When will the moneyed gentry realize that they are in “it,” too, with the rest of us? Everyone’s fate is the same.
Repeal TABOR, before al Qaeda decides to adopt Colorado as a vacation home. They’d feel right at home, with our mountains and rotten roads. And guns everywhere. But that’s for another day.
As hopeless as it might seem, Colorado must revisit the argument over its ludicrous state tax “refunds” that hurt the state and all of us much more than any individual actually benefits.
If you’re new to these parts, Colorado suffers under a unwieldy and complicated set of restrictive budget laws dubbed the Taxpayer’s Bill of Rights, or TABOR.
The measure was a product of Colorado’s notorious anti-tax crusader Douglas Bruce and misguided state voters who approved the state constitutional amendment in 1992. As it was sold to voters, the measure capped state taxes by requiring that tax increases be approved by voters. But the convoluted and labyrinthine measure does so much more. It not only caps taxes, but it caps spending. Part of the amendment sets government services at a baseline, so that when budgets decrease in lean tax years, a new, lower baseline is set, creating the so-called, dreaded ratchet-down effect.
Maybe not, because it’s TABOR time. When Colorado tax revenues increase too rapidly, the Taxpayer’s Bill of Rights and its arcane provisions authored by Douglas Bruce kick in, forcing the state to refund “surplus” tax revenues or ask voters for permission to retain them.
The state constitutional amendment may have seemed simple, transparent and commonsensical to the voters who approved it in 1992, but it isn’t. Sold as a measure that took away the power to raise taxes from spendthrift elected officials, the measure was far more complex.
Bruce wrote every word of the lengthy amendment, explicitly designed to shrink, hobble and defund Colorado governments at every level.
TABOR limits government revenue increases to an annual figure determined by population growth plus inflation. That may sound reasonable, but Bruce’s simplistic formula doesn’t work. It has forced the state to make continual service cuts and defer infrastructure maintenance and construction, because the world Bruce envisioned bears little resemblance to the world we live in.
In the real world, tax revenues may vary sharply during any multi-year period. If revenues are flat for years before rebounding sharply, too bad! The revenue cap starts from zero every fiscal year. The 2005 passage of Referendum C mitigated TABOR’s effects for a few years, and the recession made it irrelevant for a few more. But now it’s back with a vengeance.
I couldn’t help but notice that on this page last week CU economist Barry Poulson made numerous false claims about the “benefits” of TABOR refunds. That’s what conservatives do when the facts don’t support their doctrine. They … well, um, in the interest of not name-calling a fellow academic, I’ll just say that they tend to stretch the truth. A lot.
Poulson says that, if TABOR funds are returned to taxpayers in Colorado, you and I will enjoy between $50 and $100 refunds. Per year. And he says that will stimulate the state’s economy.
Fifty bucks? Seriously? Because I live in the real world, I personally know dozens of people who live at or below the federal poverty level, and to say that $50 a year would make a difference in their lives is an insult. They spend that on cigarettes every payday. That’s one tank of gas a year. A year!
Here’s the problem: Like most professional academics, Poulson doesn’t live in the same world you and I live in. His world is theoretical, and there are certain theories that are sacrosanct. Never mind that dribble-down economics (the poor are grateful for the crumbs of the rich) has been discredited in real life so often that even most conservatives have abandoned it. Poulson hangs onto it because (1) he’s paid to do that and (2) he hasn’t read a book on economics since 1997.
By The Denver Post Editorial Board
Democrats in the legislature are flirting with the idea of a ballot measure asking voters if the state can keep a likely refund dictated by the Taxpayer’s Bill of Rights. Good for them. The state needs the money to backfill both K-12 and higher education, and for transportation.
But Democrats might want to refine their pitch. According to incoming House Speaker Dickey Lee Hullinghorst, “people would be far better off if we invested that in infrastructure, education — something that really benefited them rather than (them) getting their 50 bucks to spend on a tank of gas or something.”
Intentionally or not, her statement oozes the sort of condescension that voters detest.
Rapid growth in the Colorado economy will increase state revenue in excess of the TABOR limit. Colorado’s TABOR constitutional amendment limits the growth of state revenue to the sum of population growth plus inflation; surplus revenue above that limit must be refunded to taxpayers.
Legislative analysts estimate $137 million in TABOR refunds for the next fiscal year. In the following year the state must offset surplus revenue with a temporary income tax rate reduction estimated at $234 million. Given the range of error in these estimates, the average Colorado household should expect to get somewhere between $50 and $100 per year in TABOR refunds.
Pretty harsh to say it is deceptive, but the facts leave little doubt. First, the language calls the tax a “fee.” Why? If they called it a tax, the Colorado Constitution would require the ballot language to start out by saying “shall taxes be increased by $39,275,650 for 2016 and each year after for 20 years.” By cleverly calling the tax a fee, they can now start the language with “Are you in favor of funding emergency needs caused by flooding.” It was worded this way to enhance the ability to get it passed but it is nothing more than a way to trick you into believing that the money coming out of your pocket is a fee and not a tax. After all, it is on your property tax bill.
The sleight of hand continues. Rather than being honest about how much you’re going to pay each year, they broke down the amount per month. They could have said that it would cost the average homeowner $1,848 over the next 20 years. Instead, they broke down the amount by month – to $7.70 per month. Why not break it down to the day, hour or second? By the way, if you do the math, it is just over a penny per hour tax increase.
Question 1B also creates a government bureaucracy and then exempts it from the Taxpayer’s Bill of Rights provisions of the Colorado Constitution.
In other words, it creates a bureaucracy and then allows that bureaucracy to vote to extend the tax (that they call a fee) without going to the citizens for a vote of the people.
As Mayor Steve Bach, who strongly opposes 1B, stated, “the new $92.40 stormwater fee is about the same amount the average residential property owner now pays for all city services combined.” That’s right, you’ll pay as much property tax for stormwater as you do for police, fire, snow removal, street repair, parks, arts, etc. Imagine this new unaccountable bureaucracy getting as much property tax as the city of Colorado Springs, never having to face an election and having the ability to increase ?the tax at their whim and without voter approval.
If this tax increase of $785 million over 20 years weren’t offensive enough, the audacity of the language should convince any citizen to vote “no.” The drafters of the language trying to pull the wool over voters eyes by calling a tax a “fee”; reducing the yearly tax amount to make it appear smaller; and thumbing their nose at the voters by taking away the right to vote on tax increases make this as deceptive and misleading as any ballot language we’ve ever seen.
Our stormwater problem is real and it should be addressed, but Question 1B is not the answer. I hope you’ll join Mayor Bach, myself and many other community leaders in voting “no.”
Jeff Crank is a talk show host on AM 740 KVOR and the president of Aegis Strategic, LLC.