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REUTEMAN: Recession tops list of '08 stories in Colorado

By Rob Reuteman, Rocky Mountain News (Contact)

Published December 27, 2008 at 12:05 a.m.

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Hometown low-cost carrier Frontier Airlines flew into Chapter 11 bankruptcy on April 10.

Hometown low-cost carrier Frontier Airlines flew into Chapter 11 bankruptcy on April 10.

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I spent the past week going through 300 or so Rocky Business sections from 2008. I've come up with a list of what I think were the top 10 stories of the year in Colorado. It's subjective but defensible. For the most part, I looked for actual news stories, rather than trends.

In particular, I avoided stories that merely localized national trends. Having said that, let me contradict myself immediately.

1 Recession, here we are. Colorado is joining the rest of the nation in recession, with a jobless rate that approaches the highest level in two decades and a downturn in state revenue that could approach $600 million next year. The state's unemployment rate increased to 5.8 percent last month compared with 4.0 percent in November of last year. A University of Colorado economic forecast predicts the jobless rate will hit at least 6.5 percent next year.

Bleak forecasts have prompted Gov. Bill Ritter and Denver Mayor John Hickenlooper to announce new economic stimulus efforts. The state's foreclosure rate continues to rank among the 10 worst, although it no longer leads the nation as it did two years ago. The residential real estate market is still in the doldrums. The number of unsold homes on the market is at a three-year low, since homeowners who don't have to sell are deciding not to compete with the glut of low-priced foreclosures.

2 New energy economy takes hold. Ritter gets his highest marks for making good on a vow to establish Colorado as a global center for renewable energy.

In February, energy giant ConocoPhillips paid $58.5 million to Sun Microsystems for the 432-acre Storage Technology campus in Louisville. The sprawling campus will house thousands of employees researching hydrogen fuel cells, solar and wind power, and clean diesel fuel.

In March, Vestas Wind systems opened its first U.S. wind-blade manufacturing facility in Windsor. In April, Vestas announced an expansion of the plant. In August, the company announced it will build two more plants in Brighton that will build blades and turbine units. Later in August Vestas chose Pueblo as the site of a factory to build the towers that support its wind turbines. By 2010, the Danish energy firm is expected to invest $680 million in its Colorado plants, which will employ 2,450.

In June, Siemens Energy, an arm of the gigantic German multinational, said it will establish its U.S. wind turbine research center in Boulder.

3 Business-labor alliance turns back ballot measures. A rare coalition of business and labor interests beat back an anti-union measure that stirred up the costliest ballot fight in the state's history. Amendment 47, the most controversial of three labor-related ballot proposals, would have banned agreements requiring workers to pay for union representation.

Initially, labor groups fired back with a barrage of ballot initiatives that would have created sweeping new regulations for business. The initiatives would have kept employers from firing workers without a specific reason; made executives criminally liable for fraudulent activity they failed to report; required employers to pay most of employee health care premiums; and allowed injured employees to seek extra damages in court after collecting workers compensation.

At the 11th hour, they withdrew the measures from the ballot in a compromise that had business leaders agreeing to help defeat Amendments 47, 49 and 54. Amendment 49 would have banned union-dues deductions from the paychecks of government workers. Amendment 54, which passed narrowly, bans campaign contributions by government unions and contractors.

4 Frontier Airlines bankruptcy. Hometown low-cost carrier Frontier Airlines flew into Chapter 11 bankruptcy on April 10. Frontier blamed Greenwood Village-based First Data, saying it unexpectedly demanded a $75 million increase in collateral for processing credit-card transactions. First Data, worried about Frontier's financial future amid surging fuel costs and heavy competition in Denver, wanted a bigger cash buffer should the carrier go out of business and leave it holding the bag.

Since April, Frontier has eliminated dozens of flights, sold planes and started charging passengers to check bags. It's reworked union contracts to lower expenses. It also dumped its regional carrier, trimmed hundreds of positions and landed up to $75 million in loans.

Frontier has surprised skeptics by holding its own against the competition, posting solid passenger numbers and so far surviving one of the most turbulent periods in the history of airlines. The next step: develop a solid reorganization plan that will help attract more financing to emerge from bankruptcy - a tough challenge during the current credit crisis.

5 Ritter vs. oil and gas. As Ritter pumps up the New Energy Economy, he's had his troubles this year with the state's oil and gas industry.

Voters resoundingly defeated his campaign for Amendment 58, a November ballot measure that would have ended more than $300 million in tax breaks for energy companies. The measure failed after oil and gas opponents spent $12 million on ad campaigns that successfully labeled it a tax hike on oil and gas.

Earlier this month, the Colorado Oil and Gas Commission passed a number of new environmental regulations that impose restrictions on drilling for oil and gas. The regulations, in their final form, are considerably diluted after a years-long industry outcry that they were too restrictive and would drive away business.

6 Nacchio verdict weighed. Earlier this year, a three-judge panel of the 10th Circuit Court of Appeals ruled that former Qwest chief Joe Nacchio's conviction on insider trading should be thrown out and a new trial held.

In July, the full 10th Circuit agreed to review that finding, a signal that they didn't like its outcome. Legal experts in attendance at the September hearing almost unanimously predicted that the initial guilty verdict will be reinstated once the court gets around to issuing its ruling.

Nacchio was convicted last year on 19 counts of insider trading for selling $52 million in Qwest stock in 2001 while simultaneously making numerous public statements urging people to buy it. He was sentenced to six years in prison, fined $19 million and ordered to forfeit those stock proceeds.

7 Sex, drugs, oil scandal. In September, the U.S. Interior Department issued three reports detailing a two-year, $5.3 million ethics probe into the federal Mineral Management Service in Lakewood, which collects billions of dollars in federal oil and gas royalties. Between 2002 and 2006, some employees there used illicit drugs, had inappropriate sex and took ski and golf vacations from oil and gas execs. In November, Interior announced it had taken disciplinary action against employees, ranging from demotion to termination. The agency would not confirm how many employees were fired or how many were demoted, citing privacy concerns.

8 Rocky up for sale. On Dec. 4, E.W. Scripps announced the Rocky Mountain News is for sale. If a viable buyer does not surface by mid-January, Scripps acknowledged the paper could be closed early next year, four months shy of its 150th anniversary. Given the bleak national landscape for the newspaper industry, a buyer may well be tough to find.

In a 50-50 joint operating agreement with The Denver Post since 2000, the Rocky is expected to lose $15 million this year, more than that next year.

9 $100 gambling stakes. Maximum bets will rise twentyfold - from $5 to $100 - after Colorado voters approved Amendment 50 in November. It allowed residents of former mining towns - Central City, Blackhawk and Cripple Creek - to decide whether they want to relax casino rules. Cripple Creek followed up with a Dec. 17 election that overwhelmingly gave local casinos the green light next July to raise minimum bets, stay open 24 hours a day and add craps and roulette. Casinos, mostly owned by corporations based in Las Vegas, spent more than $7 million promoting Amendment 50 in the weeks leading up to the election. Critics had expressed worries about the measure opening the door to further expansion of gambling, and they predicted an increase in bankruptcies, crime and other problems.

The state's community colleges will receive more than three-quarters of the additional gambling tax revenue.

10 Sunday liquor sales. State legislators passed a bill this spring that made Colorado the 35th state to allow Sunday liquor store sales. The law, which ended a 75-year ban, took effect on July 6. State budget analysts calculate the Sunday sales will pump an added $6 million into Colorado's coffers annually, but so far most liquor store owners report generally lackluster activity, barely worth the expense of staying open.

Meanwhile, grocery and convenience store owners found a legislator who will introduce a bill allowing them to sell full-strength beer - replacing the 3.2 percent alcohol beer they can peddle today. They argue convincingly that their 3.2 sales have plunged now that liquor stores can open on Sundays.

Rob Reuteman can be reached at 303-954-5177. To comment on this column, go to RockyMountain News.com/business.

Comments

  • December 27, 2008

    10:24 a.m.

    Suggest removal

    HopiMedicineMan writes:

    Sale of the Rocky is the biggest local story of the year, if not the decade. If this paper goes down or is rescued by a liberal billionaire, I’ll take the WSJ and read the Post on line. The town won’t support two liberal newspapers. (I see Littwin and his blogging pseudonyms disappeared. He’s either brokering a deal with Jared Polis or bagging groceries.)