Stuck With a Dishonest Tax Increase

There will be no floor debate, no committee hearings, no amendments. Proposition 103 is already written, and if we approve it we are stuck with it.

Boulder Senator Rollie Heath’s Proposition 103 increases sales and income taxes to raise over $500 million per year, supposedly for education. I applaud Senator Heath for properly proposing this tax increase. He’s following our constitution’s Taxpayer’s Bill of Rights (TABOR) that requires tax increases be voted on by the people.  A whole slew of groups are trying to circumvent and destroy TABOR. 

The Colorado Supreme Court ruled that property taxes could be increased without our vote. They also ruled that removing a tax exemption is not a tax increase, leading to the “Dirty Dozen” tax increases in 2010 which killed businesses and jobs. The legislature raised fees instead of taxes to get more money, and we got a huge increase in our vehicle registration fees.

Westminster City Councilman Bob Briggs sued the state to end the Taxpayer’s Bill of Rights. Separately, Lobato v. Colorado would more than double education spending, creating a crisis that would require emergency tax increases. It’s another end-run around our Taxpayer’s Rights. If this assault on TABOR continues, our right to vote on taxes will soon be but a cherished memory. 

But Senator Heath got this one right. At least he’s asking us for more tax money. That’s where my appreciation for Heath’s efforts ends.

Heath and his campaign to raise taxes have been, shall we say, less than honest. Heath used fourth grade students as campaign props without asking permission. Robo-calls say it’s a time-out in cuts to education instead of a tax increase. The website for Prop 103 falsely claims that the new revenue will go to education. 

The biggest deception of all is in the proposed law itself. It requires the money raised by the tax increase to be spent on education. This is pure folly. Heath knows it and yet it’s his biggest selling point. 

The legislature is under no obligation to spend the money on education. Prop 103 is a law, and it is only valid until it is superseded by another law. That law is the budget. Prop 103 will not automatically move money into education. It must be done through the budget, a law that is passed every year by the legislature. They are not obligated to write the budget in accordance with Prop 103.

Heath could have written this as a constitutional amendment to direct the new taxes to education. He chose not to. He knows that the money is not required to be spent on education, yet he and his campaign continue to sell it that way. Heath is also not telling you if the money is spent on education it will create two huge education budget cuts.  

The 2012-13 education budget would have roughly $783 million in extra revenue for education. In 2013-14 there will only be $533 million in extra revenue. That’s a $250 million cut. And when (or if) the temporary tax increase ends in 2017, education funding would lose over $500 million. 

As disheartening as all of that is, the second worst part is that there is no plan for this additional spending to improve education. There is no correlation between higher levels of funding and improvements in educational outcomes as many studies have shown. AJTT.org compares spending to outcomes. Washington D.C. spends more per pupil than 47 states and is ranked dead last in outcomes. North Dakota is outspent by 41 states and has the 6^th highest quality educational system. Money spent on education funding will not guarantee better education. 

Now for the worst part: Prop 103 is a job killer. A study by Economics International Corp. found that the proposal would result in a loss of 30,500 jobs. The average family of 4 will pay $400 per year to lose those jobs. 

A dishonest tax increase. Future education cuts. Huge job losses. Is this what we want to be stuck with?

Budget Shortfall - Fact or Fiction?

From December to March, Colorado’s budget forecast for the general fund increased by over half a billion dollars, substantially shrinking that $1.2 billion budget shortfall we’ve all heard so much about. That’s good news.  But here’s the dirty little secret:  The budget shortfall is a fiction. 

The budget for the current year (2010-11) is $7.1 billion.  We’re told that the legislature closed a $350 million shortfall.  Yet the budget for 2009-10 was $6.3 billion. That’s an increase of $800 million.

The budget forecast for next year as of last December was $7.1 billion, the same as the current year. Does that sound like a $1.2 billion shortfall?  And the updated forecast, released yesterday, predicts less than half of that shortfall.  Total budget forecast: $7.1 billion, the same amount that predicted the $1.2 billion shortfall. Huh?

Let’s do the math.  If the budget in the current year is $7.1 billion, and we anticipate a $600 million shortfall next year, what is the anticipated budget for next year? $6.5 billion, right?  Not in the world of government budgetary mathematics.

Now it may be that I don’t understand the budget. As far as I can tell, neither do the legislators.  They haven’t been able to explain how the shortfall number is calculated, and have only raised more questions when they tried.  I’ve talked to Henry Sobanet, Governor Hickenlooper’s budget director and one of the foremost experts regarding the state budget.  He provided far more insight than anyone I’ve talked to about the state budget.  Yet he could not explain the budget shortfall in a way that mere mortals could comprehend.

And therein lies the danger.  Despite the good news about the budget, the steady drumbeat about the shortfall will continue and get louder. And we’ll be asked to approve new taxes. What do you suppose are the chances that anyone will tell us how they arrived at that number? Don’t you think they should be able to prove the numbers before they ask us to satisfy the rapacious government appetite for that which does not belong to them?

Even if there are real numbers behind what appears to be fiction, shouldn’t we all be on the same page? If “shortfall” means something entirely different to you and me than it does to the general assembly, shouldn’t we reconcile terms before we hand over more money?

Unemployment is at a record high in Colorado.  People are struggling to keep food on the table, heat their homes, and put gas in their cars.  There are families that can’t afford to pay 30 cents a day to have schools feed breakfast to their children. Raising sales taxes will hurt those families the most.  Raising income taxes will hinder job creation by diverting more money from the productive private sector to the unproductive government sector.

We understand the harm that will come from raising taxes.  Shouldn’t we have a similar understanding of the supposed harm of not raising taxes?  Show us how a shortfall number is calculated!