Colorado was recently dinged for its business climate. Here’s how companies want to fix it.

When Colorado Sun Tofu (no relation) moved its manufacturing plant to Trinidad about three years ago, its new owners were excited to expand in a charming rural community and diversify beyond their two restaurants in Denver. 

There were some snags, like finding a local contractor. But other issues, like the state handling plumbing and electricity permitting, weren’t apparent until more recently.

“Every six months they’re inspecting and signing off on the work and a couple years later, they’re like, ‘You’ve got to stop, close and redo everything you just did’,” said Lauren Roberts, CEO of the tofu company, and co-owner of restaurants Watercourse Foods and City O’ City in Denver’s Capitol Hill neighborhood. “It happened to us.”

Operating a business in Colorado has its challenges, just like in every state. But frustration has been building for years, culminating with a data-heavy report last month from the Governor’s Competitiveness Council, a public-private partnership led by business leaders and advocates. 

Folks like Roberts attended listening sessions over the summer to share their hopes and frustrations. About 50 recommendations were made, with many requiring additional funding, like designating “site ready” locations so companies can build or move in quickly. Or some ideas need legislative changes, like simplifying sales and use taxes, redesigning business incentives and improving the permitting process so reviews involving multiple agencies happen concurrently.  

But behind the frustration that compelled many long-time local business owners and leaders to support the council was a feeling that many seem to share: They want to stay in Colorado. 

“In my humble opinion, things just need to be cheaper and easier, and that’s going to help us. It’s going to help small businesses and the people that live here,” Roberts said. “We want to be here. I think what drove me to participate is there’s so much I love about being here. We just want our legacy businesses to survive and do well and we want new businesses to want to be here, too.”

Are policies driving away companies? 

There’s no simple way to measure how many Colorado companies left the state and blamed the business climate. Or how many moved in. And while Colorado is still landing new companies, there’s a sense that other states are much more aggressive. New laws add more paperwork and costs for small businesses, though some have benefited workers through higher minimum wages, a state-managed retirement account and paid family leave.

In Colorado, around two-thirds of the state’s general fund revenue comes from income taxes, according to legislative staff. Of that revenue, the vast majority comes from individuals — but the actual split can vary greatly from year to year. In some recent years, corporate income taxes have accounted for less than 10% of all income tax collections, with individuals chipping in over 90%. In others, corporate income taxes have made up as much as 25% of the total, with individuals contributing 75%, according to the Office of the State Controller.

Last year, the state’s corporate income tax revenue dropped precipitously due to federal tax cuts. They made up about 12% versus 88% for individual taxpayers, according to the office of the state controller.

At the local level, however, businesses pay much higher property tax rates than individuals do.

“We all know that we need a strong tax base as a state to have good local and state services. And to do that, businesses pay more than their fair share,” said Johnna Reeder Kleymeyer, president and CEO of the Colorado Springs Chamber & EDC. 

“A lot of businesses say we love this state. We want to stay in this state where the talent is but it’s hard when other states are calling them and trying to recruit them,” added Kleymeyer, who’s also a member of the Competitiveness Council. “It’s not personal. They have to make a business decision.”

Long-time local employers, like JFW Trucking in Commerce City, are dealing with the higher price of diesel gas this year. But other costs have been added due to state policies, like the state’s paid-family leave program, which is funded by employers and workers. But it’s not just about wages, said Jim White, general manager of the family-owned business.

“It did help out employees. There’s a lot of wonderful benefits,” White said. “But we can’t fill our trucks if we have seven or eight employees off for 12 weeks or longer. You can’t just put any truck driver in a truck. We can’t take the chance that they’re not qualified. They might have a CDL but are they safe? Do they meet all of our requirements?”

An underlying reason for the competitiveness report, though not stated, was to oppose Amendment 87, which passed last week. The measure will replace the state’s flat income tax with a graduated one — higher for people and businesses that make more than $500,000 a year and lower for those making under $100,000. Opponents of 87 said Colorado would lose companies if it passed, while supporters said that remains to be seen.

It had been a frequent topic of conversation in the past month for Seth Levine, a longtime venture capitalist in Boulder who served on the council. And while there were many other recommendations unrelated to taxes, the wealth tax “poses serious challenges to the overall goal of the Council, which was to make Colorado more competitive,” Levine said in an email. 

“The suggestions we offered are important, perhaps even more so now that we’ve added another impediment to people choosing to start, grow, and relocate their businesses in Colorado,” he added. “My hope is that as a state we’ll at least consider how we can use these new funds to address other aspects of our competitive landscape to make Colorado more attractive. But I don’t want to sugarcoat the challenge (that) the nearly doubling of our top tax rate will impose on our ability to retain talent, let alone attract it.”

‘Why are you doing this work?’ It’s because I want this to be the place that my kid chooses to raise their kids.

— Cory Finney, managing partner of Howdy Partners in Durango

Cory Finney, a council member and rural Colorado investor, said that he and his team at venture capital firm Howdy Partners are working with their portfolio of rural startups to figure out who are most affected by 87 because there’s a “non-zero chance that a handful could be impacted dramatically,” Finney said. 

But, he added, “The one thing that unites everybody is that we’re Coloradans first and foremost. I can’t tell you how many times in the last couple of weeks someone’s asked me, ‘Why are you doing this work?’ It’s because I want this to be the place that my kid chooses to raise their kids.”

Colorado’s uncompetitiveness

In the past, Colorado hardly needed to lift a finger to attract companies and talent, said Larry Gigerich, chair of the Site Selectors Guild, which helps corporations pick the best locations. More than a decade ago, the state’s lifestyle and cost of living was a huge appeal, especially for those looking to leave the more expensive and congested coasts.

“There were a lot of boxes at the time that were getting checked for both individuals and also company owners or decision makers who are in California saying, ‘We like the West. Our employees like the West. We want to stay somewhere in that geography but go somewhere where perhaps costs are a bit lower and where we can still find great talent,’” Gigerich said. 

The state’s labor force has been shrinking since reaching a high of 3.27 million people in October 2024. It’s down nearly 95,000 workers, as of last month, according to the latest data from the U.S. Bureau of Labor Statistics. Economists said declines were caused by an aging workforce with more people retiring or moving. Similarly, the state has lost jobs, after years of adding thousands per month. Last year, Colorado’s job count declined by nearly 5,000.

“Colorado employment performance is abysmal. The data convinced me that leaders dropped the ball,” Broomfield economist Gary Horvath, who was not part of the council, said in an email. “The data shows that a strong case can be made that other states were more effective at attracting people/businesses than Colorado.”

But what bothers Horvath about the report is that it didn’t address where the state is going to find the funding to fulfill the recommendations made by business leaders. 

At a recent economic development meeting, he asked where the state legislature was going to find the money to support the recommendations, especially with the continued budget shortfalls, including a $1.6 billion deficit for next year’s budget. 

“The response was that things will be looking brighter in a couple of years,” he said. “That didn’t answer the question.”

Who left? 

Last spring, the Colorado Chamber of Commerce shared a dismal report: Nearly 100 companies had left Colorado or chose another state since 2019. The state has become more expensive compared to its peer states (including Utah, Idaho and Arizona), and is the sixth-most regulated, if you count all the laws (Texas and California have more). 

Not all of the companies listed left Colorado. Boulder-based security company LogRhythm merged with California-based Exabeam in in 2024, but never left the state.  Exabeam’s only North American location today is in Broomfield, according to the company’s website.

But it’s nearly impossible to track the reasons businesses move, said Hanna Scovil, vice president and senior economist at Pacey Nehls Economic Consulting, during the State Demography Summit last week. 

“If we have a report that shows us how many jobs we lost and how many headquarters we lost, we’re not counting the net effect of the ones we gained,” Scovil said at the event. “It gets a little trickier to really disentangle the reasons why. But absolutely it’s felt, and I think that we have to (keep) both in mind at the same time.” 

Added Greg Totten, a state economist who talked about jobs during the same summit: “There are a lot of reasons why companies leave for just practical reasons. Maybe you’re moving closer to a supplier, or maybe there’s a tax incentive to leave.”

One thing many agree is that living and operating in Colorado, and in Denver especially, has become expensive. And the cost of doing business can make or break a relocation. 

“Costs (in Denver) have gone up partly because of the success, population growth and companies coming there,” Gigerich said. “You know —  between the mountains, high desert climate and good talent.”

Economic development is different today compared to those earlier fruitful years for Colorado. Other western cities, including Salt Lake City and Boise, have become much more aggressive in luring companies away from Colorado. 

And decisions can often come down to one issue. Gigerich said one client in the finance industry decided to pass on Colorado because of the 2019 wage-transparency law requiring job listings to share how much a job pays. Sharing salaries hurt the company’s competitiveness so it moved elsewhere. 

“The final three places we’re looking at on paper almost look the same economically,” Gigerich said, “but it’s things like that that could nudge a decision one way or the other.” 

Who’s moving in?

Last month, the state’s Economic Development Commission approved its 28th job-growth incentive this year. That’s one more than all of last year, with two more months to go. 

The incentive, used to encourage businesses to move to Colorado or retain those already here, is a state income tax credit that’s not refundable or transferrable. Those behind the competitiveness report recommended allowing those options to provide companies more “certainty before commitment,” according to the report. While not all of the companies take the state up on its offer, it can help a company make a decision. 

But interest in moving to Colorado hasn’t subsided, according to the state Office of Economic Development and International Trade. In the past five years, the number of aerospace businesses in Colorado has grown 34% to 2,200 while aerospace jobs have increased 15%. 

The Denver-Boulder area has become a quantum-technology hub, attracting companies like IonQ, which picked Boulder to put a new lab for research and development and chip testing. IonQ plans to hire 150 people through the job-growth incentive program. 

About 70% of the 175 companies awarded job-growth incentives since 2021 have picked Colorado while two did not. Around 30% are still making a decision or are no longer active, according to state economic data.

“Colorado continues to have a strong pipeline of potential projects from companies within and from outside of the state, driven by our highly skilled workforce, robust and diversified economy, and collaborative approach to economic development. From aerospace to quantum, companies continue to choose Colorado, highlighting our leadership as a global hub for growth and innovation,” said Michelle Hadwiger, OEDIT’s director of global business development division

Interest in state incentives has picked up since 2024, when the state saw a big drop in applicants, which some attributed to it being an election year. But it was tough to top 2023, one of the biggest years on record for the state’s economic development agency. 

That year, the commission approved $146 million in incentives to 35 companies for creating 12,700 new jobs. Then the announcements dropped. Amprius Technologies picked Brighton to build a 775-000-square-foot lithium-ion battery factory. Switzerland-based Meyer Burger Technology announced it would build a solar cell factory in Colorado Springs. And Alquist 3D moved its headquarters to Greeley to focus on 3D-printed home construction.

But some of 2023’s big wins didn’t last. Meyer Burger canceled its plans a year later, saying it was “no longer financially viable.” Amprius Technologies pulled out of Brighton, stung by protests from neighbors who didn’t want a hazardous materials factory so close to their homes (Amprius also paid a $20 million termination fee to get out of the lease earlier this year).

Alquist 3D is still based in Greeley though it’s shied away from residential housing due to the high cost of materials. The company, which has about a dozen employees in Colorado, has been on a tear outside Colorado. In May, Michigan Strategic Fund approved a $1.6 million performance grant to support a manufacturing and research facility in Detroit, with Alquist making a $31.3 million investment that could someday employ more than 160 people in Michigan.

The big boost to the company was Walmart, which had Alquist “print” a 5,000-square-foot online pickup facility in Alabama in 2024. Alquist has done seven so far with “30 more in our pipeline,” founder Zachary Mannheimer said. 

“This was not what we were thinking originally four years ago but it’s been tremendous,” Mannheimer said. “The scale that Walmart has given us has allowed us to buy material at bulk. We have a great partner called Sika who makes the mix and that’s allowing us to get the prices down faster. The other piece is that has had to get more training. As Walmart ramped up with projects, we didn’t have enough people to do them. That’s why we put the focus on workforce education.”

The company, which partnered early on with Ames Community College in Greeley to develop a 3D-printing curriculum, is now working with other colleges in the U.S. to offer similar courses to attract workers, including at Rio Salado Community College in Tempe, Arizona; University of Wisconsin-Stout; and Henry Ford College in Detroit.

“When we first came to Greeley, we did not have our own robot. We were using other companies’ machines. We developed the A1 system in Greeley because we had so many great partners that (the state’s economic development office) had helped us get set up with from the manufacturing chain,” he said. “I’m very happy with the support we’ve gotten from the state.”