The Economy: Current Economic Conditions &

General Fund Overview

May 17, 2013

Office of State Planning and BudgetingLaura Blomquist303-866-2979

www.colorado.gov/ospb

Drop in Economic Output and Income – Worst Since Great Depression

Office of State Planning and Budgeting 2

1980Q1 1982Q3 1985Q1 1987Q3 1990Q1 1992Q3 1995Q1 1997Q3 2000Q1 2002Q3 2005Q1 2007Q3 2010Q1 2012Q3$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

$18,000

Gross Domestic Product, 1 Decimal (GDP), Billions of Dollars, Quarterly, Seasonally Adjusted Annual Rate

$ in

bill

ions

Source: U.S. Bureau of Economic Analysis

Bright Spots: • Housing and Stock Market• Household Balance Sheets

• Europe• Federal Budget

Challenges:• Unemployment• Uncertainty

Important Ingredient for Growth: Investment

Office of State Planning and Budgeting 3

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20129%

10%

11%

12%

13%

Nonresidential Private Investment as a % of GDP

Average Business Investment as a portion of the Economy

(1965 to 2000)

Source: U.S. Bureau of Economic Analysis

Office of State Planning and Budgeting 4

Challenges and Changes in Job Market

1995

Q1

1995

Q4

1996

Q3

1997

Q2

1998

Q1

1998

Q4

1999

Q3

2000

Q2

2001

Q1

2001

Q4

2002

Q3

2003

Q2

2004

Q1

2004

Q4

2005

Q3

2006

Q2

2007

Q1

2007

Q4

2008

Q3

2009

Q2

2010

Q1

2010

Q4

2011

Q3

2012

Q2

2013

Q195,000

100,000

105,000

110,000

115,000

120,000

$450

$550

$650

$750

$850

$950

$1,050

$1,150

$1,250

Private Sector Payroll Jobs - Left Axis

Business Spending on Equipment and software - Right Axis

in th

ousa

nds $ in billions

Source: U.S. Bureau of Labor Statistics and Bureau of Economic Analysis

Change in Jobs Nationally and in Colorado, 2000 to March 2013

Office of State Planning and Budgeting 5

1 7 13 19 25 31 37 43 49 55 61 67 73 79 85 91 97 103

109

115

121

127

133

98

100

102

104

106

108

110

The graph compares the change in the number of jobs nationally and in Colorado since January of 2000. Index: March 2000=100 Source: U.S. Bureau of Labor Statistics.

Change in Number of

Colorado Jobs

Change in Number of

Jobs Nation-ally

Inde

x

Colorado: 11,000 Jobs Below Peak

(0.5%)

Nation: 3.0 million Jobs Below Peak

(2.2%)

• Colorado Outpaces nation

• Pre-recession Peak

• Why?

Colorado’s Favorable Mix of Industries; Many Sell to Markets Outside State

Office of State Planning and Budgeting 6

Agricu

lture

Oil and

Gas

/Min

ing

Man

ufac

turin

g

Info

rmat

ion

Touris

m a

nd L

eisu

re

Profe

ssio

nal/T

echn

ical S

ervic

es

Finan

ce/In

sura

nce

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

86%83%

59%

51%

32%27% 26%

% of Industry’s Sales to Mar-kets Outside State

Source: Economic Modeling Specialists International

Office of State Planning and Budgeting 7

Changes in Job Market – Slower Matching Process

1,600

2,100

2,600

3,100

3,600

4,100

4,600

3,200

3,700

4,200

4,700

5,200

5,700

Private Sector Job Openings, in Thousands, Three Month Moving Average, Seasonally Adjusted - Left Axis

Job

Op

en

ing

s Hire

s

Source: U.S. Bureau of Labor Statis-tics

General Fund Revenue, Actual and Forecast, FY 2000-01 to FY 2013-14

Office of State Planning and Budgeting 8

FY 2000-01

FY 2001-02

FY 2002-03

FY 2003-04

FY 2004-05

FY 2005-06

FY 2006-07

FY 2007-08

FY 2008-09

FY 2009-10

FY 2010-11

FY 2011-12

FY 2012-13

FY 2013-14

$4.0

$4.5

$5.0

$5.5

$6.0

$6.5

$7.0

$7.5

$8.0

$8.5

$9.0

$6.6

$5.6 $5.5$5.8

$6.2

$7.0

$7.5$7.7

$6.7$6.5

$7.1

$7.7

$8.3$8.4

$ i

n b

illi

on

sFore-cast

Actual

Source: Office of State Planning and Budgeting, March 2013 Forecast

Individual Income Tax Revenue, Actual and Forecast, FY 2000-01 to FY 2013-14

Office of State Planning and Budgeting 9

FY 200

0-01

FY 200

1-02

FY 200

2-03

FY 200

3-04

FY 200

4-05

FY 200

5-06

FY 200

6-07

FY 200

7-08

FY 200

8-09

FY 200

9-10

FY 201

0-11

FY 201

1-12

FY 201

2-13

FY 201

3-14

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

$5,500

$6,000

Ind

ivid

ual

Inco

me T

ax

Reve

nu

e

($ i

n m

illi

on

s)

Ac-tual

Fore-cast

Source: Office of State Planning and Budgeting, March 2013 Forecast

Jan-

10

Apr-1

0

Jul-1

0

Oct-1

0

Jan-

11

Apr-1

1

Jul-1

1

Oct-1

1

Jan-

12

Apr-1

2

Jul-1

2

Oct-1

2

Jan-

13-5.0%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

National Real Disposable Personal Income Per Capita, Monthly Percent Change

Since the Beginning of 2010

Individual Income Tax Revenue And Real Disposable Personal Income

Composition of Governor’s FY 2013-14 General Fund Budget Request, ($ in Millions)

Office of State Planning and Budgeting10

K-12 Edu-cation,

$3,029.7, 37%

Health & Human

Services, $2,710.0,

33%

Public Safety and Courts, $1,127.0,

14%

Higher Education, $656.7, 8%

Other, $513.7, 6%

Capital Const./Main, $140.5, 2%

Source: Office of State Planning and Budgeting, March 2013 Forecast and the Jan. 25th Budget Amendment Transmittal to the JBC

 FY 2012-13

General Fund Request

FY 2013-14 General Fund

Request

FY 2012-13 Change over FY 2011-12

Request

FY 2013-14 % Change

K-12 Education $3,015,440,512 $3,029,717,443 $14,276,931 0.5%

Corrections $654,695,631 $659,534,398 $4,838,767 0.7%Health Care Policy and Financing

$1,864,223,672 $2,033,500,538 $169,276,866 9.1%

Higher Education $619,261,908 $656,729,783 $37,467,875 6.1%

Human Services $639,540,134 $673,651,442 $34,111,308 5.3%

Other Departments $772,031,461 $856,118,929 $84,087,468 10.9%

Subtotal Departments

$7,565,193,318 $7,909,252,533 $344,059,215 4.5%

Controlled Maintenance Trust Fund

$13,000,000 $23,097,266 $10,097,266 77.7%

Other GF Expenditures

-$6,288,700 $29,312,476 $35,601,176 NA

Rebates and Expenditures

$177,403,545 $215,072,369 $37,668,824 21.2%

Total General Fund

$7,749,308,163 $8,176,734,644 $427,426,481 5.6%

General Fund Capital Construction Projects for FY2013-14

Office of State Planning and Budgeting 11

Project FY 2013-14 Project FY 2013-14Lease Purchase of Academic Facilities at Anschutz Medical Campus (Fitzsimons)

$7,137,966 Wastewater Pre-Treatment Plant, Arkansas Valley

$1,448,260

Lease Purchase of Colorado State Penitentiary II

$18,431,100 Ute Indian Museum Expansion $2,406,789

Lease Purchase of Academic Facilities Pursuant to Section 23-19.9-102 (FML)

$18,587,975 CSU General Classroom Building $16,179,939

CO Territorial Wastewater Pre-Treatment Plant; Grease Traps and Manhole Upgrades

$1,648,885 Richardson Hall Renovation $18,885,628

GTLRR Locomotive $300,000 E.S. French Renovation $13,128,000 Ute Indian Museum Expansion $2,406,789 Academic Classroom II Colorado

Mesa University$9,791,760

Digital Trunked Radio Renewal$3,726,190 Systems Biotechnology Building,

Academic Wing$6,021,946

Level I Controlled Maintenance $21,977,822 Nursing/Science Improvements $1,978,300 Level II Controlled Maintenance $22,948,867 Visual and Performing Arts $4,684,334 Capitol Complex Master Plan $2,000,000 Alamosa Campus Expansion $1,950,000 DPA-DOR Tax Pipeline Project $2,068,832 Highway Construction Projects $500,000

OIT Tax Pipeline Project $1,266,900 State Capitol Dome Restoration $5,000,000

Capitol House and Senate Chambers Renovation

$2,000,000 Auraria Library Renovation $4,000,000

Capital Construction Funds$190,476,282.00

FY2014-15 Capital Construction Requests

Office of State Planning and Budgeting 12

Life Cycle Costs (LCC) are the cost alternatives, over the economic life of a facility, including its initial cost, the cost of energy consumed, replacement costs, and the cost of operation and maintenance of the facility.

The life cycle cost form (LCC-Form) will require identification of feasible alternatives and the cost of these alternatives, establish common assumptions and parameters, discount of future costs to present value, compute and compare LCCs for each alternative, and estimate of non-monetary savings or costs.

Evaluation Criteria Capital Construction Prioritization FY2014-15

General Fund, Capital Construction Fund, Federal Fund and Cash Fund Impact

Projects that are partially funded projects by cash funds and federal funds will receive greater priority

COPCertificates of participation (COP) annual payments for existing projects

Significant Health, Life Safety, and Code Issues

Projects with clear and urgent life or safety implications

Continuation Project Request is a continuation project appropriated in FY 2013-14

Cost Analysis Life cycle cost analysis and reasonableness of costs

Other Fund SourcesOther fund sources include projects that are funded partly by non-state funds and non-student fee funds

Space Needs Analysis

Space needs analysis reflects how much space the institution or department has in its inventory, justification on how well the space needs are filled by the request, and how much space it needs based on the Master Plan, FTE projections, or Student enrollment projections

Clear Identification of Beneficiaries

The request must clearly identify the individuals that will be served and how they will be better served by the project requested

Phase-able Projects Phases must be stand-alone projects

Achieves GoalsIntegral to Achieving Statewide Policy Goals/Integral to Institutional Planning Goals

Program Plans

Projects will be review against the program plans for appropriateness, necessity, and sufficiency of the project with respect to institution programs, applicable state policies, plans, and standards.