We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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But the county’s economy may be negatively impacted by recovery efforts following devastating floods in September 2013 and “headwinds” facing state sales-tax revenue collections, speakers said.
On the plus side, a $5.8 billion appropriation to the National Science Foundation’s research and development budget for 2014 is expected to positively impact the region’s many federal labs and the University of Colorado at Boulder, said Bill Farland, immediate past chairman of Co-Labs, a nonprofit group of federal laboratory, university and community representatives that promote Colorado as a research leader.
So far, some $1 million funds raised in Boulder County has been distributed to flood victims, said Josie Heath, a panel speaker at the event. Heath is the president of the Community Foundation Serving Boulder County, which is leading the effort to distribute $3.7 million raised in Boulder County to help residents impacted by flooding in September. In addition to the locally raised funds, the Federal Emergency Management Agency distributed $34 million in flood recovery funds after 15,000 households and businesses in the region applied for help, Heath said.
Across Colorado, budget woes continue to cloud the horizon for state social programs, said Phyllis Resnick, lead economist at the Colorado Futures Center at Colorado State University. Sales-tax revenue continues to be eroded by consumers buying goods on the Internet, which aren’t taxed, she said.
“There are headwinds against the state sales tax. It is facing all kinds of problems,” Resnick said. “It was beefed up by the Federal Reserve stimulus (program), and people were spending more money, but we think that gravy train is about to end.”
On a more positive note, various federal laboratories and universities in Colorado are expected to do better in 2014 because of the National Science Foundation appropriation, Farland said. The $5.8 billion amount is a 6.1 percent boost over estimates made during federal sequestration talks last year, Farland said. It’s a 2.4 percent increase in funds from fiscal year 2012, Farland said. Several research programs at federal labs in Boulder County and at CU-Boulder receive National Science Foundation funding.
“It’s real growth, but it’s small,” Farland said. “With sequestration, things were not looking good. Competitive funding was getting more difficult and federal labs were looking at situations where planned reductions were discussed.”
In Boulder County, federal labs contribute an annual economic impact of $743.2 million, according to a recent Co-Labs study. Across the state, federal labs contribute $2 billion to $2.3 billion to the economy annually.
“The labs really do support business and attract businesses to Colorado. They also bring recognition to the state, with several Nobel Prize winners and other major awards,” Farland said.
As an example, CU-Boulder attracted the National Solar Observatory to Boulder in 2011, Farland said. And national companies – both established and startup companies – often are attracted to the Front Range because of the high concentration of federal labs here, he said.
Economist Richard Wobbekind presented a rosy picture of the Colorado and Boulder County economies as momentum also grows national in his keynote address.
Wobbekind is the executive director of the business research division and senior associate dean at the University of Colorado’s Leeds School of Business. He said Boulder County was hit much harder by the 2001 dot-com bubble bust than by the most recent recession.
While it took 89 months for employment to recover to previous levels then, he said Boulder County made it back in 53 months this time. That’s opposite compared to the country as a whole, which has taken longer to recover this time around.
Boulder County total wages are past their previous peak, Wobbekind said. Per capita income in Boulder is near $55,000, compared to $45,700 for the state and $43,700 nationally.
While the unemployment rate in Colorado still has some catch-up to do to dip to pre-recession levels partially due to population growth, Colorado is one of 14 states to pass its previous peak for the number of jobs. The state estimated this week that the number of jobs increased by more than 40,000 in 2013. But Wobbekind believes once better data are available a few months from now that that number will eclipse 60,000. And he’s projecting another 60,000 or more added this year.
Residential building permits are expected to increase for the fifth year in a row, and the overall value of construction in the state is expected to hit $15.1 billion this year, the highest since it was $17 billion in 2006.
Colorado is among the top seven states in the nation for population growth by percentage. The only downside is that most of that growth is concentrated on the Front Range, where 83 percent of the state’s population resides in 12 counties. More than half of the state’s counties are losing population, Wobbekind said.
“It creates challenges for the state as a whole,” he said.
Like Resnick, Wobbekind does believe the state budget faces some tough times ahead, and he said the federal government’s budget does as well. The federal budget deficit was $811 billion in 2013 and is projected at $776 billion in 2014 according to Wobbekind’s presentation.
Wobbekind said that while the budget gap is expected to narrow a bit in 2015 and 2016, it will again become wider and wider around 2020 when baby boomers are retiring in full force, further stressing Medicare and Social Security systems.
A number of factors continue to stress the Social Security system, he said. The average retirement age in the United States last year was 59, with more and more people 50 and older retiring early. That’s in addition to increasing lifespans. When Social Security was created, Wobbekind said, the average male lived nine months after he started collecting and the average female just 11 months.
“They’re collecting off a system that was originally designed to have a much shorter collection period,” Wobbekind said. “At the end of the day, it has to be altered.”