| |
Nathan Rodriguez, nrodriguez@vailtrail.com
July 9, 2008
For 16 years, local and municipal governments in Colorado have been trying to figure out how to work with the Colorado Taxpayer Bill of Rights (TABOR). Now, with the state considering new changes to the law, it’s worth taking a look at how things shape up locally.
It’s pretty easy to get bogged down in the buzzwords associated with TABOR: “Referendum C,” “Amendment 23,” and “de-Brucing” are each worthy of separate articles. It’s also easy to get trapped in the talking points over TABOR’s effectiveness. Both sides are convinced of their cause and tend to flatly deny assertions floated by the opposition.
On its face, TABOR looks like an exercise in fiscal responsibility. In the spirit of “no taxation without representation,” TABOR acts as Colorado’s taxation and spending limitation amendment, requiring tax increases to be approved by voters.
Sounds simple enough.
“When TABOR gets sold, it’s sold on a bumper sticker, and it’s very easy and very seductive to say you want to limit spending,” said Robb Gray, state project coordinator for the Center for Budget and Policy Priorities. “The problem is it takes 15 minutes to explain what a bumper sticker says in 15 seconds.”
A bad rap
After a brief honeymoon period with Colorado voters during the economic boom of the mid-90s, TABOR has since been blamed for a general deterioration of services statewide.
Opponents claim it creates budget shortfalls and short-changes vital programs, pointing to data showing that Colorado ranks 47th in the nation in school funding, and 44th in spending on public roads.
Proponents maintain those figures are intentionally misleading. And they say school funding figures measure spending as a percentage of personal income. But because Coloradans have higher earning power than residents of other states, it only appears that spending is low. TABOR advocates claim that a poorer state like New Mexico, which spends fewer dollars per pupil, ranks 7th overall.
Similarly, Colorado ranks either 19th or 49th in higher education spending, depending on whether tuition fees are included.
For most Eagle County residents, such speculation about TABOR’s effectiveness is
interesting but irrelevant, as they have essentially opted out of the amendment in a move known as “de-Brucing.”
Intent and effect
TABOR was originally intended to act as a check on government spending, but opponents claim the act is a Trojan Horse for slicing budgets.
“The real problem is that it restricts revenues coming into the state with a “population plus inflation formula,” said Gray. “It doesn’t just cap it at a reasonable level, it shrinks the budget over time.”
Gray argued that the services and functions provided by local government face different levels of inflation than those faced by consumers, so applying the consumer rate of inflation to government spending means the government falls short on funding. He said that sheer population numbers are not accurate, as they don’t take into account children with disabilities, senior services, or “needy populations,” which demand more funding than the general population.
This continual shortage of funds for government spending has been termed the “ratchet effect.”
De-Brucing
The solution to the “ratchet effect” for many Colorado communities has been to “de-Bruce,” or opt-out of many of TABOR’s provisions through a public vote.
“The town of Vail has de-Bruced from TABOR, so we’re not held to all the restrictions,” said Judy Camp, finance director for the city of Vail. “By our charter, we’re allowed to spend and collect existing taxes without limitation, but we’re still governed by parts of TABOR where voters need to approve new tax increases.”
So has de-Brucing solved budget shortfalls?
Calls to local agencies including Vail Fire & Emergency Services, Eagle County Health and Human Services, and the Eagle County Ambulance District all revealed that the agencies generally have adequate funding for operations in the area. Naturally, some people may question whether the agencies now have a surplus of funds generated from property taxes.
Still paying the price
Despite de-Brucing, Eagle County residents have still felt the economic impact of TABOR.
Over the last several years, county property values have risen sharply. So even though the mill levy has remained a constant, the dollar amount paid by property owners has increased substantially.
The chorus of calls to lower mill levies is beginning to grow, as are questions about where the extra revenue is going.
The trade-off
“Without the additional revenue [from property taxes], we would have had to cut services that people wouldn’t have been too happy about,” said John Lewis, finance director for Eagle County. “We’re moving ahead with rebuilding a one-lane bridge along the Colorado River. We have three bridges that need to be rebuilt soon, and we wouldn’t have been able to move ahead without revenue from property taxes.”
Lewis added that if the bridges aren’t rebuilt in the next five to 10 years, “we run the risk of having to close the bridges, and people will have to find another route to take.” With the local population continuing to grow, the stress on roads and bridges will only be exacerbated.
Lewis said that many costs for the county have gone up, from the price of gravel to the cost of new trucks and snowplows. Even retaining employees has become more costly.
“We’re having to deal with shortages of labor because of all the mine drilling done in Garfield,” Lewis said. “We’re losing employees and have to pay them more to stay ahead of inflation.”
In this view, a reduction in revenue from property taxes would force tough decisions.
“Without that revenue, we have to say which roads don’t get plowed, which roads don’t get dust abatement, and which bridges don’t get repaired this year,” Lewis said.
Decisions, decisions, decisions
From small towns to the state legislature, officials have wrestled with how to run government agencies under TABOR.
In 2005, Colorado voters passed Referendum C, which essentially suspends the majority of TABOR for five years, allowing the Legislature to spend rather than rebate extra revenue. With the addition of Amendment 23, surplus revenue is earmarked for education.
Now, speaker of the Colorado house, Andrew Romanoff, is circulating a petition that would leave intact the central provision of TABOR, requiring taxpayer approval before raising taxes, while allowing the state to keep tax surplus refunds to invest in the State Education Fund. His plan would also eliminate the mandatory education spending increases under Amendment 23 while creating a “rainy day fund” used primarily for education.
Despite its flaws, many fiscal conservatives see TABOR as a lesser evil, compared to what they see as runaway government spending.
“If (Romanoff’s ballot issue) is such a wonderful idea, why couldn’t the speaker of the House get it through the Democrat-controlled Legislature?” asks Jon Caldara, president of the Independence Institute, a conservative think tank in Golden.
Caldara argues that Referendum C is more than just a “timeout,” claiming it never ends, and says it actually has a similar “ratchet effect.”
“It has an interesting little bit to it that the other side doesn’t like to talk about. It permanently ratchets up the baseline for the state budget because in the fine print it says that the highest budget in those five years becomes the new baseline.”
Right now, Romanoff’s ballot initiative is circulating throughout the state. At least 76,000 signatures are required to qualify for the November ballot.
“We’re actively working to gather those signatures,” said Colorado State Treasurer Cary Kennedy. “We’ve turned in a large amount, somewhere around 30,000 signatures in the past week, and we have people gathering signatures all over the state.”
It is difficult, if not impossible, to simply remove TABOR now that it is in the state constitution.
“It’s due to the single subject rule. You can’t remove something, you just have to pass a slew of budget measures to counteract it,” Gray said. “TABOR has its tendrils in the state of Colorado.”
Many local officials have found a way to work around TABOR, and are now hesitant to shake things up.
“It seems to be working now, so I wouldn’t change it,” Lewis said. “There’s some talk about reinstituting [TABOR] so there’s only a certain amount of increase per year, and as a taxpayer that sounds rational.”
Lewis said the problem is that once property values level off, the county could experience revenue shortfalls yet again if it chooses to lower the mill levy.
In the meantime, voters have given government agencies some breathing room by de-Brucing.
“Just look at the counties that have not (de-Bruced),” Lewis said. “Pueblo is having huge financial difficulties. It’s hard to predict exactly what life would be like if we were not De-Bruced, but looking at it from the perspective of providing services, it would be a scary proposition.”
Nathan Rodriguez can be reached for comment at nrodriguez@vailtrail.com.
No comments:
Post a Comment