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.
The real effect of the measure has been to diminish Colorado schools and roads. Despite having one of the healthiest economies in the country, the state can’t afford to properly maintain or build new roads, run schools or keep colleges competitive and affordable.
The insult to injury of the TABOR Amendment is back: Colorado must refund hundreds of millions of dollars in taxes to state residents, despite the widespread public needs. Part of the measure requires “refunds” when state revenues grow and exceed a bizarre formula involving the rate of inflation and population growth.
If you’re thinking that you could care less about the big budget picture or petty politics, “just hand over the cash,” realize that were talking about $15 or so in refunds per taxpayer. That’s it.
But collectively, were talking about $140 million or so each year. That kind of money goes a long ways toward shoring up the $800 million annual shortfall in state highway needs, or the $900 million a year in unmet public schools needs all over the state.
Colorado is fast becoming a victim of its own successes because of this measure. Hard work and solid planning have created a place where good jobs are relatively plentiful, along with one of the most enviable public education systems in the country. That draws more people here, draining state resources. The cost of Colorado’s impressive growth far outpaces the price of keeping state services and infrastructure at a level that draws new businesses and residents. You don’t have to be a news junkie or political wonk to know that overtaxed roads are a serious problem all over the Front Range and many other places in Colorado. It’s the same story with schools, where the lack of teachers clearly impacts student performance, especially for poorer families.
While the subsequent Referendum C approved by voters in 2005 did some good to diminish TABOR’s flaws, Colorado is right back in the position of handing out relatively meaningless tax refunds while we endanger our own success by underfunding strategic government services and programs.
The reason Colorado has been able to attract and expand businesses that provide high-paying jobs is because this is not California, Texas, New Jersey, Illinois and the host of states with problems caused by overlooked growth or cheaped-out public services.
It’s time for state lawmakers to risk the ire of tax protesters and do the right thing by keeping revenue that doesn’t come from tax increases, so that we eventually don’t have to raise taxes, or raise them so much when we can no longer ignore Colorado’s critical transportation and education predicaments.