Monday, February 14, 2005

February 14, 2005 The Budget


Consider This for February 14, 2005 -- The Budget

First, I want to wish you all a Happy Valentine’s Day. I hope you got the flowers and the cards I sent. Just kidding, but I bet that got your attention.

Valentine’s Day is the good news. The bad news is the State of Colorado is going broke. Yup. Broke. No money. Nothing.

It is a long and strange journey, and I will do my best to tell you the story.

Back in the late 1980s, a fellow down in Colorado Springs had an idea to reduce the growth of government. In fact, he even had an idea to eliminate government. Later he proposed a ballot question that would have removed $25 a year from your property tax bill until all of the taxes were gone. Of course, the schools, law enforcement, and snowplowing would be gone too. That is another story.

This fellow came here from California where they had passed Proposition 13. That legislation froze the size of government at a specific point of spending without allowing for any increases. The idea was to stop government in its tracks and force elected officials and government employees to search for cuts in order to provide basic services.

Police officers, firefighters, and teachers were losing their jobs so there would be money for electricity and normal basic services.

Enough people in Colorado agreed a similar plan would work here. It was given a very positive name: The Taxpayer’s Bill of Rights. TABOR. There are many very good parts of the law.

One requires that the voters approve all tax increases. Another one requires that all ballot questions and legislative bills only have one subject.

Not part of the law but another spin-off is that if you vote yes for a new law, then it means you are in favor of the law. If you vote no, then it means you do not like the law. We all remember the good old days when that was not true and we voted incorrectly.

TABOR sets revenue limits for the cost-of-living index for the Denver/Boulder area and the amount of growth in Colorado. Any revenues over those amounts have to be refunded to the taxpayers. Counties and Towns can remove TABOR limits by a vote of the people. Summit County, the towns, the school district, and the college have all removed TABOR limits.

The State of Colorado has never removed TABOR limits. Probably because most people do not think a ballot question would pass. That sounds fine on its face until we go into a recession as we did in 2001.

For three years the revenues dropped. There has been no refund, and there is no money in reserve that can be used for normal operating expenses. Cash funds that had been set-aside for specific purposes were used to run government for the past few years. Lots of cuts and reduced services at the state level have occurred.

Recently, the Governor, the Senate, and the House of Representatives have agreed that something needs to be done. All are considering taking a question to the ballot in November. The problem now is there are at least four different proposals on the table. It is my guess that all the parties will get together in the near future to hammer out a compromise agreement. Even then it needs to pass muster with the voters. If it wins at the ballot box, then it will take at least one full year before we see any of the revenues come into the state coffers.

House Speaker Andrew Romanoff has come up with a plan that has bipartisan support in both the House and the Senate. It is close to what the Governor has proposed but different enough to generate some discussion.

Andrew’s plan has three main parts.

Reduce the amount of personal income tax from 4.63% to 4.5%. This will give every working person in the state of Colorado an immediate boost in his or her weekly check. At the same time, the automatic refunds will be put on hold until the economy recovers.

Drop back the TABOR revenue limit to year 2000 levels. That would be pre-recession and boost the numbers we can receive in revenues.

Take the new revenues and invest them in Colorado’s transportation system and to repair and build new schools throughout Colorado.

Again, this is not the final solution, and we will all see new and improved versions of this as we get closer to the election. The bill to put this on the ballot is moving through the House of Representatives and will be in the Senate this week. Stay tuned and watch the future of Colorado emerge from all of this.