CSU - Pueblo releases economic impact of Amendment 61 on Pueblo, El Paso counties
PUEBLO – Results of a study by Dr. Kevin Duncan, professor and senior economist for the Healy Center for Business and Economic Research at Colorado State University-Pueblo, show that passage of the proposed Amendment 61 would reduce the flow of new dollars into the region and reduce economic activity in both Pueblo and El Paso counties based on projects currently in process.
Duncan’s study examines the potential economic impact on Pueblo and El Paso counties of proposed Amendment 61, which would prohibit borrowing by the state government and limit the ability of local governments to borrow. Duncan uses recent capital construction projects that would be affected by Amendment 61 to illustrate the impact of the proposed legislation.
In both counties, jobs and tax revenue would be lost due to the elimination or reduction of capital construction projects. As a result of this reduction in economic activity, local property values and rental income also would decline. The construction and retail industries would be hardest hit by passage of this legislation.
Impact on the Pueblo County Economy
Local economic activity would decrease by approximately $27.9 million, and employment would decrease by about 240 jobs if projects were eliminated or reduced by the enactment of Amendment 61. The renovation of the Academic Resources Center at CSU-Pueblo was one of 12 higher education capital projects financed by the sale of certificates of participation in 2008 at a cost of approximately $22 million. This type of financing would be eliminated under the amendment. Several other local projects from the FY2009-10 Capital Construction and Controlled Maintenance Appropriations would be indirectly affected as overall appropriations decrease with restrictions on state borrowing, including construction and renovation work at the Colorado State Fair, the Colorado Mental Health Institute, Lake Pueblo State Park, and El Pueblo Museum. The impact of the proposed legislation on these smaller projects would be minimal as nearly all of the impact in Pueblo County is due to the current construction activity at CSU-Pueblo.
For example, between 2005 and 2009, only 3.4 percent of state-funded capital and maintenance projects were funded by borrowing. If state capital construction funding decreased by 3.4 percent with restrictions on state borrowing, expenditures on the local projects would decrease by approximately $158,000. So, the total amount of local capital expenditures that would be directly and indirectly affected by Amendment 61 would be approximately $22.7 million (in 2010 dollars). If these projects were eliminated or reduced by Amendment 61 requirements,
If the CSU-Pueblo project did not take place, and if these workers did not find other jobs, the local unemployment rate (for February 2010) would rise from 9.5 to 9.8 percent. With the reduction in economic activity, tax revenue collected by the city government would decrease by approximately $89,000. Tax revenue collected by the county would decrease by about $25,000. The combined decrease in local tax revenue would be about $114,000. While the impact would be distributed across the Pueblo County economy, the construction, food service, and retail sectors would experience the brunt of the impact. For example, construction employment would decrease by about 195 jobs. Eating and drinking establishments and the broadly defined retail sector would experience a decrease in revenue of approximately $835,000, as well as the loss of about 12 jobs. The results also imply that with the reduction in economic activity, local property values and rental income would decrease.
Impact on the El Paso County Economy: Several state-funded capital construction projects in this county are financed with certificates of participation, revenue anticipation bonds, and lease-purchase grants. This type of financing by the state would be prohibited under Amendment 61. If the funding for projects funded in this manner was eliminated, economic activity in El Paso County would decrease by approximately $343.6 million. Consequences would include reductions in the workforce as well as city and county tax revenues.
Current projects of this kind include the renovation of the science building at the University of Colorado, Colorado Springs, Strategic Transportation Projects on Powers Blvd and I-25 in northern El Paso County, and several projects funded by the Build Excellent Schools Today Assistance Fund (including renovation of the Colorado School for the Deaf and Blind and new school construction in Fountain District 8 and Miami-Yoder District 60 JT). The total amount of state borrowing to fund these projects is $236.4 million (in 2010 dollars).
The impact of these six projects represents about 1.4 percent of El Paso County GDP. Local employment would decrease by about 3,000 jobs. With the reduction in local economic activity, city tax revenue would decrease by about $1.2 million, and tax revenue collected by the county government would decrease by approximately $500,000. The combined decrease in local tax revenue would be approximately $1.7 million. While the impact would be distributed across the local economy, businesses related to construction activity (building, architecture, engineering, and real estate) would experience a disproportionate impact. Economic activity in these sectors would decrease by approximately $252 million with employment decreasing by about 2,225 jobs. Eating and drinking establishments and the broadly defined retail sector would experience a decrease in sales of about $17.3 million and the loss of about 309 jobs. The results also imply that with the reduction in economic activity, local property values and rental income would decrease.
Through the Healy Center for Business and Economic Development, the Hasan School of Business engages students and faculty in conducting applied research projects that promote economic development in Southern Colorado.
For a complete copy of the report, visit http://www.hsb.colostate-pueblo.edu/PartnershipsAndOpportunities/HealyCenterForBusiness