Jun 11

Mahaney: Have taxes been raised?

To quote the Pueblo West district manager as printed in the June 4, 2020 article headed “So Where Do Your Tax Dollars Go?” In sub heading No. 4, the spin starts as “We are continuing to provide the same services as when Pueblo West originated and that is without a mill levy increase since 1971, which doesn’t allow for the cost of inflation of goods and services since 1971.

My “old daddy” once told me, figures don’t lie, but liars can figure. The two points the quote does not explain is that first property taxes have gone up. As the Pueblo County assessor reassess the value of a home the same mill levy generates a higher tax bill. Ask anyone if their property tax bill has gone up in the last two years. Property values tend to track with inflation.

The Taxpayer Bill of Rights (TABOR) was made into law to restrain local government from expanding without taxpayer approval.

To continue reading this letter-to-the-editor, please click (HERE):

Jun 11

Editorial; Legislature plans to bury us in taxes

Never has one simple fact been so clear. Businesses fund everything. When shut down to slow the spread of COVID-19, the state government went from a nearly $1 billion revenue surplus to a $3 billion shortfall. Shuttered businesses don’t collect sales taxes, and their out-of-work employees don’t pay state income taxes.

Given the sorry state of our economy and state budget, business recovery should be the Legislature’s top priority. To help them recover and survive, lawmakers should reduce the burden of overhead. Give these struggling patients oxygen and support; bill them for it later.

Instead of helping businesses recover and survive, legislators want more money from them immediately. Toward that self-destructive end, Democrats introduced House Bill 1420 on Monday and passed it out of committee Tuesday with the session ending this week.

To continue reading this story, please click (HERE):

May 28

From An Editorial On May 5, 2019: State Could Go Off A Fiscal Cliff

State could go off a fiscal cliff

By: Barry W Poulson
May 5, 2019

Colorado has created a fiscal cliff; the state is woefully unprepared for the revenue shortfall that will accompany the next recession. Citizens might be surprised to learn that the state has been pursuing imprudent policies that will result in a fiscal crisis when the next recession hits. It is important to understand how the fiscal cliff was created and what we can do about it.

Over the past two decades, Colorado has weakened the fiscal constraints imposed by the Colorado Taxpayer Bill of Rights. TABOR limits the rate of growth in state spending to the sum of inflation plus population growth, regardless of the amount of revenue the state takes in.

But most state revenue is exempt from the TABOR limit. The exempt funds include the revenue from enterprises and the fees collected by government agencies, which have grown rapidly over this period. As a result, over the past decade TABOR has not constrained the growth in spending, and this year the state will spend virtually every dollar of revenue it takes in.

The fiscal cliff is also linked to a rapid growth in debt and unfunded liabilities. While limits are imposed on general obligation debt, there are no limits on the issuance of revenue bonds. These are bonds with a dedicated stream of revenue used to pay off the bonds over time. As state enterprises have grown they have saddled the state with greater debt burdens.

Increasing debt is also incurred in the form of unfunded liabilities. Despite the recent reforms enacted in the Public Employees Retirement Association, unfunded liabilities continue to increase. The official estimate of these unfunded liabilities is $32 billion; but with realistic assumptions regarding rates returns on assets, the actual unfunded liabilities are estimated to be in excess of $100 billion. Continue reading

May 26

TABOR and COVID 19: We’re All Gonna Pay

TABOR and COVID 19: We’re all gonna pay

Blog post by Christine Burtt
5/26/2020 – 4 minute read

Let’s face it.  You can’t shut down the economy, borrow trillions of dollars to subsidize households and businesses, and cause massive unemployment in the private sector without getting seriously upside down in tax revenues.

The Colorado state budget will be about $3.3B in the hole for FY2021, and that doesn’t include deficits in county and special district budgets.

If Legislatures over the years had honored the requirement of the Taxpayer’s Bill of Rights to stash away an emergency fund, we’d have roughly $1B in cash right now.  Instead of a lockbox of cash, illiquid government buildings were determined to be assets counted toward the emergency fund. Anybody have cash to buy a government building?  But I digress….

In the Democrat-controlled Colorado Legislature, raising taxes is the easy answer to a budget shortfall. The short-term exercise is to reconcile what is “essential” vs “nice to have.”

In reality, government mandated services like administering food stamps, running elections, law enforcement, infrastructure, and paying public employee retirement benefits will be protected. But other programs funded for ideological wish-lists may be delayed – until they can raise taxes.

The most likely ways to raise taxes include: Continue reading

May 19

Worst Public Pension Quarterly Results Reported-Reality Is Far Worse

Public pensions, including PERA, had their worst investment return quarter ever in 1Q20. State pensions, on average, lost 13.2% in the quarter. However, the losses are worse than reported due to secrecy agreements in place regarding their alternative investments position. These highly speculative investments in the PERA portfolio do not have to be reported now. This reality will exacerbate the financial condition of PERA, and other state pensions, and will motivate states, like Colorado, to scream for taxpayer relief. PERA’s funding ratio declined in the very good times (and stock market boom from 2009 to 2019.) The funding ratio will decline even ffurther in the current economic. The coronavirus economy will show that their financial health is now even more problematic. Colorado taxpayers will be the target to bail these pensions out yet again. Taxpayers already contribute more than 2X to PERA than private sector employers contribute to Social Security. For more, see this Forbes analysis:

 

Worst Public Pension Quarterly Results Reported-Reality Is Far Worse

Edward Siedle Contributor


Public pensions just reported their worst quarterly investment performance in over a decade. Thanks to secrecy agreements, reporting delays and valuation wiggle-room granted to hedge funds, private equity, real estate, infrastructure, venture capital and other private asset managers, the full extent of public pension losses has not been disclosed to pension stakeholders.

Getty

Public pensions just reported their worst quarterly investment performance in over a decade. But results related to 25%-50% of their riskiest investments aren’t included. Thanks to secrecy agreements, reporting delays and valuation wiggle-room granted to hedge, private equity, real estate, infrastructure, venture capital and other private asset managers, the full extent of the losses has not been disclosed to pension stakeholders. Complicity with Wall Street allows public pensions to avoid accountability and push bad performance results off until the next quarter, year or even decade.

To continue reading this Forbes article, please click (here): 

May 18

TABOR repeal is off the table for 2020. Now it’s Initiative 271, a $2 billion tax hike

TABOR repeal is off the table for 2020. Now it’s Initiative 271, a $2 billion tax hike targeting the wealthy

Vision 2020 Colorado, a coalition behind a tax system overhaul, tells The Sun it will move forward with a graduated income tax measure that will lower taxes for the vast majority

coalition pushing to overhaul Colorado’s tax system will not pursue a complete repeal of the Taxpayer’s Bill of Rights this year, opting instead for a ballot measure in November that would generate billions in new money with higher taxes on the wealthy.

The new initiative — which is expected to receive final legal approval Wednesday — is designed to create a more equitable tax system in Colorado by lowering the current 4.63% tax rate for households making less than $250,000 a year.

MORE: Colorado’s regressive tax system, and a proposed graduated income tax, explained

An estimated 95% of taxpayers who are below the threshold would qualify for the tax cut, which would take effect for 2021. For those who make more than $250,000, the additional earnings are taxed at a higher rate up to the maximum of 8.9% for annual taxable income over $1 million.

The organizations behind the ballot question, known collectively as Vision 2020 Colorado, expect the new graduated income tax to generate an estimated $2 billion a year in new money with at least half earmarked to increase teacher salaries and retention. The remainder would be spent at the discretion of state lawmakers.

“We know middle-income Coloradans are paying a greater share of the tax burden than the wealthy 5%, but our tax code isn’t just unfair, it’s inadequate,” said Scott Wasserman, president of the Bell Policy Center, a leading proponent of the measure. The tough decisions made by state lawmakers about how to spend the $30 billion annual budget, he added, are “a purely consequence of our state not having enough money.”

To continue reading the rest of this story, please click (HERE):

May 08

TABOR: GOOD MEDICINE OR BAD?

Constraints will help Colorado governments weather downturn

 

Shelby Meyer passes by The Irish Rover, one of many restaurants and bars now shuttered along South Broadway in Denver on April 14. The coronavirus has caused many businesses to shut their doors during the coronavirus pandemic. Helen H. Richardson, The Denver Post

By Peg Brady
Guest Commentary

Peg Brady is a retired software analyst and designer. She has served on the TABOR Foundation Board of Directors for more than a decade.

The Denver Broncos and Food Bank of the Rockies hosted a mobile pantry at Empower Field at Mile High on April 27 to help people in need during the pandemic. RJ Sangosti, The Denver Post

The Taxpayer’s Bill of Rights (TABOR) has provided welcome stability to Coloradans as we all deal with the coronavirus pandemic. This provision of our state constitution allows all governments throughout Colorado an automatic but reasonable annual budget increase. The limits keep governments from growing too fast.

Therefore, when the economy gets into trouble, Colorado state and local governments have a more firm base for their spending and do not need to cut as drastically as other states. Government programs are more sound, strong and sustainable than if they had grown as fast as ambitious politicians often wanted. TABOR helps us to confront the current crisis.

Moreover, just when families and businesses are struggling, the Taxpayer’s Bill of Rights has led to timely tax relief. The state tax system has evolved so that, when times are good, it over-collects tax revenue. Last year, Colorado over-collected $428 million. TABOR mandates that the state rebates to you excess revenue collected during a fiscal year. So, the 2019 tax rate has been reduced from the usual 4.63% to 4.5% — a 0.13% drop.

You won’t receive a tax refund check; instead, the legislature reduced the income tax rate. Because the rebate is being accomplished through the lower tax rate, you may not recognize how much money you saved. Still, because the state will not incur the cost of issuing and mailing checks, we save that expense as well.

To continue reading this TABOR article, please click (HERE):