November 26, 2019
Last week, a New York Times reporter reached out to ask if I had heard that the village of Amelia, Ohio was dissolving over a tax increase. Facing an unpopular new tax, voters went to the polls and just… abolished their local government.
I wasn’t aware of the drama bubbling up in Amelia (or in nearby Newtonsville, also dissolving over a new tax), but I wasn’t surprised, either. As the resulting Times article notes, at least 130 municipalities dissolved between 2000 and 2011, without, presumably, seeing the communities descend into anarchy. The loss of Amelia and Newtonsville brings the count of recently dissolved Ohio municipalities to 14. So what’s going on, and what do taxes have to do with it?
In most of the country, the governmental hierarchy is relatively straightforward: states are divided into counties, and those counties contain some range of municipalities—cities, towns, villages, boroughs, townships, hamlets, and the like. But, especially outside more densely populated regions, you can also find vast tracts of unincorporated land, where no (or limited) municipal government exists below the county level. Here, core services like police, fire, and emergency services, along with road maintenance and other government functions, are provided by the county or even the state, while more municipal-oriented services—water and sewer or waste management, for instance—are either privately provided or non-existent.
For years — decades even — Coloradans have called upon the General Assembly to prioritize Colorado’s outdated transportation infrastructure. Our elected officials have for so long kicked this proverbial can down the (potholed) road that the Colorado Department of Transportation now has a backlog of anywhere from $7 billion to $9 billion in projects. To put that in perspective, that’s nearly a fourth of Colorado’s entire budget this year.
We hear it all the time — where are the taxes we already pay going?
The truth is that the legislature has been using your tax dollars as a piggy bank for pet projects instead of utilizing them to fill potholes and add new highway lanes. Pet projects such as Senate Bill 19-173, a $800,000 study on the feasibility of the state government getting involved in your retirement savings, the creation of an “Office of Just Transition” that has been covered extensively in the press, and $6 million for unnecessary census outreach that wasn’t required by the federal government. These have all been priorities of legislative Democrats — not transportation.
The new year has brought reduced income tax rates to two Democrat-run states: Colorado and Massachusetts. These income tax cuts were the result of two and nearly three decade old laws that triggered this new round of income tax relief in the face of opposition from progressive politicians who control state government in Denver and Boston.
Massachusetts’ flat income tax rate dropped from 5.05% to 5.00% on New Years Day 2020, the result of a ballot measure approved by Massachusetts voters in the year 2000, the implementation of which was subsequently delayed by Massachusetts legislators. Colorado, like Massachusetts, is another state where the ruling political class saw an income tax cut that it opposed take effect on January 1, with the rate dropping from 4.63% to 4.5% for one year. This temporary rate cut is the result of a law approved by Colorado voters eight years before Massachusetts’ two decade-old tax cut-triggering ballot measure.
The temporary income tax cut that recently took effect in Colorado is due to the state’s Taxpayer Bill of Rights (TABOR), an amendment to the state constitution approved by voters in 1992 that to this day is the strongest taxpayer safeguard in the nation. Under TABOR, state revenue cannot grow faster than the combined rate of population growth and inflation. Any state revenue collected in excess of the TABOR cap must be refunded to taxpayers.