Hugh Carey/Summit Daily News via AP
Skiers hike to the top of Peak 8 at Breckenridge Ski Resort, Colorado, January 2019.
“Colorado cool” is the apex of lifestyle branding. A strong job market in burgeoning sectors like technology, combined with long-standing employment mainstays like tourism and agriculture, anchored to cultural touchstones like skiing, legal marijuana, and craft beer have attracted tens of thousands of new residents. Unemployment is just under 3 percent, making the self-proclaimed cool state one of the fastest-growing in the country.
But the flip side of cool is the state’s underinvestment in basic services. More than half of Colorado’s roads are in poor condition, transit options outside large metro and rural recreational areas can be problematic, K-12 teachers are poorly paid, and parents and students shoulder more of the burden of higher education costs. And how cool is a tax regime that institutionalizes this dichotomy by consigning the state to fiscal austerity—even in boom times when state revenues are robust?
Funding transportation, K-12, and higher education are perennially divisive issues in Colorado, and on November 5, Coloradans vote on a ballot initiative that would redirect existing state revenues—currently refunded to voters—to those sectors, which would begin to reverse decades of underinvestment. If Proposition CC passes, nearly $264 million in fiscal 2019-2020 and $143 million in fiscal 2020-2021 would be available for those needs. Passage would also signal a shift in the state’s historically fiscally conservative mindset. Colorado may now be a light-purple state, but it has long equated spending with waste, starving key public sectors and deepening inequities between wealthier communities and poorer ones.
At the center of Colorado’s fiscal Sturm und Drang is the TABOR—the Taxpayer Bill of Rights—a 1992 constitutional amendment that sets strict spending limits on state and local government revenues. Under TABOR, state and local revenues are capped by a complex formula that refunds monies to taxpayers if those revenues grow faster than the rate of inflation plus the rate of population growth. The TABOR regime also stipulates that all taxation decisions rest with voters. Colorado state lawmakers and local officials cannot levy new taxes or raise existing ones.
“People don’t understand why it is we’re not solving the problems that we are experiencing—something must be going wrong,” says Carol Hedges, executive director of the Colorado Fiscal Institute. “[They] don’t understand that this is in the Colorado constitution.”
What’s going wrong is that the state Department of Transportation needs $9 billion in new funding for maintenance and a roster of road, bridge, and transit projects (localities have comparable wish lists, according to Hedges). Current state DOT revenues cannot support these projects, which means if a community wants a project, it often has to raise revenues locally or go without if it cannot. To fund transportation, Colorado relies on a 22-cent gas tax (not pegged to inflation) and vehicle licensing and registration fees that were last increased in 1991.
Raising the gas tax is anathema. But with population increasing by more than 50 percent over the past decade and another nearly 50 percent increase projected over the next two decades, just plain maintenance plus expansion will require some kind of funding boost. With localities keen to fund local projects, wealthier regions like Metro Denver choose to contribute funds for popular regional bus routes, while sparsely populated rural areas like Morgan County in the northeast part of the state near the Wyoming and Nebraska borders has infrequent shuttle service and can’t schedule enough trips to meet rider demand, especially from aging residents.
Underinvestment is also a staple of K-12 and higher education. A 2018 report titled “Is School Funding Fair?: A National Report Card,” published by Rutgers University’s Graduate School of Education, ranked Colorado at rock-bottom in the U.S. for wage competitiveness—how teacher salaries compare to those in other professions with similar education requirements—which is a key contributor to the state’s teacher shortages. More than 80,000 K-12 students attend school just four days a week, because that’s all that 104 of the state’s 178 school districts can afford.
Colorado may now be a light-purple state, but it has long equated spending with waste, starving key public sectors and deepening inequities between wealthier communities and poorer ones.
The report also found that Colorado, along with North Carolina and Utah, have “somewhat progressive funding systems, but low funding levels” and score “poorly” on “fiscal effort,” a marker that underlines the fact that the state has the ability to increase base funding levels.
In 2008, a public college or university student could expect the state to pay two-thirds of their education. That ratio has flipped today, with the state funding reduced to one-third while parents and students carry the other two-thirds—leaving Colorado 48th in the country for higher-education funding. An October 29 North Forty News op-ed co-authored by Tony Frank, the Colorado State University chancellor, noted that “while there is always room to find more efficiencies, the reality is that years of being near dead last in state funding have made Colorado’s post-secondary institutions administratively lean and operationally efficient.”
Convincing Coloradans that tax dollars will be used efficiently is the biggest hurdle that Proposition CC faces. State taxes have only been raised three times by voters since 1992 (twice on recreational marijuana and once on tobacco). In 2018, two initiatives, one that would have allocated general-fund revenues to highway projects and a second that would have raised the state sales tax 0.62 percent in order to bond transportation projects, both failed by margins of roughly 60 percent to 40 percent.
Another measure that would have funded education by establishing graduated income tax rates for higher-income earners, adjusting residential and commercial and property taxes, and increasing corporate taxes failed 55 percent to 45 percent, despite a high-profile, two-and-a-half-week-long teacher strike over their low pay, and education funding shortfalls earlier in the year.
With so many public services delivered by school districts or counties, local control is sacrosanct in Colorado, and the state operates like the supplier of supplemental funds, according to Henry Sobanet, the Colorado State University System’s chief financial officer and a former state budget director. Residents expect low state taxes and higher local levies. Proposition CC supporters are battling against an ingrained mindset that the state should do less and localities should tax themselves to pay for special projects. But that philosophy produces still-broader inequities between residents of the wealthy, urban, and rural recreational areas and the denizens of the less well-off regions. It fuels the frustration of residents who don’t understand why the state can’t keep up with the maintenance on roads and bridges.
Nevertheless, local initiatives fare better since municipal officials usually can link specific projects to a particular tax levy. “Local ballot issues pass at a very high rate,” says Sobanet. “State issues are very hard fought and many are annihilated at the ballot.” TABOR’s complexity also poses another major challenge for its proponents, a diverse coalition of education, transportation, and public-health groups and others. In campaigning for Proposition CC, they have to unpack one of the most intricate tax frameworks in the country in order to persuade voters that the initiative is not a new tax—and that giving up a small refund will ultimately benefit them and their families.
Predictably, the principal opponent of the campaign is the Americans for Prosperity Colorado Issue Committee, a state offshoot of the Koch brothers–funded group that pours millions into referendum campaigns to defeat progressive revenue-raising measures across the country. According to campaign finance data, however, Proposition CC’s proponents are outraising opponents nearly $4.5 million to $1.7 million.
A mid-August Magellan Strategies poll of 500 likely 2020 general-election voters found that 54 percent of respondents planned to vote yes; 30 percent planned to vote no, with 15 percent undecided. Yet it also found 46 percent of voters have a favorable view of TABOR as “a check on government spending, holding elected officials accountable and requiring them to explain their spending decisions.”
Asked to prognosticate, Sobanet demurs. “The answer to your question is really November 5,” he says. “If it passes, it will be by a razor-thin margin.”
