The Big Payout
Colorado received close to $ 66 billion in pandemic aid, or over $ 11,300 per resident; where did all that money go?
Colorado received nearly $ 66 billion in federal pandemic assistance over the past two years, a river of money that made its way to every corner of the state — from tourist attractions high in the mountains to large universities and hospitals along the Front Range down to tiny Main Street diners that dot the Eastern Plains.
The Denver Post examined more than 367,000 loans, grants and awards from federal agencies in a first- of- its- kind analysis tracking how federal dollars filtered their way to the state’s 64 counties. Distributions were hardly even, and the federal response, above and beyond the pandemic, likely caused the gap between the haves and have- nots in the state to widen.
Denver, Arapahoe and El Paso counties captured 44 cents of every federal dollar in assistance that could be localized. A dozen resort counties received as much federal money as the remaining 40 rural counties, even though those rural counties had 186,000 more residents. Pitkin County, home to Aspen, pulled in 5.5 times as much money per resident as Crowley, one of the poorest counties in the state.
Coloradans earned $ 8,000 more on average in income last year than they did before COVID- 19 hit. Higher incomes and higher savings accrued disproportionately to households in the upper- income brackets. Home values and stock prices surged because of federal policies, boosting the wealth of people holding those assets.
“We can argue whether this was too much stimulus, but you can’t argue about whether it worked. It worked,” said Richard Wobbekind, a senior economist at the University of Colorado Leeds School of Business.
The Colorado economy regained its prepandemic output in just over a year. The state recovered the 374,500 jobs lost after COVID- 19 came on the scene in less than two years, a much faster rebound than what followed the prior two recessions.
The federal money went to a variety of things — providing protective equipment, funding the transition to remote learning at schools, saving thousands of service jobs, helping restaurants and health care providers recover lost reve
Federal distributions flowed most freely to the places that had the most people and economic activity, a case of dollars following density.
nues and, in a use raising eyebrows, funding two golf course irrigation systems in Colorado Springs.
The federal help was unprecedented and massive, and it will continue to reshape the economy for years to come as the state and local governments work to spend an additional $ 5.8 billion in federal recovery funds.
An unexpected blow
State leaders scrimped and saved in the past decade, pulling together nearly $ 900 million in reserves to weather unexpected rough patches Colorado might face. When the pandemic hit in March 2020, they quickly realized it wouldn’t be enough.
“We were watching weekly, and we burned through our 7.25% reserve ( about $ 900 million) in 90 days. It was terrifying,” said Lauren Larson, director of the state planning and budgeting office, recalling the early weeks of the pandemic.
Ski resorts, casinos, concert halls, nonessential retail stores and restaurants shut down. Employers sent workers home, emptying out downtown buildings and office parks. Collapsing oil prices put a stop to drilling. The state’s unemployment rate shot up from a very low 2.8% to a postWorld War II high of 11.8% in just three months. Dislocated workers crushed the state’s overwhelmed and underfunded unemployment insurance system. By the end of the second quarter of 2020, Colorado’s GDP had plunged an unprecedented 8%.
“The governor, in partnership with the legislature, made a real strategic allocation of those ( reserve) funds, and that really supported our businesses and our workforce; those were key decisions in the early days,” Larson said.
But by itself, state money represented a drop in the bucket. The federal government would need to step in, and it did. Abandoning the restraint shown in prior downturns, the Trump administration and Congress quickly assembled a $ 2 trillion package known as the Coronavirus Aid, Relief, and Economic Security Act in late March 2020.
The CARES Act is the largest federal aid package in U. S. history, and Congress passed other smaller funding measures a year later. An additional $ 1.9 trillion was approved under the American Rescue Plan Act, or ARPA. In all the federal government authorized $ 4.61 trillion in COVID- 19 relief, obligated $ 4.15 trillion and spent $ 3.62 trillion, according to the website Usaspending. gov.
The Denver Post examined the 22 largest government assistance programs during the pandemic, which provided $ 63.17 billion in aid to Colorado as of mid- January, according to a COVID- 19 assistance tracker from the Peter G. Peterson Foundation.
The nonpartisan foundation focuses on federal spending and revenues, as well as debt levels. Peter G. Peterson, who made his money as a co- founder of The Blackstone Group, started it in 2008.
Diving into federal government databases, the Post assigned awards with an address to individual counties. In cases where the information was partial, distributions were extrapolated. And in cases where no address was available, but alternatives were, such as a county’s share of tax returns or unemployment claims, distributions were estimated.
In all, the analysis assigned $ 54.8 billion or 87% of the federal assistance from those larger programs to a specific county. A portion of the money that couldn’t be assigned to a county went directly to the state.
Colorado’s $ 63.17 billion in assistance ranked 20th, between Minnesota and Missouri, the spot expected, given the size of its population. On a per- capita basis, Colorado received $ 10,970 per person in direct federal assistance from those major programs, which ranks 28th among states, between Florida and Texas.
While comprehensive, the Peterson tracker didn’t include $ 386 million in support airlines in the state received, child care tax credits worth $ 1.53 billion and distributions from smaller programs. The Committee for a Responsible Federal Budget puts Colorado’s take of federal assistance at closer to $ 65.8 billion, or $ 11,378 per person, with $ 61.7 billion disbursed or committed. Beyond that, the Federal Reserve provided an additional $ 746 million in lending facilities and other support in the state.
A newer and bigger deal
To put COVID- 19 assistance in perspective, the American Recovery and Reinvestment Act of 2009, the main measure Congress passed to fight the Great Recession, totaled $ 840 billion at the time, or about $ 2,738 per person. Adjusted into current dollars, that would be worth about $ 3,679, according to a consumer inflation calculator from the U. S. Bureau of Labor Statistics.
The New Deal, the Roosevelt administration’s effort to lift the country out of the Great Depression, cost $ 653 billion or $ 5,231 per person in 2009 dollars, according to an analysis from the Federal Reserve Bank of St. Louis. That works out to $ 7,029 in current dollars.
Federal COVID- 19 assistance was more than sixfold the $ 10 billion decline in Colorado GDP in 2019 and 2020. It is four times the $ 16.2 billion in general fund revenues the state expects to collect in fiscal 2021- 22. And for a comparison that sports fans can relate to, the Denver Broncos may sell for about $ 4 billion, a record amount for an NFL team. The federal government provided Colorado with enough money to buy 16 teams at that price.
Although Colorado received the amount of assistance expected versus other states, given its population, distributions within the state were lumpy when measured against each county’s population.
The per capita average of money that could be localized was $ 9,482, with distributions across the state ranging from $ 19,545 in Pitkin, the state’s wealthiest county, to $ 3,497 in Crowley, where nearly three in 10 residents fall below the poverty line. Rural counties that didn’t have a ski resort typically received significantly less money per resident.
“It is not an easy thing to spend money and do so legitimately and in an orderly way,” said Stephan Weiler, director of Colorado State University’s Regional Economic Development Institute, which studies issues related to the ruralurban divide.
Two key sources of assistance — the Paycheck Protection Program and federal unemployment benefits — were stood up quickly with lax safeguards because of a desire to get as much money out the door as quickly as possible. The extent of the fraud still is being uncovered, but it is likely that tens of billions of dollars nationally were siphoned off by domestic scammers and international crime rings.
Both programs were applicationbased and not always easy for individuals to navigate. PPP lending in particular demonstrated wide variations within the state. When it came to the distribution of federal COVID- 19 funds, the preexisting economic divisions in Colorado and elsewhere were reinforced, Weiler said.
Where the money went and where it didn’t
Federal distributions flowed most freely to the places that had the most people and economic activity, a case of dollars following density. Around 44% of federal pandemic dollars went to the state’s three most populated counties — Denver, Arapahoe and El Paso.
Those three counties account for about 36% of the state’s population and 44% of state GDP. Each county’s share of assistance lined up with its contribution to the economic output of the state.
Denver County, with its high concentration of government, medical, educational, tourism, entertainment and business activities, was the epicenter of COVID19 relief in Colorado, receiving $ 12 billion, or 22% of the funds assigned to a county. From the evaporation of business travel to shuttered concert halls to empty office buildings — Denver was hit hard in about every area imaginable. It also led when it came to distributions from most federal pandemic assistance programs in Colorado.
Arapahoe County was second overall, with $ 6.85 billion, or 12.5% of pandemic funding. The county was a leader in claiming funds to assist health care providers recover lost revenues. Centennial-based Centura Health, a leading hospital group with several subsidiaries and locations across Colorado, claimed a large share of those funds.
El Paso County, which barely edges out Denver in population, received 9.9% of the county- assigned total or $ 5.4 billion. A heavier reliance on military and defense spending left that county’s economy more resilient in the face of the pandemic.
An ingrained bent toward selfreliance and distrust of the federal government, along with concerns about deficit spending, might have resulted in more politically conservative parts of the state seeking less help, said Brian Lewandowski, executive director of the Business Research Division at the Leeds School of Business.
Even though it received less than half as much federal pandemic assistance as Denver, Colorado Springs is restoring jobs at a rate well ahead of metro Denver and second only to Grand Junction, according to the Colorado Department of Labor and Employment.
Another way to compare distributions is by looking at what counties received per resident. Colorado’s dozen metropolitan counties received localized federal assistance averaging $ 9,574 per resident, not far from the statewide average of $ 9,482 per person.
The divide was wider in rural areas. A dozen rural ski resort counties received $ 11,652 per resident, led by Pitkin County at $ 19,545 and San Miguel, home to Telluride, at $ 17,286 per resident Non- resort rural counties, by contrast received $ 7,202 per resident.
COVID- 19 cases hit Colorado right in March, forcing ski resorts to close prematurely and causing a loss of revenues in a lucrative period not only for resorts but surrounding restaurants, lodging providers and retailers. Thousands of employees who rely heavily on tips, from restaurant servers to ski instructors, saw that spigot of extra cash cut off. Those workers then found themselves laid off, resulting in elevated rates of unemployment claims in resort counties. The pandemic shutdowns also depressed summer tourism in 2020.
“Many of our locals rely on that high season to get them through the year,” said Debbie Braun, president and CEO of the Aspen Chamber Resort Association. “So it was a pretty crushing blow when we had to close the resorts for the season.”
Even though resort counties attracted more of their wealthy secondhome residents and highly paid remote workers seeking to escape crowded urban areas, service workers in those areas struggled.
At the other extreme, many of the counties at the bottom end when it came to receiving federal assistance struggled with poverty rates above the statewide average and household incomes significantly below — characteristics that would suggest they needed more help, not less, during the pandemic. That group included
Crowley, Fremont, Bent, Custer, Conejos, Hinsdale, Delta, Costilla and Moffat counties.
But not every county at the bottom fit that pattern. Elbert County received the fourth- lowest amount per resident in federal aid at $ 5,451, and Douglas County was the seventh- lowest at $ 6,316 per resident. Both counties rank high for household income and low for their poverty rates. Their economies don’t depend so heavily on tourism, relying more on highpaying professional and technical jobs, which fared better during the downturn.
Apply or get left behind
Some counties lack medical facilities or colleges, which limited the health care and education support they received. Others were fortunate to suffer fewer job losses, reducing the draw their residents made on the unemployment system. But the key to understanding lopsided distributions in Colorado comes by examining business support.
Federal pandemic funding can be divided into five big buckets — personal assistance at $ 23.3 billion, or 37% of the total; business assistance at $ 21.1 billion, or a third of what Colorado received; state and local government assistance at $ 10.8 billion, or 17% of the total; health care programs at $ 5.1 billion, or 8.1%; and education at $ 2.9 billion, or 4.6%.
Some federal programs assigned money based on population, a fair but untargeted way to get help out. When it came to business relief, the U. S. Small Business Administration relied on applications through lenders. People who needed help had to ask for it.
More than a quarter of the federal pandemic assistance dollars in Colorado from the 22 largest programs, $ 15.1 billion, or $ 2,604 per capita, came through the Paycheck Protection Program. It was a new loan program designed to help small businesses with fewer than 500 employees keep their workers on the payroll. If the money was spent saving jobs, the loans were forgivable.
Business assistance was more than twice as high in resort areas as it was in non- resort areas on a per capita basis, and the gap between the top and bottom counties was extreme. In Pitkin County, PPP loans worked out to $ 9,258 per capita, or 3.6 times the state average, while in San Miguel County it was $ 6,054. At the other end were Costilla County, with $ 575 in PPP funding per resident, and Crowley County, at $ 502 per resident.
“We do know that there are more businesses per capita receiving assistance in resort communities than non- resort communities because a very high percentage of customers are imported, tourists, compared to non- resort counties whose businesses are more heavily dependent on local residents,” said Elizabeth Kosar, the state’s Economic Recovery Communications Coordinator.
Because resort areas have a higher concentration of businesses than non- resort areas, it isn’t a surprise that they drew in more pandemic assistance from business programs. Pitkin County, for example, is home to 20 times more businesses than Crowley, according to the U. S. Census Bureau.
Although Weiler agrees that business and job concentration are part of the equation, they don’t provide a complete answer. Pitkin County may have 20 times more businesses than Crowley, but it received 55 times more PPP funds.
To obtain a loan or grant from the SBA, business owners needed to know about the programs and determine their eligibility. And they needed a lender willing to work with them. That wasn’t always easy to pull off, especially in areas where communities are underbanked after years of mergers, closures and disinvestment.
“Not every area has a bank, especially with all the consolidation that has been occurring,” he said. “You don’t have the personnel on the ground, and an ATM won’t do you any good when you are looking for a loan.”
Weiler researched pandemic lending nationwide and found that the number of PPP loans per business in a county correlated with the depth of banking resources. Banking “deserts” had fewer PPP loans per business. Viewed that way, it isn’t just that resort counties had more businesses, they had more banks willing to work with those businesses.
Because the money was already there, the banks were there. And because the banks were there, businesses in those counties tended to receive more federal dollars in assistance during the crisis.
Information about the different assistance programs, including the guidelines, wasn’t always timely, said Melody Villard, a commissioner in Moffat County, which lagged when it came to federal assistance.
“I think maybe some people just didn’t have time to research or the knowledge base to do that, not knowing all the implications,” she said. “Factoring in the ( Paycheck Protection Program) funds, a lot of our smaller businesses and individuals did not apply for those funds.”
Anna Lighthizer knows that feeling. She was in the middle of moving her restaurant, The Sizzling Pickle Restaurant and Lounge, from a bowling alley in Craig to a new spot in fall 2020. She learned too late about a few grants and loans that she might have qualified for.
“I didn’t want to do the payroll stuff because I didn’t want the loans and the payback stuff,” Lighthizer said. “But some of the other grants would’ve been nice. We just missed a lot of it. It was just not knowing, being brand new and trying to keep your head above water.”
Lighthizer did get a $ 10,000 grant from a city program for small businesses.
Even in urban areas where banks are more active, larger customers were favored when it came to obtaining PPP loans, Weiler said.
Yet, businesses that took out smaller PPP loans of less than $ 150,000 were more efficient at saving jobs, a Denver Post analysis found. In Colorado, it cost the SBA on average $ 7,115 per job saved at firms borrowing $ 150,000 or less, but $ 10,807 per job at firms borrowing more than that.
SBA administrator Isabella Guzman acknowledged that the smallest of small businesses and those without a banking relationship had a harder time accessing pandemic assistance, something the SBA addressed in its second PPP round in 2021. It leaned more heavily on community financial institutions and online lenders. It also earmarked funds for micro and disadvantaged businesses.
“We know there were gaps in the marketplace,” she said. “In 2021, we tried to fill those gaps with these online options and support through our centers and district offices.” Of the PPP loans that went out in 2021, 96% went to firms with 20 or fewer employees, according to the SBA.
One of the key architects of the Paycheck Protection Program, Sen. Ben Cardin, D- Md., said in a speech to Congress on March 25 that the SBA needs to create a direct-lending program to get around some of the flaws exposed during the pandemic.
“Now is not the time to retreat. It is time for us to double down. In implementing lessons learned over the lifetime of PPP, we should create a new direct loan program within SBA and further empower small businesses,” he said.
Did the money get the job done?
If the purpose of the COVID- 19 assistance was to fight off the pandemic and shore up the economy, it did that well. Colorado’s economic output, or GDP, recovered by the second quarter of 2021. All the federal direct assistance provided to individuals — think stimulus checks and enhanced unemployment benefits — pushed incomes higher throughout the pandemic, to the point that the average Coloradan made $ 8,000 more in 2021 than in 2019, according to the OSPB’S Colorado Outlook.
That’s not what is supposed to happen during a recession. Consumers nationally, limited in how they could spend their money, accumulated $ 2.5 trillion in extra savings during the pandemic, and their net worth increased by $ 24 trillion, much of it from home price gains, according to a report last month from Brookings, a Washington, D. C.- based research and policy group.
For the top 1% of households, the gain in net worth was 19 times that of the bottom 20%, Brookings found.
A separate study last summer from Moody’s estimated that about 70% of the excess savings generated during the pandemic ended up in the hands of the top 20% of households by income. They tended to be older, collegeeducated and homeowners. Home owners captured 90% of excess savings, and they received another big boost in their wealth from rapidly rising home prices.
The S& P Corelogic Case- Shiller home price index for metro Denver is up by nearly a third since the pandemic started, with a 20.8% gain in the past year through January. Corelogic estimates the typical homeowner in Colorado carrying a mortgage gained $ 75,000 in additional home equity last year.
In February, job counts statewide returned to where they were before the pandemic started. It took 21 months to get from peak unemployment to 4%, which contrasts with 42 months after the dot- com recession and 54 months after the housing- driven Great Recession, according to Ryan Gedney, senior economist at the Colorado Department of Labor and Employment.
During the Great Recession, job losses didn’t bottom out until two years into the downturn, Lewandowski said. It took under two years in this recovery to get them all back.
“The federal response was really, really strong this time around,” Gedney said. “When you look at the CARES Act, the Continued Assistance Act, the American Rescue Plan — there was a lot of effort and federal dollars pumped into the economy to try and stimulate and spur on a fast recovery.”
Yet all the money pumped into the economy is having unintended consequences. Consumer inflation in metro Denver hit 9.1% in March, its hottest pace since 1982. Automobiles are in short supply, resulting in some used models costing more than a new version. Workers are hard to find and are switching jobs at a record rate. And good luck to anyone trying to buy a starter home. Metro Denver ranks as the fifth- least- affordable housing market in the country, given incomes, and Colorado Springs as the ninth- least- affordable.
Mary Daly, president and CEO of the Federal Reserve Bank of San Francisco, said consumers, unable to spend money on services as freely as they did before the pandemic, focused more of their spending on goods. Manufacturing shortages and supply- chain issues in delivering those goods contributed to higher prices.
“We weathered the pandemic as an economy better than anybody thought,” she said during a “fireside chat” hosted by Brookings to discuss the pandemic recovery. “Better to have a bridge too long than one too short.”
But for some parts of the Colorado economy, the bridge never really arrived. The statewide job recovery rate was just shy of 102% in February, Gedney notes. Almost every metro area in the state reclaimed or is close to reclaiming the jobs lost in March and April 2020, except one. Metro Greeley, which covers Weld County, a leader nationally in job creation last decade, recaptured only 47% of its prepandemic job counts.
The county’s greater concentration of natural resource jobs explains why it is lagging. Relief programs were rolled out for airlines, restaurants, entertainment venues, health care providers, schools, small businesses and local governments but not for oil and gas producers, even though spot oil prices briefly turned negative in early 2020.
Wobbekind and Weiler said the commodity business is cyclical by nature, which likely left policymakers reluctant to extend help. But that lack of support during the pandemic may be coming back to bite as producers, still licking their wounds, are hesitant to drill even after Russia’s invasion of Ukraine sent oil prices spiraling above $ 100 a barrel.
A second take
How federal assistance was distributed in Colorado varied by geography. Higher savings and higher gains in net worth resulting from the federal response accrued to the most well- off households. And some damaged industries, such as oil and gas, were passed over completely. But there is a chance to address some of those gaps.
Gov. Jared Polis’ administration and the legislature are working out how to spend $ 3.8 billion in assistance the state received under the American Rescue Plan’s Fiscal Recovery Fund, while state, municipal and tribal governments have an additional $ 1.9 billion to work with. The funds must be spent by 2026, and a push is on to find the best way to spend what some have described as a once- inageneration windfall.
Discussions among state and local leaders brought three pressing concerns to the surface — affordable housing, workforce training and mental and behavioral health. All were areas of high concern heading into the pandemic and were made worse by the pandemic, said Patrick Meyers, the state’s chief economic recovery officer.
The state’s fiscal limits mean that it is hard to accumulate large sums of money in short order to tackle the most pressing problems. The fiscal recovery funds offer the chance to do something big.
“The governor has been very clear since the money came in that he wanted it to be used for transformational projects. He didn’t want it to be spread out,” Meyers said.
The state wants to work jointly with local governments to leverage combined dollars where possible, Larson said. But it is a process of persuasion.
Local governments can spend up to $ 10 million to backfill lost revenues. Beyond that, many are looking at bigger projects involving public health, workforce training, economic assistance and infrastructure projects in water, sewer and broadband.
“The funds made available are one to rescue and two to rebuild,” said Teryn Zmuda, chief economist at the National Association of Counties. “This is why it was so critical for counties to receive direct and flexible funding from the government. They are closest to the people and they know how to best utilize these funds.”
Colorado’s largest counties, with 250,000 or more residents, must file Recovery Plan Reports with the U. S. Treasury Department. Those reports show $ 132 million obligated across 41 projects, according to NACO.
El Paso County is applying $ 8 million toward drinking water infrastructure, $ 5 million in stormwater improvement and $ 6 million in “middle mile” broadband, but Colorado Springs drew attention after setting aside $ 6.5 million of its $ 76 million in funds to replace irrigation systems at two golf courses.
Arapahoe County is directing $ 7 million to support small businesses and $ 600,000 to groups that provide food assistance. Boulder County is providing $ 140,000 to increase cellphone and technology access to the homeless and provided an additional $ 300,000 for a Left Behind Workers Fund.
Several bills passed during the most recent legislative session that focused on helping groups and areas of the state that didn’t do as well at obtaining federal assistance, Kosar said.
They included providing additional funding to the COVID- 19 Small Business Grant Program and to the Colorado Startup Loan Fund, nearly $ 25 million to support artists and arts organizations, and $ 10 million for a meetings and events incentive program.
The Colorado Office of Economic Development and International Trade also created a freestanding Rural Opportunity Office to provide better support to rural communities this month.
Small- business owners still report they are hurting, with only 23% nationally saying they have returned to normal operations at the end of March, according to the U. S. Census Bureau’s Small Business Pulse Survey. In Colorado, a fifth of small businesses said the pandemic had a large negative impact on them, while 43% described it as a moderate negative impact.
The federal government may have had the right intention in trying to help small businesses, but its programs were not efficient, Weiler said. State and local governments should see if they can do better with the funds left at their discretion.
A study from the Peter G. Peterson Foundation estimates that $ 1.01 in boosted GDP came from every federal dollar spent on health, education, transportation and emergency management during the pandemic. Enhanced federal unemployment benefits returned 75 cents per $ 1 spent, while fiscal recovery funds provided to state and local governments are expected to generate 62 cents per $ 1 spent.
Financial support to businesses during the pandemic generated only $ 0.31 in added GDP for each $ 1 spent.