Pros and cons of tax control measures debated in Aspen
October 28, 2010
ASPEN – The bitter battle over three Colorado tax control measures on the November ballot spilled into Aspen Wednesday with experts volleying back and forth on the pros and cons of the proposals.
Debbie Schum, Western Slope campaign coordinator for Amendments 60 and 61 and Proposition 101, told a crowd of about 100 people at the St. Regis that the tax measures are the only way to get state and local government spending under control.
“If you’re waiting for the government to rein itself in, it’s never going to happen,” Schum said.
Matthew Gray, a Denver attorney with the firm Sherman and Howard, countered that the tax-cutting proposals are draconian measures that would create public financing nightmares. If approved, the three measures will gut Colorado governments and ruin the state’s standing as an attractive place to do business, he said.
Gray implored the audience not to take the easy way out and vote on the abstract concept of reducing taxes. Find out how the three ballot issues would actually affect the state, he said.
“There’s a huge chunk [of tax revenues] coming out and I want people to know where it’s coming from,” Gray said.
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Amendment 60 would restore what’s known as the TABOR Amendment to the state constitution. In 1992, that measure placed a strict cap on the annual revenues that governments could keep. Since then, voters in 98 percent of all school districts in the state, 76 percent of the municipalities and 81 percent of the counties have voted to ease the caps. That step is known as “de-Brucing,” in a reference to TABOR proponent Douglas Bruce.
Amendment 60 essentially re-Bruces, or wipes out those earlier decisions by voters. It would renew the strict cap on government revenues and define that future de-Brucing by voters could only occur for a four-year period, then the revenue cap would automatically renew. It would also make it easier for citizens to petition to force votes to reduce property taxes.
In another big step, Amendment 60 would cut local property taxes for schools in half over 10 years and require the state to try to replace that funding.
Schum said the amendment strengthens TABOR. It would make governments more accountable to constituents and increase their transparency.
“I think TABOR has been a fabulous thing,” Schum said. “It allows us to decide what the basic services are, how much we can afford, what we want to spend our money on.
“It’s our money. We want them to ask.”
Numerous taxing districts in Aspen, such as the hospital and school districts, de-Bruced years ago with voter approval. That allows them to keep annual revenues if they exceed limits created by TABOR. However, it doesn’t create a windfall large enough to finance major projects. The school district and hospital district still must get voter approval for property tax hikes for special projects like adding teachers or expanding facilities.
Amendment 60 would repeal the voters’ decisions in the school and hospital districts to de-Bruce, create new revenue limits, require a new vote to de-Bruce and automatically end de-Brucing after four years, then start the process over again.
Whether or not Amendment 60 passes, voter approval is needed for property tax increases.
Gray said the amendment is a recipe for disaster, mainly because the state won’t be able to replace the local funds lost for education and carry out other basic services. The state would lose $2 billion annually in revenues, at full implementation, at the same time it would be mandated to pay substantially more for education.
The 2010 State Ballot Information Booklet, a neutral publication known as The Blue Book, says state government spending on K-12 education would increase from the current 46 percent of the general operating budget to 67 percent if Amendment 60 is passed, once the measure is fully implemented.
“To meet this increased obligation to schools, the state will have to decrease spending and services in other areas, increase fees for services, or some combination of both,” The Blue Book says.
Gray said passage of Amendment 60 would paralyze government spending on capital improvements, thus causing job losses and harming Colorado’s status as one of the top business environments in the country.
Another requirement of the amendment is that publicly owned enterprises would have to pay taxes on their property. For example, the Roaring Fork Transportation Authority would face a large tax bill on the value of its buses.
Amendment 61 would define rules on government borrowing. Bonds issued for projects like road work would have to be repaid in 10 years, rather than today’s standard of 20 to 30 years.
Schum argued the shorter repayment schedules are another piece in the puzzle for making governments more accountable for spending. Gray said the amendment further complicates managing public financing.
Proposition 101 would reduce or eliminate various fees. Vehicle registration fees would drop to $10, for example. Schum said that will counteract the government practice of finding a sneaky way to raise revenues without actually raising taxes.
While people who pay certain targeted fees would benefit, the state would lose an estimated $1.4 billion in the first year alone, according to The Blue Book.
Looking at the three measures as a whole, Schum said: “I don’t think it’s dramatic at all. We’re spreading it out over 10 years.”
It’s not only the right for Colorado voters to implement these steps to curb government spending, “it’s our duty to do something about this,” she later added. “If this isn’t the solution, I don’t know what is.”
Gray said there are more modest steps Colorado residents can take to curb government spending. The three ballot measures are too extreme, like cutting off your leg at the thigh to lose weight, he said.