in 2012 and at the same time they will reduce spending on K-12 education by $2.5 billion.

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Source: “Financing Colorado’s Future, An Analysis of the Fiscal Sustainability of State Government,” University of Denver Center for Colorado’s Economic Future. April 2011.

Solutions for Colorado: Medicaid

➤ The Supreme Court decision on the Patient Protection and Affordable Care Act allows states to forgo the expansion of Medicaid beyond current levels.

➤ Policymakers should resist the temptation of new federal money and opt-out of the expansion proposed by the Patient Protection and Affordable Care Act.

➤ Reform the existing program to create a Colorado solution that includes payment reform – no more fee for service – no more unnecessary and costly procedures and long-term care reform.

➤ State lawmakers should insist on greater flexibility from the federal government, no more unaffordable mandates.


Trust Taxes in Colorado

Did you know?

♦ Colorado currently places an income tax on both distributed and undistributed income from trusts that are administered in our state – most states only apply a single tax to distributed income.

♦ The double taxation on irrevocable trusts administered in Colorado has put the Centennial State at a competitive disadvantage. Neighboring states with friendly trust laws have captured thousands of good paying jobs in the financial sector.

♦ An economic study of the trust tax in Colorado suggested that by eliminating the double tax the state would offset any loss in tax revenue in a short period of time.

Solutions for Colorado: Trust Taxes

♦ Revise Colorado’s income tax form to ensure relevant data from the federal form is captured to accurately assess the state’s income from irrevocable trusts.

♦ Eliminate the double taxation on irrevocable trusts – studies suggest Colorado would gain up to $3.87 billion in additional economic activity.

♦ Commission a thorough evaluation of Colorado’s tax structure and complete a study asking the “what if” questions about alternative methods of collecting taxes.

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* Source: “Economic Impacts of Eliminating Colorado’s Fiduciary Tax on Trust” by CSPR.