Colorados Revenue and Expenditures: A View to 2030 COLORADO - - PowerPoint PPT Presentation

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May 22, 2023 372 likes •628 views

The Effects of Aging on Colorados Revenue and Expenditures: A View to 2030 COLORADO FUTURES CENTER REPORT TO SAPGA OCTOBER, 2016 The 65 and Over Cohort Growing as a SHARE of the Total Population Percentage of Households by Cohort 40%

SLIDE 1

The Effects of Aging on Colorado’s Revenue and Expenditures: A View to 2030

COLORADO FUTURES CENTER REPORT TO SAPGA OCTOBER, 2016

SLIDE 2

The 65 and Over Cohort Growing as a SHARE of the Total Population

0% 5% 10% 15% 20% 25% 30% 35% 40%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Percentage of Households by Cohort

18-24 25-44 45-64 65 & Over Linear (45-64) Linear (65 & Over)

SLIDE 3

Assumptions

Forecast horizon of 2030 For all revenue and expenditures for which we had sufficient data, we completed forecasts Forecast assumptions – revenue models

Assessed impact of aging only
Held constant all other economic and demographic variables
Results stated in growth rates of constant dollars
This is not a budget exercise

Forecast assumptions – Medicaid

Augmented aging assumptions with HCPF’s health care inflation

projections

SLIDE 4

We Studied the Impact of Aging on…

The Revenue System

Sales Tax
Income Tax
State responsibility for the Senior and Disabled Veteran

Property Tax Homestead Exemption State Expenditures

Medicaid
Non health care related expenditures

SLIDE 5

Revenue Findings

SLIDE 6

Key Finding: Annual Growth Rates in Real Sales and Income Tax Revenues Will Slow Due to Aging

1.40% 1.45% 1.50% 1.55% 1.60% 1.65% 1.70% 1.75% 1.80% 1.85% 1.90% 1.95% 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Growth Rate in Sales Tax Revenue, 2015 Real Dollars

1.30% 1.35% 1.40% 1.45% 1.50% 1.55% 1.60% 1.65% 1.70%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Growth Rate in Income Tax Revenue, 2013 Real Dollars

SLIDE 7

Aging Affects Sales Tax Through Consumption Patterns

$- $10,000 $20,000 $30,000 $40,000 $50,000 $60,000 $70,000

Under 25 years 25-44 years 45-64 years 65 years and older Average Annual Total Spending and Taxable Spending per Household by Age Cohort ($2015)

Average Annual Spending Average Annual Spending on Sales Taxable Items

Poly. (Average Annual Spending)
Poly. (Average Annual Spending on Sales Taxable Items)

SLIDE 8

The Result is a Decline in Per Household Taxable Spending

0.20%
0.18%
0.16%
0.14%
0.12%
0.10%
0.08%
0.06%
0.04%
0.02%

0.00% Percent Change in Per Household Taxable Spending

SLIDE 9

Colorado Projected to Continue to Grow

500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Total Number of Households

SLIDE 10

The Result is More Slowly Growing Sales Tax Revenue

1.40% 1.45% 1.50% 1.55% 1.60% 1.65% 1.70% 1.75% 1.80% 1.85% 1.90% 1.95%

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Percent Change in Total Taxable Spending

SLIDE 11

Income Tax Displays a Similar Pattern

$- $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000

25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80-84 85-89 90 and above Taxable Income Per Capita by Age Cohort, 2013

SLIDE 12

The Increase in Share of Older Coloradans Results in Decline in Per Capita Tax Revenue

$855.00 $860.00 $865.00 $870.00 $875.00 $880.00 $885.00 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Forecast of Per Capita Income Tax Revenue as a Result of an Aging Colorado Population

(Modeled in 2013 dollars and holding all economic effects constant)

SLIDE 13

Remember Colorado Continues to Grow

500,000

1,000,000 1,500,000 2,000,000 2,500,000 3,000,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Total Number of Households

SLIDE 14

Like the Sales Tax, TOTAL Income Tax Revenue Will Continue to Grow but at a Slower Rate

1.30% 1.35% 1.40% 1.45% 1.50% 1.55% 1.60% 1.65% 1.70%

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Growth Rate in TOTAL Income Tax Revenue, 2013 Real Dollars

SLIDE 15

Local Government Impacts will Depend

n Relative Reliance on Revenue Sources

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% State (General Fund, FY16 data) Municipal (2013 data) County (2013 data)

Tax Revenue Profile of Colorado's Governments

Averge Reliance on Individual Income Tax Average Reliance on Sales Tax Average Reliance on Property Tax Average Reliance on Other Sources of Tax Revenue

SLIDE 16

Property Tax Exemption Impacts State Government

200,000 400,000 600,000 800,000 1,000,000 1,200,000 1,400,000 $0 $50,000,000 $100,000,000 $150,000,000 $200,000,000 $250,000,000 $300,000,000 $350,000,000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Over 65 Population

Actual and Forecast State Reimbursements to Local Governments for Senior and Disabled Property Tax Homestead Exemption

Senior and Disabled Property Tax Exemption Cost Growth Over Age 65 Population

Actual CFC Forecast

SLIDE 17

Expenditure Findings

SLIDE 18

Aging Affects State Budget Most Significantly in the Medicaid Program

0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30

Aged Cohorts as a Share of Total Medicaid Population

SLIDE 19

Over 65 Cohorts Most Expensive

3.00%
2.00%
1.00%

0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00%

Adults 65 and Older Disabled Adults 60 to 64 Disabled Individuals to 59 Disabled Buy- In Parents/ Caretakers to 68% FPL Parents/ Caretakers 69% to 133% FPL MAGI Adults Breast & Cervical Cancer Program Eligible Children SB 11-008 Eligible Children Foster Care MAGI Pregnant Adults SB 11-250 Eligible Pregnant Adults Non-Citizens Emergency Services Partial Dual Eligibles TOTAL

Inflation Rates for Per Capita Expenditures by Cohort: Medical Services Premiums and Mental Health, FY 2017-18

2017-18 Inflation rate MSP 2017-18 inflation rate MH

SLIDE 20

And as a Result, Spending on 65+ Cohorts Grows as a Share of Total Medicaid Program

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30

Aging Related Expenditure as a Share of Total Medicaid Program

SLIDE 21

Over 65 Cohort Spending an Even Larger Share of the Non-Expansion Population

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30

Aging Related Expenditures as a Share of the Non-Expansion Medicaid Population

SLIDE 22

Beyond Medicaid, Many Other Program Expenditures Directly Driven by Aging

Old Age Pension Program - Department of Human Services (DHS) Older Americans Act – DHS State Funding for Senior Services – DHS Colorado Dental Health Care Program for Low Income Seniors – Department of Health Care Policy and Financing (HCPF) Adult Protective Services – Elder Abuse - DHS

SLIDE 23

Other Programs for Which Aging Also Has an Impact

Colorado Department of Public Health and Environment (CDPHE) - Health Facility Oversight and Licensing Prevention Services – CDPHE Department of Corrections -DOC Department of Transportation - CDOT Department of Local Affairs (DOLA) – Division of Housing

SLIDE 24

Conclusion: Modest Age Related Revenue Impacts Exacerbated with Expenditure Pressure

Sales Tax – The growth rate in real sales tax revenue will decline from a high of just over 1.85% in 2018 to just over 1.55% in 2030. Income Tax – The growth rate in real income tax revenue will fall from just under 1.65% in 2016 to just under 1.45% in 2030 Medicaid - Age related expenditures in the Medicaid program will grow from 16.73% today to 21.7% of total expenditures in 2030. Senior Property Tax Exemption – The exemption will grow from a high of 10.7% in FY 2016-17 to 4.7% by FY 2029-30