Tamara Chuang | Business/Technology Reporter
A decline in new business formations in Colorado in the fourth quarter from a year earlier probably has less to do with any economic uncertainty than with something much more tangible: A fee reduction that ended in May.
That’s what Colorado Secretary of State Jena Griswold blamed for the 16% decline in new business filings last quarter. A year earlier, new companies paid just $1 to file. Now it’s back to $50. But with 40,987 filing to start a new business, that’s well above the average for the typically slower fourth quarter, at least before the pandemic. The state also had the most companies in good standing in December, at nearly 1 million and up 7% year over year.
That means, Griswold said during a news conference this week, “Colorado businesses are staying in business thanks to the strength of the state’s overall economy.”
But how strong is Colorado’s economy?
It was just better than the expected, said economists at University of Colorado’s Leeds School of Business. They’d already forecast a slowdown, which means we’re still growing but not as much as past years.
Last year, consumer spending, which is about 70% of what goes into measuring economic activity, was still up in Colorado. Folks kept spending money eating out with sales at food services and drinking places up 6.6% annually, as well as retail sales, which were up 1.7%. But that was lower than the growth in 2022, at 13.9% and 19.9% respectively, according to the Quarterly Business & Economic Indicators report.
Spending contributed to the state’s yearlong GDP growth of 2.5%, “a far cry from any sort of recession that many had forecasted at the end of 2022,” said Richard L. Wobbekind, faculty director of the Leeds School’s Business Research Division.
“We had thought, a year ago, that when savings were slowing down, jobs were going to be slowing down more than they did. We thought that would mean less growth in personal income and less capabilities of buying stuff,” Wobbekind said. “And lo and behold, even with a higher interest rate environment, households continue to consume. They used up a lot of their excess savings they had accumulated in the past but they got further gains in income from more jobs and wage increases that we hadn’t seen in a while.”
Think of what consumers spent money on in 2023.
Travel picked back up and took off last year with Denver International Airport reporting its biggest year in history with 70 million passengers, a 12.3% increase from the prior year. The airport also had the highest number of international travelers, at 4 million, which was up 21.5% from 2022. Colorado Springs Airport also hit a record last year with 1.2 million travelers boarding at the airport, a 10% increase from 2022.
Some concertgoers spent thousands of dollars to see Taylor Swift at Empower Field at Mile High, plus an estimated $140 million in hotels, food and body glitter locally.
Shoppers spent heavily during the Christmas holidays last year, helping boost revenues for Amazon, Walmart and other big retailers to record levels. Colorado’s sales tax receipts were up 2.8% for the 12-month trailing average.
But then think about what else happened: inflation.
Something’s different in Colorado
Even though spending was up in the state with the growing GDP, Colorado sales tax receipts increased just 2.8%, or less than the annual rate of inflation of 5.2% last year in the Denver area. It’s also less than January’s 3.5% inflation rate, the lowest since mid-2021. Annual wages per employee rose 4.9% in the year.
“At the state level, we did see a slowing of retail activity sooner than we did nationally,” said Brian Lewandowski, the research division’s executive director. “It begs the question of if the already higher cost of living that Colorado has and the higher the national inflation rates are weighing more on the Colorado consumer? I think that could be a very logical conclusion.”
But there’s more for 2024.
Property taxes continue to head up as home-sales prices have risen across the state. The Colorado Assessors’ Association compiled assessor data from around the state to come up with a county-by-county look at how property values increased and have contributed to double-digit rate increases on tax bills. They don’t do this every year but did so last year because the increase in market values was higher than normal, said Corbin Sakdol, CAA’s executive director.
Here’s a look by county of the higher rate of assessed values:
But, he added, that doesn’t mean property taxes are rising at the same rate.
“With the market values going up so much in Colorado, some taxing districts lowered their mill levies, some did not, which would equate to higher taxes,” he said in an email.
Residential property values increased at least 15%, and the lowest hike was in Baca County. Western Slope counties like Grand, Eagle and Summit are seeing increases in the 60% range. Pitkin County, home of Aspen, is at 92%.
“Whether you’re renting or you own properties, most of the time the people residing in those properties are the ones really paying that bill. And that means they’ll have to divert some disposable personal income from what they would normally spend on goods and services to pay the property tax,” Lewandowski said. “It’s another unique headwind in Colorado, but it hasn’t really even fully been felt yet in the state. I think it could slow down retail further.”
Need help?
➔ Housing tax and heating rebate offers up to $1,112. Apply for the Colorado Property Tax, Rent, Heat Credit Rebate by April 15 to get some money back from paying property taxes, rent and/or heating bills. This rebate is only offered to residents who earn less than $18,026 (or $24,345 for married couples) and are 65 and older or have a disability. This is also open to folks who don’t file tax returns. The rebate has been paid to about 15,000 Coloradans since 2019, according to the Department of Revenue. >> Details
Sun economy stories you may have missed
➔ Colorado’s largest private sector union violated federal labor law in treatment of its internal staff, judge rules. Former UFCW Local 7 employees interviewed by The Colorado Sun pointed the blame at union President Kim Cordova, who has been at the helm since 2010. >> Read story
➔ Adams County’s oil and gas rules are among Colorado’s strictest — and the industry is still rapidly growing. Since 2017, oil production has grown 15-fold as the county became Colorado’s second-biggest producer churning out 12.8 million barrels in 2023. >> Read story
➔ Federal government sues to block merger of grocery giants Kroger and Albertsons, saying it could push prices higher. The Federal Trade Commission argued the deal would eliminate competition and hurt consumers. >> Read story
➔ Denver closing four shelters, scaling back migrant services to save $60M. As the hotel shelters close, the city says it will “double down” on case management by coordinating with nonprofits that are connecting migrants to jobs and housing >> Read story
➔ Colorado has allocated millions of dollars this year to governments and housing organizations planning to build affordable units. Funds from Proposition 123, the 2022 ballot measure aiming to increase affordable housing stock in Colorado, are helping to create more of these units. >> Read story
➔ Colorado conservatives want a property tax cap. The state’s bipartisan tax commission hates the idea. Policymakers are trying to mitigate sticker shock for homeowners without harming public services like schools and emergency responders. >> Read story
Other working bits
➔ Denver apartment rents were flat in February. They grew just 0.2% from a year ago, according to ApartmentList. “On an annualized basis, rent growth remains negative at minus 1%, meaning that on average, new leases remain marginally cheaper than they were one year ago. But we expect the coming months to bring steady, moderate rent growth as housing demand improves but is partially offset by new construction,” a spokesperson said.
By the numbers: One-bedroom apartments are renting for a median $1,534, while two bedrooms are $1.911. The citywide vacancy rate is up 7.7% from a year ago. >> Report
➔ Bill to provide $5 million to convert empty offices into residential gets debated. Growing concerns that the current 30% office vacancy rate in downtown Denver isn’t improving spurred lawmakers, affordable-housing advocates and conservationists to voice support for House Bill 1125 during a finance committee hearing Thursday.
The bill would create a pilot program offering $5 million in tax credits a year to a few developers who rise up to the expensive conversion. Skeptics wondered why such a small sum would change anything — wouldn’t the market be enough incentive, they asked? Supporters want to increase it to $25 million, or even $50 million.
A representative from the state Office of Economic Development & International Trade, which would oversee the program, said it would be a pilot to determine the potential. They’d also reject developers who’d build out the project anyway, sans incentive. >> House Bill 1125
➔ State gives $5,000 to small businesses here and there. The state’s economic development office awarded $900,000 to 180 recipients who participated in its Small Business Accelerated Growth program. Of those, 67 were digital marketing grants and 113 were Access to Capital grants of $5,000 each. Recipients hail from 36 counties around the state. Last year, 56 small businesses received the same grants. The program was created by Senate Bill 241 to offer business development support for companies with fewer than 20 employees. >> More info
➔ Colorado’s paid-leave program gets noticed. The U.S. Department of Labor blogged about it. >> Read
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