Like other states with revenue restrictions, (it enacted and later suspended the first so-called “Taxpayer Bill of Rights” or TABOR), Colorado has to rely on local governments to provide the majority of subsidies in its major economic development deals. In general, Colorado has not invested large amounts of state funds in job subsidies, but in recent years it has enacted a few potentially costly credits for job creation.
Local subsidies dominated, for example, the stadium deals Denver gave to the Rockies and the Broncos, which were financed by city sales tax increases (see below). The deal given to the United States Olympic Committee for its headquarters and training center involved some state Strategic Fund money, but the vast majority of funding came from the city of Colorado Springs (see below). Localities have also been the main source of subsidies to wind energy company Vestas for various production facilities in the state.
Colorado also allows municipalities to use tax increment financing (TIF) to subsidize new development. FRESC, the Partnership for Working Families affiliate in Denver, won a major accountable development victory in 2008 when the city agreed to apply job-quality standards to TIF-funded projects. In Spring 2011 the Colorado Fiscal Policy Institute helped defeat a bill that would have allowed for the first time in the state the diversion of sales tax for new retail development. TIF remains a controversial issue in the state; The Denver suburb of Aurora approved plans to finance a massive new convention center complex with TIF. Concerns that the development would displace existing convention center business were intensified when Denver’s treasured National Western Stock Show announced plans to move the event to Aurora in 2011.
Colorado’s Enterprise Zone (EZ) Program, one of its largest economic development expenditures, is rapidly approaching $50 million per year, up sharply since 2005. In response to this rising cost, the state’s fiscal crisis, and its inability to increase taxes, Colorado enacted legislation in spring 2010 deferring certain EZ investment tax credit claims for three years.
Another large economic development expense has been the discretionary grants awarded via the Performance Incentive Fund (PIF), but in 2011 the program was de-funded. Other subsidy programs in the state include the Job Growth Incentive Tax Credit (JGITC), the Strategic Fund, and Colorado FIRST workforce training grants.
The names of recipients in three of the five programs we examined (the Strategic Fund, JGITC, and PIF) are disclosed online in the Economic Development Commission’s annual reports, which are available from 2000 onward. Project narratives in these reports describe location, job creation expectations, projected wages, and industry.
A business tax credit accountability bill that would have required in-depth performance analysis of some of the state’s major programs died in the legislature in 2010 but was revived in the form of an Executive Order issued by then-Gov. Bill Ritter. The order required that the Economic Development Commission prepare a plan detailing how the state can implement a program for tracking grants, loans, and tax credits intended to spur job creation. As of early 2012, the Commission had not yet produced the required report.
Key Subsidy Programs
|Subsidy Program||Recent Annual Cost||Online Recipient Disclosure||Recipient Disclosure Score*||Job-Creation/Job-Quality Score**||Monitoring/Enforcement Score***|
Colorado FIRST/Existing Industry Training Program
workforce training grants of up to $800 per employee for companies that are relocating to or expanding in the state
|$2.7 million (2012)||
Enterprise Zone Program
designated areas in which companies may qualify for up to nine different tax credits and other abatements/exemptions
|$62.7 million (2009)||
Job Creation Performance Incentive Fund
cash grants of up to $4,500 per new job (program eliminated)
|$6.1 million (2009)||84/100||not included||not included|
Job Growth Incentive Tax Credit
corporate income tax credits worth up to 50% of the employer’s portion of federal social security tax withholding for new jobs
|$4 million (2010)||59/100||66/100||71/100|
deal-closing fund that provides cash grants of up to $5,000 per job to companies that hire new employees
|$3.1 million (2010)||49/100||60/100||65/100|
* The score is derived from the Good Jobs First report Show Us the Subsidies (December 2010).
** The score is derived from the Good Jobs First report Money for Something (December 2011).
*** The score is derived from the Good Jobs First report Money-Back Guarantees for Taxpayers (January 2012).
Major Subsidy Deals
Colorado Rockies (1990) and Denver Broncos (1998)
After a year-long lobbying campaign by the Colorado Baseball Commission, 54 percent of Denver residents voted in 1990 for a citywide sales tax increase to subsidize a new stadium for a hoped-for Major League expansion team. Denver did land a team, later named the Rockies, and taxpayers ended up paying about three-quarters of the $215 million cost for what became Coors Field. This apparently inspired Pat Bowlen, owner of the National Football League’s Denver Broncos, to push for a new publicly financed stadium for his team. Critics saw the proposal as a bailout for Bowlen’s poor business decisions.
Nonetheless, in 1998 residents of the Denver area approved a plan to extend the tax increases enacted for the ballpark to finance three-quarters of the cost of a new $360 million Broncos stadium. Despite widespread public support for preserving the Mile High Stadium name of the Broncos’ old venue, the team was given permission in 2001 to sell naming rights to Invesco Funds Group for about $120 million, with half the proceeds going to the team and half to the public. (Key sources)
U.S. Olympic Committee (2009)
In 2009 the city of Colorado Springs consented to a complicated deal in which it would borrow more than $30 million to provide the main financing for a package worth some $40 million to keep the U.S. Olympic Committee (USOC) and a dozen Olympic national governing bodies from leaving town. The city was to raise the money by issuing COPS (certificates of participation), a lease-finance instrument similar to bonds. However, COPS do not constitute a long-term obligation for the issuer and thus do not require voter approval under Colorado law. With the proceeds, the city would spend $21.5 million to purchase and furnish five floors of a new downtown headquarters building to be leased for a token amount to the USOC, which agreed to stay in Colorado Springs for at least another 30 years.
The city also agreed to pay $9.5 million of the $16 million cost of renovating the Olympic Training Center, which would also house the national governing bodies. The chairman and president of LandCo Equity Partners, the developer of the building containing the new USOC headquarters, were indicted for securities fraud and theft in November 2009. The new USOC offices opened in May 2010. (Key sources)
Wal-Mart in Colorado
- At least 4 Wal-Mart locations have received subsidies worth about $8.8 million in Colorado.
- At least 9 Wal-Mart locations in Colorado have challenged their property tax assessment, recouping about $718,000.
- Many Wal-Mart workers are ineligible for health coverage from their employer or choose not to purchase what is available, because it is too expensive or too limited in scope. These workers often turn to taxpayer-funded health programs such as Medicaid. Colorado is among those states that have not disclosed data on the employers with the most workers or their dependents enrolled in such programs.
- Wal-Mart receives about $3.6 million a year from a state policy that allows retailers to keep a portion of the sales tax they collect from customers.
For more information, see the Colorado page of Wal-Mart Subsidy Watch.