Published: July 8, 2013
Coming to a street corner near you: petition gatherers looking for your signature to put a $1 billion annual income tax increase for education on the November ballot.
Colorado Commits to Kids, a campaign committee formed to back the tax increase, reported $342,000 in contributions last week, with $250,000 coming from the state's largest teacher union, the Colorado Education Association. Colorado Commits to Kids has spent $82,000, most of it on a Washington, D.C.-based firm specializing in signature gathering.
The campaign needs just over 86,000 signatures by Aug. 5 to put the issue on the ballot.
"I think it's very telling that the CEA would make a quarter of a million-dollar contribution to the effort," said Jennifer Kerns, spokeswoman for the organized group against the tax increase. "It's widely known that the union represents teachers and not kids."
Curtis Hubbard, a spokesman for the pro-tax group, said it was thrilled to have the CEA's support on what has been a divisive issue - school finance reform - in education in the past.
"Our view is that educators understand as well as anybody the challenges posed by more than billion dollars in cuts to education in the past few years and we're happy to have their support," Hubbard said.
Both Hubbard and Kerns are paid political consultants speaking on behalf of somewhat ill defined interest groups.
Colorado Commits to Kids is asking voters to sign proposals bumping the personal income tax from 4.63 percent to 5 percent. Everyone in Colorado pays that rate - known as a flat tax.
But the petition would also create a new bracket and any income that exceeds $75,000 would be taxed at the higher rate of 5.9 percent - a graduated tax.
It's estimated in the first year that both increases would generate a combined $950 million in tax revenue.
If voters approve the tax increase, it will trigger a new school funding mechanism to be implemented that increases overall per-pupil funding for every school district, but also adds funding for at-risk students, full-day kindergarten programs, preschool programs, gifted students and special education students.
Sen. Mike Johnston, D-Denver, sponsored the legislation, SB213, that overhauls education funding, but made its implementation contingent on a billion dollar tax increase.
Johnston and other Democrats supported the measure as a necessary change to an antiquated school funding formula that left schools in need underfunded and resulted in inequities in education.
Republicans opposed the measure, saying it poured money into schools without meaningful reform to ensure the dollars are well spent. Lacking a majority in either the House or Senate, the bill easily passed and was signed into law.
Behind the effort
More than two dozen proposals were submitted for the funding mechanism of the new school finance formula, but ultimately "stake holders" selected the proposed income tax increase, said Hubbard.
The largest stakeholder is the Colorado Forum - a nonprofit group with 65 members led by Bruce Alexander, the CEO of Vectra Bank Colorado.
Some of the top donors to the campaign are from companies with members on the Colorado Forum including a $50,000 donation from the Gary Community Investment Company.
The senior vice president of the investment firm is David Younggren who is on the Colorado Forum.
Meanwhile Kerns' group, Coloradans Against Unions Using Kids as Pawns, has only raised $5,000 since its inception in April.
"We'll be running a very aggressive voter education campaign to make sure Coloradans are aware of this billion-dollar-per-year tax increase," Kerns said.
She said things will ramp up closer to election day when voters will decide the issue in November. That campaign, Kerns said, will include informing voters that a significant portion of the tax increase will go to back-fill the unfunded liability of the Colorado Public Employees Retirement Association.
It's an accusation that Hubbard said is false, noting the school finance reform allocates no funding be directed toward the employer contributions for the retirement funds of teachers.
Whether the new school funding formula is written in a way to prevent school districts form using their increased funding to pay for the growing contributions required of employers for employee's retirement funds is unclear.
"I don't think that, that's the case," Hubbard said. "Sen. Johnston went to great pains to make sure that the money being raised by this tax would fund only those measures in SB213."
PERA Executive Director Greg Smith told trustee members at their last board meeting that he would be spending time this summer trying to dispel the rumor that the tax increase would fund PERA. Smith was optimistic about the fund's almost 13 percent return on investment and said PERA is on track to pay off its liabilities.
"PERA is in very, very bad shape, and it's going to take part-of-this, or half-of-this, billion-dollar-a-year tax increase to bail out PERA," Kerns said. "And we believe that's why they're pushing this as they are."
Contact Megan Schrader