The 2024 state legislative session is underway, which means that over the coming weeks and months, we’ll hear from our elected lawmakers about the proposals they have to move our state forward. While we have different ideas of what policies are best for the state, we want Colorado to be successful.

At the Colorado Chamber, our focus is on improving the state’s economic climate. We want Colorado to be the preferred place where business leaders choose to invest and innovate. We want to be a leading state, setting a national example for job creation and economic growth.

Unfortunately, in recent years, we have set an example for other states — but not in a good way.

Over the last several years, the Colorado Chamber has sounded the alarm that our competitive edge is slipping. Colorado has lost out on jobs and businesses to neighboring states, and we’re at risk of falling even further behind.

Our counterparts at the Arizona state chamber have taken notice. They’ve recently commissioned a study comparing their state’s economic landscape to that of Colorado’s. The conclusion? Colorado has become a glaring example of what not to do when it comes to business policy.

Up until recently, Arizona and Colorado had remarkably similar economies, with Colorado having a slight edge — from state GDP and growth trajectories to population and jobs. But something happened in Colorado around five years ago that set us on a different course. For the first time since the Great Recession, Arizona’s economy now outpaces Colorado’s, even when factoring in the impacts of the pandemic.

According to the Arizona chamber’s report, the shift in tide came after Colorado’s 2019 state legislative session, which sparked the rapid onset of new mandates, costs and regulatory burdens on the business community. As the report’s joint authors at the Common Sense Institute said, “the lesson of Colorado’s anti-business policy transformation over the past half decade shows that climates can change quickly.”

Since 2019, Colorado’s annual job growth slowed by more than 60%. Sectors that are sensitive to governmental regulation, such as manufacturing and energy resources, have been declining.

Most of the job growth we have experienced has been found in professional business services — an area that (not coincidentally) assists with regulatory compliance through human resources, accounting, and legal support.

The Arizona model

Meanwhile, state leaders in Arizona have taken a vastly different approach from Colorado’s. Instead of piling regulations on employers, they’ve reduced them. For example, they’ve recently codified a rule-making moratorium to ensure new regulations are justified and to encourage state agencies to conduct periodic reviews of existing rules. Arizona also has a broad and longstanding regulatory review infrastructure in place through a Governor’s Regulatory Review Council to provide oversight to the process.

Arizona also adopted growth-centered economic strategies, like tax cuts for business capital investments and reductions in business property and income tax rates. Importantly, they have recently rejected policies that are strikingly similar to many of Colorado’s new laws — from paid employee leave mandates to a public health insurance option to environmental proposals nearly identical to those recently passed here. The Arizona state chamber dubbed these proposals “job killers” for a reason.

These two divergent approaches in Arizona and Colorado have led to contrasting outcomes. Today, Colorado has over three times as many regulatory mandates as Arizona, adding over 10,000 mandates in just the past five years. According to the Arizona chamber, “had Arizona followed Colorado’s example, it would be grappling with 113,500 fewer workers today, and its economy would have shrunk by 2.6% — equivalent to a $9.5 billion loss in GDP.”

This data is consistent with recent Colorado Chamber studies finding that our regulatory climate is driving business out of state. In our most recent annual business poll, almost half (46%) of Colorado business leaders said they will be making future investments out of state. When talking to companies that operate in other states, that number hits 83% — meaning only 17% of those companies intend to solely invest in Colorado.

When asked about the most important issues facing Colorado businesses, the answers were definitive: 48% of employers said regulations were their primary concern. Our pollster noted that our survey recorded the greatest concern about the state-level regulatory climate that he’s seen compared with other states where he polls.

Similarly, our 2022 competitive landscape analysis found that Colorado’s affordability and cumbersome regulations are major risk factors impacting company decisions to stay in Colorado. In that report, business leaders pointed to the complexity of new state regulations around paid employee leave, regulatory fees on employers, and other new labor and employment requirements as being potential deterrents to expansion and growth.

Let’s reset

That’s why Colorado’s competitiveness has become top priority at the Colorado Chamber. It’s not too late to get back on track, and we’ve laid out short- and long-term action plans to correct course.

Back in October, we launched Vision 2033, a 10-year strategic blueprint to elevate our competitiveness. The plan tells us where we are, where we want to be and how we’ll get there. We outline key focus areas, like cost-of-living, environmental sustainability, growing our tech sector and improving the legal climate. And we’ve set forth clear and defined courses of action for each goal.

We’ve broken ground on implementing this plan, bringing forward data, strategy and policy ideas. But changing our trajectory will require commitment and action by state leaders.

That starts with the 2024 legislative session. Using the Colorado Chamber’s long-term strategic action plan as a foundation, we’ve laid out a bold and proactive policy agenda to help bring Vision 2033 to life.

We’re pursuing future-focused legislative proposals to tackle critical economic issues and support the businesses and workers that define our communities. For example, in the coming weeks, the Colorado Chamber will lay out a bipartisan workforce development package aimed at bringing business leaders, higher education, and local communities together to address our skills gap and improve the talent pipeline statewide.

We’ve also been working closely with public officials to find real solutions to housing affordability — a top driver of Colorado’s cost-of-living crisis.

Colorado is among the five most expensive housing markets in the nation, and that has a real impact on talent recruitment, economic development and growth. We’re looking at policies to make it easier to build and fund new housing along with reforming the state’s property tax structure. We will also aggressively oppose efforts to limit the housing supply and increase costs, like rent control and right-of-first-refusal.

And most importantly, we will continue to aggressively defend the business community from the very regulations that have made us the admonition of other states. We’re hearing the familiar tune of new policy ideas coming from the 2024 Legislature that will make it even harder to do business here.

For example, Colorado’s legal climate has been deteriorating and certain proposals this year will make it even worse, encouraging costly lawsuits on employers and creating new opportunities for litigation. These types of policies could destroy small businesses and further drive job creators out of the state. We’re also closely watching potential bills that will create new regulatory schemes and lead to increased costs in health care, workers compensation and environmental regulations.

Looking ahead, the Colorado Chamber is developing a new course of action to specifically tackle regulations. Over the next year, we will be working with economists to study the full scope of our regulatory climate and help state leaders understand the price tag. Using this research, we will propose new approaches and structural reforms to provide regulatory relief to the Colorado business community.

Business leaders are tired of short-sighted policies that don’t address the real challenges facing our state. They want future-focused solutions and leadership to position Colorado for sustained growth. By focusing on these key priorities, we believe that Colorado can become a national example for good business instead of a cautionary tale of how to drive businesses out.

Loren Furman is president and CEO of the Colorado Chamber of Commerce.