Dire predictions of ballot initiatives' impact draws millions

If Colorado voters approve three controversial ballot issues aimed at lowering taxes and curbing government borrowing, 99 percent of the state’s general fund would have to be used for K-12 education, a draft analysis by the Colorado Legislative Council shows.

The remaining one percent, or about  $38 million, would be left for all other departments, including human services, health care, corrections, higher education, the judiciary and other state agencies, the July 8 memo states.

The 12-page preliminary analysis by the Legislative Council, a nonpartisan research arm of the Colorado General Assembly, paints a harrowing picture of what will happen to local governments, state government, school districts and other taxing entities if voters approve Amendment 60, Amendment 61 and Proposition 101.

With the stakes so high, money has been pouring into Coloradans for Responsible Reform, a political-issue committee based in Denver that is developing a multi-faceted campaign to fight the measures.

As of Thursday, the committee had raised $4.1 million, confirmed spokesman Dan Hopkins. According to the Colorado Secretary of State’s Office, some of the largest contributions include $500,000 from the Denver Metro Chamber of Commerce; $400,000 from the National Education Association based in Washington, D.C., $300,000 from the Colorado Contractors Association, Inc., in Centennial; $250,000 from the Securities Industry and Financial Markets Association in New York, and $250,000 from the Colorado Education Association.  

“All of them are convinced that these measures will trigger a voter-approved recession,”  said Rick Reiter, the committee’s campaign manager.

The committee will spend $3.5 million on a media buy that will include television and radio ads  focusing on the three issues, Hopkins said. Campaign staffers declined to say when that campaign will debut, but it’s likely to begin after Labor Day when the political season for the general election typically heats up.

Reiter said the media blitz is needed to educate voters on the impact of the measures. He predicted that they would be popular because the ballot language mentions tax cuts and restrictions on government borrowing. “Are you against a tax cut? Are you against limiting government debt?  I don’t  know if there are nine people in the state who are against that.”

But the populist appeal has yet to translate into financial support for the supporters of the trio of ballot issues. A political action committee in Lakewood called CO Tax Reforms had received about $12,000 in campaign contributions by mid-July, according to Secretary of State’s Office records.

That’s not the whole story, though. The proponents of the initiatives have not disclosed how much money they paid to get the measures on the ballot despite a judicial order instructing them to do so. A massive signature-gathering campaign, which included the use of professional petition circulators, resulted in the collection of more than 400,000 signatures and led to their placement on the ballot.

If passed, the trio would dramatically re-shape local and state governments by reducing all kinds of taxes that are used for everything from major construction projects, such as schools and bridges, to programs that aid vulnerable populations, such as the disabled and the elderly.

In dry language devoid of campaign rhetoric, the Legislative Council ticked off impacts of the three measures. If all three were implemented in 2010-2011 time frame, the state would lose $2.1 billion in revenue and be forced to pick up another $1.6 billion in costs for  K-12 education. Local governments would lose an estimated $3.8 billion.

The Legislative Council estimated that in the same time period a homeowner earning $55,000 year and living in a $295,000 house would save about $1,800 in taxes.

The legislative research agency warned that its figures were preliminary and that the measures may require clarification by the courts or the General Assembly.

Below are some of the agency’s key findings:  

Amendment 60: Limit Property Taxes

• Reduces school district property taxes by an estimated $1.5 billion each year, with the state kicking in the lost revenue.
• Repeals any property tax increase, extension or abatement that has occurred without voter approval since 1992 when the Taxpayer’s Bill of Rights, or TABOR, went into effect. Would also overturn local elections in which voters allowed governments to retain property tax revenue above TABOR limits.
• Requires government authorities and enterprises to pay property taxes and local governments to lower tax rates to offset the additional revenue.
• Allows property owners to vote in any election involving property tax issues.
• Requires a 10-year sunset on voter-approved property tax rate increases.
• The amendment would result in average tax savings of $376 for homeowners and $5,574 for commercial business owners.

Amendment 61: Prohibition on Debt

• Prohibits the state and its political subdivisions from borrowing money in any form. The prohibition includes short-term borrowing, which is typically used to by the state to cover operations and help school districts bridge funding gaps until taxes are collected and distributed.
• Requires tax rates to decrease as debt is repaid.
• Allows local governments to borrow money only with voter approval and stipulates that debt be re-paid in 10 years. The debt restriction would impede construction of capital projects, such as highways, bridges, low-income housing, sewer and water systems and schools.
• Thirty-six school districts, including eight in El Paso County, exceed debt limits imposed by the proposed Amendment 61 and will not be able to borrow any money until existing debt is repaid or property values go up.
• The tax savings from Amendment 61 would amount to $130 in income tax annually for a household earning $55,000 a year and reduction in property taxes of $678 for a house worth $295,000.

Proposition 101: Limit State and Local Government Revenue

• Reduces the state income tax rate over time from 4.63 percent to 3.5 percent.
• Reduces automobile-related revenue, including reduction in annual registration and title fees to $10, a reduction of ownership taxes to $2 for a new vehicle and $1 for older vehicles, as well as exempting the first $10,000 of a new car’s price from sales tax.
• Prohibits state and local governments from tacking fees onto customer accounts associated with telephones, pagers, cable, television, radio, Internet, computer, or satellite. “Added charges” are to be defined as tax increases.  

The Legislative Council warned that Proposition 101 will impact householders very differently.

A  table developed by the researchers shows that affluent householders would most likely see the greatest benefit.

Reiter said that his political-issue committee has about a dozen consultants. Some are focusing on outreach and others on research. Analyzing the measures are like peeling onions, he said.  “Every time we peel away a layer, it reveals something else.”