Colorado Springs News, Sports & Business

Hickenlooper encourages support of Colorado tax rate hike

By Megan Schrader Updated: October 30, 2013 at 7:27 am 0

Gov. John Hickenlooper said it took him awhile to come around on supporting the $950 million tax increase for education proposed in Amendment 66, in part because supporting a tax hike can be so politically charged.

"I'm not a fool. I know re-election makes that difficult," said Hickenlooper, the first-term Democrat who has a long list of Republican challengers lining up for 2014.

But Hickenlooper said that when he looked at what the state would get for the increased income tax rates, he couldn't help but throw his support behind the plan and ask voters to increase funding for Colorado's education system.

"I'm not trying to hit them over the head with it. I'm trying to relay the facts," said Hickenlooper, who has been accused of being lukewarm toward the amendment. "I believe in letting the voters make the decision.

"If you give voters the real facts, nine times out of 10 they are going to make smart decisions."

But the facts have been hotly debated in the weeks leading up to Tuesday's election.

For Jon Caldara, who is leading the "vote no" effort, and others, the facts are so damning to the "vote yes" campaign he's optimistic in overcoming more than $9 million in campaign spending on behalf of Amendment 66.

The facts

Amendment 66 would increase the state's personal income tax rate from 4.63 percent to 5 percent and would create a tax bracket in which every dollar of income over $75,000 would be taxed at 5.9 percent.

Estimates from Legislative Council say that higher tax rate will generate $950 million more in the 2014-15 fiscal year than the current tax rate.

All of that money will be put into a new, constitutionally protected account that would go directly to school districts, based on a new education finance formula laid out in Senate Bill 213.

That new finance formula only takes effect if voters approve a tax increase such as Amendment 66.

For a Colorado taxable income of $100,000, the increase would be $595 a year, or 13 percent.

For a taxable income of $35,000, the annual increase would be $130, or 8 percent. (Taxable income is shown on line 18 of the Colorado income tax return form.)

In dispute

Perhaps nothing in the debate has been more disputed than whether the money - once it reaches school districts - will be used for education reform or poured into growing administrative and bureaucratic costs.

"This is by almost all accounts one of the most explicit and directed uses of public revenues, certainly in the history of Colorado," Hickenlooper said.

The new amendment in conjunction with SB213 requires schools to post financial data online showing where every education dollar is spent and posting historic data for comparison purposes.

Lawmakers also will receive a financial audit of the new education fund and can use that information to redirect funding if necessary.

Exactly how the money is spent would be determined by local school boards and school officials.

Caldara and other opponents of the tax increase say it's a cleverly disguised plan to reimburse school districts for the rising cost of the retirement system.

Senate Bill 1 from 2010 requires school districts to increase their share of retirement costs, from contributing 15.65 percent of each teacher's salary to the Public Employees' Retirement Association in 2012 to contributing 20.15 percent in 2018.

Hickenlooper is emphatic the money won't go to back-fill the PERA liability on the state level.

At the local level, there might be some wiggle room.

Most school districts have already created a plan to cope with the rising cost of PERA, and the intent when SB1 passed was that the increased costs would be paid for by foregone salary increases for teachers over the next eight years.

"Most schools haven't given their teachers a raise in several years," Hickenlooper said. "I think each school district has got to look at how to stay competitive. We're competing with other states for teachers, too."

"Funding streams are going to be reallocated, so some schools are going to have some discretion," Hickenlooper said.

But, he said, all the information will be disclosed online so voters will be able to tell if a district is using the money to pay for retirement obligations.

The law specifically directs money to at-risk students and provides funds for all-day kindergarten if that's what a district wants.

Hickenlooper said it sets Colorado up to have a nationally ranked education system he could flaunt while courting large corporations considering Colorado openings or expansions.

"For the first time, the money follows the child, which is a famous Republican innovation," Hickenlooper said. "If a student drops out and goes to the charter school, then the charter school gets that money for the remainder of the year."

That's because SB213 drastically changes how school districts count their enrollment - switching from a single-day head count at the beginning of the year to a more fluid count over time.

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Contact Megan Schrader: 719-286-0644

Twitter: @CapitolSchrader

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