June 17, 2010
In May, Colorado Springs sales and use tax collections jumped by 14 percent compared with May 2009.
Time for a nightly Mardi Gras on Tejon Street (guess we already do that).
But wait. It turns out that in May 2009 the city’s tax collections were the lowest in almost 19 years. Cork those bottles; it’s sad but true: A 14 percent increase over and above a whole lot of nothing isn’t cause for a spontaneous demonstration.
A deep recession followed by a nice rebound brings out the worst in the Taxpayer’s Bill of Rights.
Tax revenues show the city is ahead of its 2009 pace, but still behind 2008, 2007 and 2006. Under TABOR’s convoluted fatal math, Colorado Springs established a new revenue “basement” in 2009. The local government TABOR formula combines the inflation rate for 2009 with the increase in assessed valuation (class convenes on my blog).
Charae Sach, principal analyst for the city, said the inflation number for 2009 is minus-.65 percent. She said the best guess for the gain in assessed valuation for 2009 is about 2.31 percent. The final number won't be ready until November. The result, and it’s only an estimate for now: the 2009 TABOR equation means a 1.66 percent increase would be allowed in the 2011 budget.
Sales and use taxes only account for about half of the city’s revenues, which are down in other areas, so the city revenue probably won’t reach the estimated 1.66 percent growth rate that would trigger a TABOR election.
Let’s deflate the balloon a bit more. Even if the city enjoys a rocket ride for the rest of the year, it couldn’t keep the “extra” tax revenue above the 1.66 percent ballpark number without scheduling an election to ask permission from the taxpayers.
“We’d get no benefit,” said Fred Crowley, senior economist for the Southern Colorado Economic Forum. “They’re going to run a several-million-dollar surplus (this year) the way they’re going.”
Last year, Crowley recalled, “I said sales tax would increase and it wouldn’t do us any good.”
Talk to Fred Crowley and you’ll quickly learn he is a conservative guy. Unlike some conservatives, though, Crowley doesn’t see TABOR as the litmus test for membership in conservative ranks. To him, it’s not about left or right, it’s the math.
“TABOR,” Crowley said, “is inherently unsound.”
TABOR’s never-ending ratchet effect constantly shrinks government relative to the size of the economy. It never stops, especially when the economy is booming.
As certain as gravity, TABOR’s math leads to service cuts many people will not accept. “It’s really biased against a growth community,” he said.
Make no mistake: We’re in the TABOR basement, and it’s a long way to the penthouse.