Proposition CC and TABOR explained
On Nov. 5, Colorado voters will decide on a measure that would fund public education, higher education and transportation without raising taxes. Here's what you need to know before casting your vote.
Danielle Holmes sees a disparity in the advising and wrap-around services available to her fellow students at Metropolitan State University of Denver.
There are currently some academic departments with a 500 to 1 student-to-advisor ratio, said Holmes, president of MSU Denver’s Student Government Assembly. That’s well above the comparable higher education standard of approximately 300 to 1.
“I know the University is working to address the issue through its Classroom to Career Hub,” she said. “But in an ideal world, increased funding would move the us closer to a concierge-style service that caters to the needs of individual students.”
On Nov. 5, Colorado voters will decide on a legislatively referred ballot measure that proponents say would pump much-needed money into higher education without raising taxes. If approved, Proposition CC would allow the state to retain tax revenue it is currently required to refund under the state’s Taxpayer’s Bill of Rights (TABOR), which would then be distributed equally among K-12 education, higher education and transportation.
“For too long, an antiquated formula has really tilted the playing field against our kids and our roads and bridges, in a really arbitrary way,” Democratic Gov. Jared Polis said at an Oct. 2 news conference at MSU Denver that was organized by pro-Proposition CC issue committee Coloradans for Prosperity.
Polis was joined at the event by state Sen. Kevin Priola (R-Adams County); Lisa Weil, executive director of the nonprofit Great Education Colorado; Janine Davidson, Ph.D., MSU Denver president; Dan Ritchie, University of Denver chancellor emeritus; and Mark Kennedy, MBA, University of Colorado president.
Despite Colorado’s booming economy and population growth, its public schools are struggling, higher-education funding rates are falling, and the state’s roads and highways are crowded and crumbling. Colorado ranks 47th nationally for average K-12 teacher starting salary and 33rd for per-student spending, according to the National Education Association. The state’s 31 public colleges and universities, meanwhile, have seen funding rates drop from 68% in 2000 to 33% in 2016, according to the nonprofit Bell Policy Center. Colorado ranks 47th for rural interstate pavement condition, 33rd for overall spending per mile of state-controlled highways and 37th for urban-area congestion according to the Reason Foundation’s 2019 Annual Highway Report.
“This is a great opportunity to invest in the state without any new taxes,” Priola said at the event. “I voted for (TABOR), and part of the reason TABOR passed was because it had the direct-democracy component to go to the voters and let them make the decision if they want to invest in infrastructure and education without raising new taxes.”
TABOR: a brief explanation
Colorado’s TABOR constitutional amendment was approved by voters in 1992; it limits the amount of tax revenue Colorado can retain and spend based on a formula tied to inflation and state population increases. It also requires voter approval for any tax increase.
TABOR was passed as part of a tax-revolt push spearheaded by conservative activist and former state Rep. Douglas Bruce, explained MSU Denver political science professor Rob Preuhs, Ph.D. If passed, Proposition CC would extend to the state level the municipal and county practice dubbed “de-Brucing” – local voter-approved elimination of TABOR revenue caps.
In Colorado, 98% of school districts (174 of 178), 80% of counties (51 of 64) and 84% of municipalities (230 of 274) have de-Bruced, according to the Bell Policy Center.
The effect of de-Brucing for those entities is that they have been able to respond to population and economic growth beyond the cap imposed by TABOR, Preuhs said.
“Inflation, which is essentially the cost of a basket of goods, doesn’t account for economic elements like infrastructure to accommodate business,” he said. “When other prices increase – think salaries for teachers or construction to build and renovate schools – all those tend to exceed inflation. A lot of times, the financial need at local levels exceeds the limits that TABOR imposes.”
Supporters of Prop CC argue that we’re facing a number of issues in the state budget that constrain our ability to fund transportation infrastructure and education while the state anticipates making more money than the TABOR limits would allow, Preuhs said.
Revenue subject to TABOR exceeded its cap by $428.3 million in fiscal 2018-19, according to September projections from Polis’ budget office. It’s projected to exceed the cap by $348.1 million in fiscal 2019-20 and $551.6 million in fiscal 2020-21. The fiscal 2018-19 TABOR surplus will be returned to taxpayers via Colorado’s Homestead Exemption and a temporary income-tax-rate reduction in fiscal 2019-20. Should Proposition CC pass, the state will retain revenue in excess of the TABOR caps beginning with fiscal 2019-20.
Competing visions of government
Americans for Prosperity, a national conservative group founded by billionaire brothers Charles Koch and the late David Koch, opposes Proposition CC. In the first week of October, the group launched television and radio commercials against the measure.
The nonprofit Colorado Rising Action is leading an anti-Proposition CC campaign as well. Its leadership contends that the way the legislatively referred ballot measure is written provides no guarantee that the funds will boost public schools, higher education or transportation.
“If legislators were being honest, the ballot language would read something like: ‘Can state government keep your TABOR tax refunds forever?’ It’s not hard to guess how an honest ballot question like that would fare with the voters,” Michael Fields, executive director of Colorado Rising Action, wrote in a Sept. 17 op-ed published in the Colorado Sun.
TABOR tax refunds are projected to be $1.3 billion over the next three years, Fields wrote. “All of that money should be refunded to taxpayers,” he wrote. “They need the money more than the government does.”
Proposition CC requires an annual report that specifies the total retained funds and their associated uses. Likewise, it requires the state auditor to hire a private entity to conduct an annual financial audit regarding use of those retained funds.
State spending has increased over the past decade, Preuhs said. And while Colorado projects it will collect revenue in excess of the TABOR caps, until fiscal 2018-19 the revenue collected by the state hasn’t exceeded that cap in almost two decades.
The legislature last April passed a $30.5 billion state budget for fiscal 2019-20, a 61% increase from the 2009-10 state budget of $19 billion. In April 2010, the state’s population was 5,029,196, according the U.S. Census Bureau. By July 2018, the latest estimates available, the state’s population had jumped 13.24% to an estimated 5,695,564.
As the Nov. 5 election approaches and ballots hit mailboxes, it’s not clear whether there’s a strong desire for larger state government or more state spending, Preuhs said. Past ballot measures addressing TABOR caps have been green-lighted by Colorado voters.
In 2005, voters passed Referendum C, which essentially allowed a “timeout” from TABOR limits, he added.
“TABOR had a built-in challenge of basing revenue limits on just the previous year instead of a number of years,” Preuhs said. “The result was problematic, as the dip in the economy substantially limited the amount of revenue available (the next year). Referendum C changed this to a rolling 5-year average.”
Further back, in 2000, voters passed Amendment 23 to guarantee increases in educational spending. But it ran into complications when it ran up against the TABOR-imposed caps.
“Essentially, we were obligated by law to fund an area without the means to do it,” Preuhs said. “Combined with increasing costs for health care, this has squeezed out transportation and higher-education funding to a point where a very small portion of the state budget is actually discretionary.”
The Americans for Prosperity Colorado issue committee, a Proposition CC opponent, spent $462,000 opposing the measure between June and the end of September, according to the Colorado Secretary of State’s Office.
Pro-Proposition CC issue committee Coloradans for Prosperity spent more than $115,000 between July and the end of September; proponent issue committee Great Education Colorado also spent almost $48,000 in favor of the measure between June and the end of September.
MSU Denver’s Board of Trustees on Sept. 6 passed a unanimous resolution of support for Proposition CC, and the Colorado State University system Board of Governors on Sept. 9 passed a unanimous resolution to support. The University of Colorado Board of Regents has not weighed in and remains divided on the measure, an Aug. 29 report in the Denver Post said.