A closer look at 3E
October 29, 2011
For anyone who knows me it will come as no surprise to hear that I bristled at the suggestion of a “tax increase” for local schools. As a midvalley resident as well as the CFO for one of the valley’s largest taxpayers (Aspen Skiing Co.), I don’t take such things lightly. So I did some research on the topic, and what I found was disturbing.
In 1992 TABOR legislation passed. Essentially this meant that as property values grew “too much” school mill levies had to be “ratcheted” down. In 1993-94 the Roaring Fork School District mill levy was 39.5. By 2009-10 it had dropped 45 percent to 21.8.
In some ways this makes sense – as property values grow quickly, tax revenues grow slowly. They only increase with inflation and population growth (anything more is “too much”). So how could our local schools be in such a money crisis, even after laying off dozens and slashing millions from budgets? The answer requires some math, but can be boiled down into three issues:
1. The ratchet only worked one way. Levies went down in good times, and they’ll stay down in bad. Kind of like a noose that only tightened. Now they’re frozen and school taxes can only fluctuate with property values. With values down 30 percent nationwide and even more so locally, that alone is a death sentence.
2. Inflation isn’t enough. Inflation is an estimate of what it would cost to buy the same basket of goods and services from year to year. It’s hard to remember that before the current recession, healthy economies including Colorado grew much faster than inflation. That phenomenon is called progress. It’s why we drive cars instead of covered wagons, count with computers not fingers, and aren’t disfigured by polio. It’s the economic wave that lifts all boats – except our schools, which are anchored to the bottom by an ever-shortening rope. Think of it this way: If you believe hand-scribble on an overhead projector is superior to videos or the Internet, then we have a good system. And if you believe that economic progress, which is the subject of pretty much every political discourse heard today, isn’t fundamentally rooted in excellent education, then we also have a good system.
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3. Finally, there is no way for the schools to collect and save additional funds for a rainy day, much less invest in progress. It’s illegal.
So how could our schools have prepared for a storm like this? They couldn’t. And since they couldn’t, what do they do now? They drown.
We need to fix this system. But first we need to throw it a lifeline. Please vote yes on 3E.