October 9, 2010
Colorado voters could stage the state’s biggest-ever taxpayer revolt by approving three measures in the November election that could save most families more than $2,000 a year but that opponents say would cripple the state.
Supporters of Amendments 60 and 61 and Proposition 101 say the three would force government to downsize and spur economic growth by leaving taxpayers with more disposable income. Opponents say the three would cut a wide swath of devastation across Colorado, imperiling the quality of everything the government does, from fighting crime to teaching children.
(To learn more about the Nov. 2 ballot, visit The Gazette's online voter guide).
How would the measures work?
Amendment 60 would cut property taxes by half by 2020, “requiring school districts to replace the revenue with state aid,” according to the ballot language. The measure would eliminate any property tax increases that have been approved by voters since 1992, when the Taxpayer’s Bill of Rights constitutional amendment was voted in, and would require that future property tax rate increases expire within 10 years.
An analysis by the Office of Legislative Council calculates that the owner of a $295,000 home would save $87 in the first year and $376 in 2020 if the measure passes.
Amendment 61 would prohibit future borrowing by state government “in any form.” The measure also would require voter approval, in a November election, of borrowing by local governments, prohibit extensions of current borrowing and limit local government borrowing to 10-year loans, with strict limits on how much can be borrowed. Amendment 61 also would require that after borrowing is repaid, tax rates in that jurisdiction must decline by the amount of the debt’s average annual payment.
The average taxpayer, making $55,000 and living in a $295,000 home, would save $274 per year if the measure passes, according to the Legislative Council.
Proposition 101 would cut income, vehicle and telephone taxes.
The income tax would fall to 4.5 percent in 2011, and decrease by 0.1 percent each year that income tax revenue net growth exceeds 6 percent. It would eventually reach 3.5 percent.
Car registration, license and titles charges, combined, would drop to $10 per year per vehicle. Car ownership taxes would drop, over four years, to $2 for a new car and $1 for a used cars.
All fees except 911 fees now imposed on phone bills would be repealed.
A family with an income of $110,000, a couple of cars and $180 in monthly phone bills would see a tax cut of $545 in the first year and $1,791 when the measure is fully implemented in 2020, according to the Legislative Council.
Who supports the measures and why?
State campaign regulators have been working for months to figure out who backs the three measures and who paid signature gatherers to get them on the ballot. An administrative court in Denver determined that Douglas Bruce, a Colorado Springs anti-tax advocate and father of the Taxpayer’s Bill of Rights, has helped with the effort. A few lawmakers, including Colorado Springs Republican state Sen. Bill Cadman, support the three.
Cadman said the measures are overdue payback for years of overspending and using fees to fill the role of tax increases that voters must approve. “A few of us of tried to stop this,” he said. “But maybe with a vote like this, more people will join the choir to force a change.”
Cadman said cutting the state’s budget means more money in private hands, which could pull the state from its economic stupor.
Supporters say the three measures would downsize government and note that some of the tax cuts would be phased in over several years.
Who opposes the measures and why?
The Greater Colorado Springs Chamber of Commerce has joined with business and labor groups to oppose the cuts. Local governments have passed resolutions of opposition, and most local politicians have come out against them. School boards across the region have passed resolutions opposing the measures.
Opponents say the measures go too far in cutting government and would cost the state as many as 73,000 jobs, with construction trades especially hard-hit. The state would face a fiscal crisis that would lead to huge cuts in education and police services and elimination of highway programs. Lawmakers say programs already facing fiscal trouble, including colleges and the parks, could lose all state support.
On Amendment 60
Opponents say school funding would be decimated, forcing schools to eliminate 8,000 teachers and increase class sizes. The measure’s provision requiring that “state aid” replace lost revenue is unrealistic and would leave virtually no money for any other state government functions. That, in turn, would endanger matches that the state government provides to receive federal funds for such things as Medicaid. Opponents also note the measure would overturn local voters’ decisions since 1992 to “de-TABOR” in their jurisdictions.
On Amendment 61
Opponents say the measure’s 10-year limit on debt is unrealistic, noting that most public infrastructure projects, such as buildings and bridges, have a life beyond 10 years. Opponents liken Amendment 61 to requiring a homeowner to pay off a mortgage in 10 years. Opponents also say the provision that would reduce taxes when loans are paid off would further hurt local governments.
On Proposition 101
Opponents say Proposition 101 would eliminate a major source of money for road and bridge work. The Colorado Department of Transportation estimates that the measure would eliminate a quarter of its annual revenue, about $277 million, according to Coloradans for Responsible Reform, which is working to defeat the measures.
The nonpartisan Colorado Legislative Council predicts the state’s $7 billion general fund budget will plunge to $5.2 billion as the measures take effect. Of that, all but $430 million would be constitutionally allocated to schools, putting the steepest cuts in colleges, public safety and programs that help the poor.
The Gazette surveyed local governments and school districts to find out what the potential impacts of the measures would be.
CITY OF COLORADO SPRINGS
The city estimates it would lose nearly $42 million in revenue by 2014 if voters approve Proposition 101.
“Realizing the budget cuts that the city has experienced recently, we could only speculate on where cuts of this magnitude would have to take place,” said spokeswoman Sue Skiffington-Blumberg.
Skiffington-Blumberg notes that public safety makes up about 55 percent of the city’s annual budget. On Sept. 14, the City Council passed a resolution supporting Coloradans For Responsible Reform. On Sept. 28, the council took up a separate resolution to oppose the ballot measures as an elected body.
“The City Council hereby finds that Amendments 60 and 61 and Proposition 101 will significantly decrease already diminished sources of revenue to the city government to provide services and will force further radical cuts in all services now provided to citizens and visitors,” the Sept. 28 resolution states.
COLORADO SPRINGS UTILITIES
Customer rates would jump by 50 percent by 2016 if Amendments 60 and 61 pass, Utilities spokesman Steve Berry said.
Under Amendment 60, Colorado Springs Utilities would be required to pay an estimated $441,100 in property taxes over six years, an expense that would be passed on to customers, Utilities said.
Under Amendment 61, the utility’s ability to pay for the planned Southern Delivery System pipeline would be in jeopardy, borrowing of any kind would become more expensive, if not impossible, and Utilities’ credit rating likely would be downgraded, city documents state.
“Passage of both Amendment 60 and Amendment 61 would have an immediate and highly negative impact on the maintenance and rehabilitation of Colorado Springs Utilities aging infrastructure, preparation for future demand and the ability to meet environmental and regulatory requirements,” documents states.
If Amendment 61 passes, all future capital borrowing would be less attractive to investors and more expensive to issue because of the measure’s provisions, according to city documents.
The Utilities Board, which is comprised of the City Council, took up a resolution Sept. 28 urging the defeat of the three ballot measures. “Amendment 60 will impose new property tax on our multi-county water and electric infrastructure operated by Colorado Springs Utilities, resulting in higher utility bills,” the resolution states.
PIKES PEAK REGIONAL TRANSPORTATION AUTHORITY
Proposition 101 would reduce its funding annually, by about $478,000 in 2011 to nearly $1.3 million by 2014, according to Andre P. Brackin, county engineer. As a result, El Paso County’s capital and maintenance programs would suffer, he said.
Widening Baptist Road and building an overpass would be delayed a year, to 2012, for example. The budget for the Marksheffel South Project, extending from Mesa Ridge Parkway to State Highway 94, would be cut by $2.4 million, Brackin said. Also, maintenance and rehabilitation of paved roads would be reduced by 10 percent annually through 2014. The projections are based on an annual budget of $4 million.
A lengthy list of roads that have been identified as needing new asphalt or chip-seal application would be re-prioritized, Brackin said, and many would be dropped from the repair list. By 2014, a “drastic” number would fall by the wayside, he said. Some are high-volume traffic routes, such as portions of South Academy Boulevard, Omaha Boulevard and Woodmen Hills Drive.
EL PASO COUNTY
County budget officer Nicola Sapp says the three ballot questions would cripple El Paso County government.
“It would be absolutely devastating,” Sapp said. “The impact of (Proposition) 101 over five years would be a decrease of nearly $100 million in the county budget.”
In 2011, Sapp said, Proposition 101 would slash $5.1 million, or 22 percent, from the road and bridge fund. The general fund would lose $8.2 million from the loss of sales tax revenue on automobile leasing, new car sales and taxes on telecommunications.
Each subsequent year, those losses would grow dramatically, she said. Together, the losses in those two county accounts would total $93 million in five years.
Sapp said the county would be forced to cut 278 jobs, in addition to the nearly 200 positions cut in the past year.
Sapp said public safety – the sheriff’s department, prosecutors and coroner’s office – make up 65 percent of all county spending, and there would be no way to protect it from cuts.
The impacts of Amendments 60 and 61 are less clear, she said. She predicts El Paso County’s bills from Colorado Springs Utilities would double to $3 million a year because Utilities’ anticipated rate hikes, Sapp said. Under Amendment 61, it would be impossible for the county to finance major projects if it is required to repay all debt within 10 years. Commissioners also balked at the requirement that every lease contract, whether it’s for a dump truck, road grader or copying machine, go to a vote of the people.
Rick Bengtsson, director of the Department of Human Services, said his department would suffer if the measures pass.
As an example, Bengtsson cited the $424 million that El Paso County paid in 2009 in Medicaid benefits, a portion of which came from matching federal Medicaid dollars.
“If the state cannot provide that match or the county is unable to provide its required support for DHS, those Medicaid dollars would disappear,” he said, “resulting in a loss of more than $400 million dollars in revenue each year for doctors, dentists and nursing homes.”
County commissioners unanimously passed a resolution urging voters to defeat all three measures.
On Sept. 14, the Fountain City Council voted unanimously to urge voters to reject all three ballot questions.
The council said the ballot measures would slash city revenue. Councilmembers warned that road and bridge improvements would suffer, as well as police and fire services.
Schools would lose funding and the measures would hurt parks and recreation services.
The Teller County Commission passed a similar resolution Sept. 23 opposing all three measures. Commissioners Bill Buckhanan and Bob Campbell cautioned voters to consider the dramatic impacts of the measures. For example, county fire districts would lose so much funding that they would have to lay off paid staff and replace it with all-volunteer crews. In losing professional firefighters, homeowners and businesses could expect their insurance rates to soar.
Campbell said the ballot measures go far beyond “keeping government efficient.” He said they would “butcher” government and he urged voters to reject them.
Woodland Park City Manager David Buttery has his staff building two budgets for 2011 in the event the measures pass. He said the city will suffer immediately and for years afterward if they pass. Buttery estimated the combined impact of all three at $2.26 million in lost revenue by 2019.
The Black Forest Fire/Rescue Protection District adopted a resolution opposing the measures, saying the district would suffer “an immediate, crippling impact.”
Proposition 101 would slash the district’s $1.9 million budget by $95,000. That’s more than one full-time firefighter. Amendment 60 would reverse a decision by Black Forest voters in 1996 to exempt the district from TABOR-imposed budget limitations.
Re-imposing TABOR would restrict the District’s ability to set aside part of its annual budget to save up for large purchases, such as fire trucks and forbid the district from seeking matching grants. Amendment 61 would “punish the district for reasonable and appropriate financing, even when it lives within its means.”
MEMORIAL HEALTH SYSTEM
Memorial Health System officials said Amendment 60 could require the system to pay property taxes on land it leases and/or land the city owns on behalf of Memorial. That could amount to nearly $6 million.
Amendment 61 would make refinancing Memorial debt all but impossible, officials said.
Memorial has $251.5 million in outstanding bonds, including approximately $21 million that hospital officials say they might want to refinance, along with a $76 million loan due in 2019.
The Memorial Board of Trustees plans to vote on a resolution opposing the measure.
Memorial notes that once the issue of governance of the hospital system is resolved, likely next year, the effects of the initiatives on Memorial could change significantly.
Unemployment insurance benefits would end and Colorado businesses could see their federal unemployment insurance taxes jump nearly sevenfold under Amendment 61, according to the Colorado Department of Labor and Employment’s analysis of the measure.
That’s because the state’s unemployment insurance fund has borrowed $250 million interest-free from the federal government to pay such benefits. The state has borrowed from the federal government to pay such benefits two other times in the past 30 years and could end up borrowing up to $1 billion, depending on how quickly the state’s economy recovers.
Without the federal loan, which is part of last year’s stimulus legislation, the state could no longer pay unemployment insurance benefits. That means the state’s program would no longer be certified under federal law and Colorado businesses would become ineligible for a credit they now receive against their federal unemployment insurance taxes, the analysis said.
The loss of the credit would cost businesses $700 million, according to the analysis.
Amendment 60 would reduce school district property taxes by $1.5 billion each year in today’s dollars once it is fully implemented, officials said.
Under Amendment 61, an estimated 46 of 178 school districts in the state would exceed or equal the new debt limits and be unable to borrow money to build school facilities until debt is repaid or assessed property values grow.
All three measures would lead to as many as 12,869 job losses in K-12 education, including more than 8,000 teaching positions, according to Colorado Strategies.
Colorado Springs School District 11, the area’s largest district, could lose almost $58 million over several years, according to Looking Forward, a collaborative effort of the Fiscal Policy Institute, Colorado Children’s Campaign and The Bell Policy Center. This would force the district to cut half of its administration positions; cut half of all non-required programs and classes, such as music, sports and art; cut salaries and wages 10 percent; and close one high school, one middle school and four elementary schools. The funding cuts would add 10 students to every classroom, D-11 said.
Small and rural schools, comparatively speaking, would be especially hard hit, officials said.
Miami-Yoder School District 60, which has a budget of about $3.8 million, could lose up to $335,000, if all three measures pass.
In Manitou Springs School District 14, Amendment 61 would require the district to ask voters to approve leases it has for 120 Apple laptop computers, or to pay cash for them.
Many districts and education entities have passed resolutions against the amendments, including Cheyenne Mountain School District 12, Colorado Springs School District 11, Harrison School District 2, Academy School District 20, University of Colorado Board of Regents and Colorado Association of School Boards.
COLORADO SPRINGS AIRPORT
Amendment 60 would require the Colorado Springs Airport to pay property taxes, and Amendment 61 would make financing airport improvements much more difficult and expensive, according to an analysis by the Colorado Airport Operators Association.
Amendment 61 also would prevent the airport from extending or refinancing some of its debt. Under Proposition 101, the airport could lose the ability to levy facility charges on customers that are used to repay costs of building rental-car facilities.