Denver Bounces Back from the Economic Recession
Denver experienced a fast recovery from the Great Recession compared to the rest of the country, according to the latest study by the Pew Charitable Trusts’ American Cities Project.
The study, titled, “America’s Big Cities in Volatile Times,” focuses on financial reports of the 30 largest metropolitan areas in the nation from 2007 to 2011.
“We found that revenue for two-thirds of the cities we studied hadn’t bounced back to their revenue peaks by 2011,” said Kil Huh, Pew’s director of state and local fiscal health. “Cities are still continuing to struggle and face future challenges.”
The cities facing a slower recovery relied heavily on property taxes. Although they didn’t feel the decline in real estate value immediately, these big city governments were hit much later into the recession, recovered slowly, and are still suffering from some of the effects of the decline. More than two-thirds of the cities had not recovered by the end of 2011.
However, Denver proved itself as the comeback kid. According to the study, Denver’s revenue approached pre-recession levels by 2011.
So what made the difference for Denver? Although the region saw its greatest dip in 2009, the region was smart in its approach to fiscal management ensuring that while we were one of the first into to the recession, we were also one of the first out of the recession. This is often a point our CEO Tom Clark is overheard discussing.
“Denver positioned itself very well in terms of long-term obligations, compared to other cities,” said Huh.
The economic growth in the Metro Denver region has continued into 2013, with new developments and pre-leasing levels not seen in more than 10 years. And the market is not stopping—commercial rental rates are predicted to exceed an all-time record by the end of the year.
Key Findings from Denver’s Profile:
- Personal consumption reflected sales tax growth.
A 10 percent increase in sales tax collections from 2009 to 2011, totaling $46 million, highly contributed in the city’s overall revenue growth. The study also shows that every revenue category increased by 2011, including investment income, and property tax collections.
- Denver continued targeted spending cuts and froze hiring between 2009 and 2011, despite revenue gains.
Spending cuts were made in parks, recreation and cultural facilities, social services, and police and fire. Along with implementing a hiring freeze, Denver also managed its long-term strategy by encouraging early retirements.
- Proactive fiscal management positioned Denver well for the future.
Denver took action to fund its future retiree health care liabilities. With assets of $88 million in 2010, funding slightly less than half of its long-term retiree health commitments, the city was one of four examined with funding levels above 40 percent. Although the city’s pension funding level was down to 86 percent from 97 percent three years earlier, Denver continued to make its recommended contributions.
While many cities will continue to deal with a slow economic recovery, Denver remains on top of its economic game, thanks to its ability to create long-term goals.
Our great state is one of the best for business right now and it’s predicted that we’ll have the third-fastest growth for jobs and household incomes over the next five years. With continuous announcements of company headquarters and expansions into the region, this report is just one more proof point showcasing how Metro Denver’s future looks bright and prosperous.