February 28, 2011
It may be easier for a camel to pass through the eye of a needle than for state Sen. Rollie Heath to sell a state tax increase next fall. Nevertheless, he’ll try to pitch a three-year, $1.63 billion hike in sales and property taxes.
Gov. John Hickenlooper perceives no appetite for new taxes, as too many of the state’s taxpayers are hanging onto their jobs for dear life, losing their homes or trying to figure out how they’ll feed children when unemployment insurance runs out. Besides, the Legislature raised taxes in 2010 without following the Colorado Constitution’s requirement for voter approval. Legislators and former Gov. Bill Ritter approved the “Dirty Dozen,” passing laws that eliminated traditional exemptions — on items ranging from direct mail, to candy and soda, to software, to plastic bags to pesticides. Before that, Ritter froze mill levies in order to raise taxes without voter approval. Voters may not forget this when finally asked to raise their own taxes.
Hickenlooper told The Gazette’s editorial board that he wants to eliminate the Dirty Dozen “as soon as possible.” He has proposed dramatic cuts in state spending, positioning state government to live within its means while the economy struggles to recover. If it cannot recover, state government has no hope.
Hickenlooper is not a conservative Republican. He is a Democrat — most would say a liberal Democrat — who believes in the value of education and strategic investments of public funds. As a two-term Denver mayor, he sold taxpayers on tax increases during good times. He is also a successful small businessman and a realist, who understands the foolishness of spending more — or even holding the line — when the economy produces less. Hickenlooper founded restaurants and brew pubs, so he knows one cannot raise menu prices when customers have less to spend. Market forces, more than business owners, determine prices. A reduction in demand lowers prices — even fuel prices, which a foreign cartel attempts to control.
A tax is a price on government services. State government must run like a business, viewing taxpayers as the customers who fund it. Customers pay the state in return for services. In Colorado, where residents vote on taxes, customers are supposed to determine what they will and will not buy. During this time of extraordinary economic challenge, Colorado taxpayers cannot afford all they have enjoyed in the past. They have less money to spend on education, which means they are able to buy less of it from state employees. They can barely afford the current price tag, much less a higher one. It is no more complicated than that. Most Coloradans understand the value of education and would like more of it. So what? Most most would enjoy a Harvard education, if only they could afford one.
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Only an increase in the state’s private-sector productivity will result in more capital to invest through government, and the private-sector cannot invest in its own growth by sending more capital to Denver. We cannot tax our way out of recession any more than a restaurant can over-price food to counter dwindling demand.
“Jump-starting the economy does not involve raising taxes. Why would you put that on business right now?” asked Stephanie Finley, governmental affairs director for the Colorado Springs Chamber of Commerce, in Gazette reporter John Schroyer’s blog.
Heath, a Boulder Democrat with a solid business background, announced on Monday his plans to propose a tax hike initiative for voters to put on the ballot. He means well, but he should know better than to waste time with this right now. Even most Democrats don’t support his proposal.
“Doing nothing is not an option,” Heath told the Denver Post.
“Doing nothing” isn’t Hickenlooper’s plan. He has proposed taking a meat ax to the budget, to bring it in line with economic reality. If taxpayers recover, Hickenlooper is likely to sell them on investing more of their hard-earned capital in state government. Unless and until that happens, Hickenlooper is correct. There is no appetite for higher-priced government, because few are able to afford it.