September 2003
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Dwindling budget hurts higher ed, services

By David Grant Long

Caught in the jaws of a vise ....

Like the shadowy figure in the opening of that ancient TV show, Colorado residents are getting seriously squeezed by a dilemma of their own making — a worsening state budget crunch brought about by two constitutional amendments passed by voters that pre-empt the legislature on major budget decisions.

The TABOR amendment (Taxpayers Bill of Rights, passed in 1992) strictly limits any increases in tax-revenue collections, while Amendment 23 (passed in 2000) forces the state to spend increasing amounts on the public school system. These colliding forces have resulted in major cuts in funding for higher education, roads and human services — even as the state’s economy has rebounded and tax revenues have grown to the point where refunds are mandated by TABOR.

Simply put, the result is that next year the state will have a shortfall of more than $200 million in funding for such programs at the same time it will be refunding taxpayers twice that amount. And this is after the state budget has already been cut by 25 percent over the last three years.

But beyond engaging in partisan bickering, state lawmakers have been unable or unwilling to address the critical issue throughout this year’s legislative session — apparently rendered impotent by the mere thought of advocating any politically unpopular measures during an election year.

Democrats in the legislature wanted to ask voters to allow the state to keep the TABOR surplus for two years, but Republicans insisted that any such proposal also include voter approval to spend less on public schools than is required by Amendment 23.

A citizens’ initiative to get a measure on the November ballot to adjust the TABOR-Amendment 23 problem was abandoned. In the end nothing was done, and more funding cuts seem inevitable.

‘Devastated higher ed’

These problems are only going to get worse, according to 59th District Rep. Mark Larson, a Cortez Republican known for his candid criticism of fellow solons, regardless of their party. During a recent interview with the Free Press, Larson lambasted the GOP-controlled legislature as well as Gov. Bill Owens for doing nothing to address a problem that’s been festering for several years. He said state officials have been “absolutely” irresponsible in failing to take action to prevent further cuts in essential programs.

The biggest impact of the budget mess has fallen on the state’s higher-education system, he explained, because as state funding has been cut, tuition has been raised to the point where a college education is becoming unaffordable to more and more families.

“We’ve already damn near devastated higher ed,” he said. “This is where I get upset at our governor and (House majority leader) Keith King and the Republicans as a whole. They just don’t get the big picture of economic health and well-being.

“The governor says we’re 46th (among the states) in lowest taxes — well, big deal,” Larson said. “He doesn't understand business because high-wage companies thinking about coming to Colorado are going to say, ‘How about higher education - am I going to be able to get employees out of that system? And what about when my kids go to college?’

“They look at how we take care of our seniors, how we take care of our youth, and how many people are walking the street and what’s the health-care environment. (Owens) hasn’t got a clue about what people are really looking for when they come to Colorado.”

But King, who killed a proposed Democratic ballot referendum to suspend the TABOR revenue cap for two years, isn’t concerned about such matters, Larson said, “because he doesn't give a shit about higher education.”

However, in an Aug. 21 press release, King placed the blame squarely on recalcitrant Democrats.

“I am very disappointed the Democrats believe the only solution is just to spend more of the Colorado taxpayers’ money,” King said. “That solution does not solve the issue, and thus I regret the time has run out on putting a solution to the voters in November.”

Still, in a recent interview with the Denver Post, he downplayed the consequences of doing nothing about the funding shortfalls. “Things never turn out as bad as quite what you think they’re going to,” King told the Post. “So I think if we don’t do anything on TABOR and Amendment 23... I think actually state government will probably get along quite fine.”

Toward the end of the legislative session, King had renewed his call for an alternative that would have asked voters to keep $300 million of the TABOR surplus and cut $75 million from the spending requirements of Amendment 23 over the next two years, but that was rejected by Democrats.

Colliding amendments

TABOR was championed by Douglas Bruce, an advocate of smaller government and taxes, and passed by voters who liked the idea of having the final word on any tax increases at both the state and local levels; however, the complex ballot measure also had other impacts that have in large part led to the current fiscal dilemma.

A comprehensive study published last year by the Bell Policy Institute found that while TABOR “clearly has achieved its primary and single-minded goal of restricting the growth of government,” it also had an unexpected downside: “There are major structural flaws in the amendment that seriously impair the state's ability to set budgetary and programatic priorities and to respond to changing needs of a growing state,” it noted.

“TABOR has created a state government hamstrung by inflexible rules that make it less responsive and effective.”

Then in 2000 voters added Amendment 23, which requires an annual increase in funding for K-12 public schools, to the mix, and a perfect storm was brewing. Funding for higher education dropped and college tuition jumped; the highway system deteriorated faster than it could be repaired; and human-service programs such as mental-health clinics and drug-rehabilitation centers were allocated less and less money.

“Amendment 23 ramps up spending (on K-12 education) while TABOR is ratcheting down and establishing new low levels of baseline spending,” Larson said, which means most of next year’s 2.8 percent budget increase will go to education while the remainder will be spent on the prison system.

“That completely ignores the mandates of Medicaid and all the other programs we’ve been cutting for the last three years, (including) children’s mental heath,” he said. “We eliminated indigent (care), basically, and we had to raise the fees almost 100 percent for access” by others in need of mental-heath services.

Rose blames spending

Larson also faults Democrats for their part in failing to reach a compromise, the Democratic senators in particular.

“In the last days of the session we passed in the House four measures and sent them over to the Senate... and the Dems gave us a bunch of B.S.,” he said. “At the end of the day nothing came back from the Senate.”

For instance, he said, the Democrats insisted on adding a requirement to one proposal that would have ended TABOR revenue caps on local governments as well, but by then there really wasn't time enough to study its impact.

All they accomplished, he said, was to “hand Owens a tool to say the Democrats stymied the process.”

“Both sides have responsibility,” Larson said. “This thing has gotten to be a real political animal (and) the legislature as a whole has clearly abrogated its responsibility - I think both parties have lost touch with mainstream voters.”

But Republican Rep. Ray Rose, who represents the 58th District in Southwest Colorado, says the legislature bears no blame at all for the fiscal nightmare, that it’s done just what voters mandated.

“I don't think the legislature is acting irresponsibly at all,” Rose said. “I think we are acting in the most responsible direction that’s allowed us by the people.

“The irresponsibility has come from the voters in passing initiatives that will eventually bankrupt this state,” he maintained. “They have taken away through the voter initiative the power of the legislature to deal with the overall operation of the state.”

But Rose doesn’t support repealing either amendment that’s causing the problem.

“ Those are the irresponsible actions and direction to take,” he said, “because we need TABOR, we need a limit on government and spending - this forces the legislature to take the dollars we have and spend them in the most responsible manner we can.

“The supporters of Amendment 23 are firmly convinced that TABOR should go away so we’d have all this money to spend on education, and supporters of TABOR think Amendment 23 should go away so we don’t have to spend any money on education,” he said, “and both of those extremes are indeed irresponsible.

“The problem with our state budget right now is not necessarily TABOR - it’s our spending habits as a state,” Rose said. “We want to do everything or nothing, and you can’t have it that way.”

Larson pointed out that during the past three years the legislature has managed to insulate citizens from the reality of the problem through “constitutional trickery” and using one-time funding sources that didn’t eliminate the structural deficiet. But those devices are no longer available.

He said before there will be any real solutions to the funding crisis, “the public's got to feel the pain - they’ve got to bleed a little bit,” by experiencing massive cutbacks in services and driving on crumbling highways.

In addition to TABOR and Amendment 23, a lesser-known amendment, Gallagher, is also working to decrease tax revenues at a time when the state’s population is growing.

The Gallagher Amendment mandates that residential property tax will be 45 percent of total property-tax revenues statewide while commercial properties pay the other 55 percent. Population growth and the accompanying housing boom have resulted in homeowners’ taxes becoming lower while the tax on business property has grown, which discourages new companies from moving to the state, Larson said.

Polls indicate a slight majority of voters would support “tweaking” TABOR, Larson said, but less than a third would agree to changes in Amendment 23. But the Republican majority in the legislature refused to propose any referendum to voters that did not include changes to both.

“Even in the good times when the state was growing at 8 to 10 percent, we were ratcheting down,” Larson said. “What the ratcheting down means is that you can’t spend at the level revenue is coming in — you’re not keeping up... so we’re obviously passing down some (costs for) services to local governments.”

The recent economic downturn from which the the state is just recovering has made things even worse, he said. “You never are able to recover the spending on programs that you lose in a recession.”

Because TABOR limits spending through a complicated formula involving inflation, population growth and the Denver/Boulder consumer-price index, the previous year’s budget, no matter how drastically it was chopped, becomes the new ceiling for future budgets, even when the economy improves.

So after the budget was cut by 25 percent, or about $2 billion, during the recent economic slump, it can only be increased a maximum of 6 percent annually now that the state economy is improving and revenues are increasing.

“Under TABOR your worst of times is now your new best of times,” Larson said.

And many Colorado residents may soon be hard pressed to tell the difference.

In late August, Lt. Gov. Jane Norton, acting governor while Owens was attending the Republican National Convention in New York, rejected a last-minute plea from Democrats for a special legislative session, crushing any hope of getting a referendum on the November ballot to let voters decide on a solution.


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