Our View - Sunday

An uphill hike

Ritter tries to salvage property tax increase

What’s the first thing to do when you find yourself in a hole? You stop digging. It’s a political survival lesson Gov. Bill Ritter may have to learn the hard way. Ritter has been working frantically to salvage his plan to block mill levy rate decreases required by law, in order to raise $65 million for a new school program, which even many Democrats recognize as a politically perilous tax hike. But the more Ritter struggles to extricate himself from political quicksand, the more stuck he gets.

On Wednesday, Ritter modified the original proposal, saying he would allow automatic property tax reductions to go forward in 33 of the state’s school districts (including those in El Paso County) while freezing them in 145 other school districts. He said this effort to “stabilize” property-tax rates across the state would prevent the Education Fund from going broke.

But the new proposal raises as many questions, and objections, as the original did. Maybe more.

Exempting certain counties is a nice gesture, which might buy the governor support from the more mercenary members of the Legislature. But this still means a significant tax increase for residents of the 145 school districts where mill levy rates won’t fall. Nor does it settle the question of whether this is permitted under TABOR without a vote, despite what the Legislature’s lawyers say. This invites a legal challenge.

It also doesn’t explain why the Education Fund is going bust, though voters less than two years ago approved a TABOR refund override worth billions of dollars — anyone remember Referendum C? — based in part on the premise that it would shore up education funding. And why is Ritter proposing all-day kindergarten if the trust fund is in such dire straits? Wouldn’t it make more sense to hold off on any new programs until we know we can afford existing ones?

And aren’t taxpayers owed an accounting of where all these Referendum C funds are going and what “priorities” they are funding before any new talk of tax increases takes place? We think supporters of the referendum are going to feel dismayed and betrayed, unless this multi-billion dollar mystery is cleared up.

We will be surprised if Ritter’s rearrangement of the deck chairs will keep this titanic policy blunder afloat. But who knows — Ritter has found at least one ally in Mike Kazmierski, president of the Colorado Springs Economic Development Corp, who has lobbied at least one local legislator in support of Ritter’s tax increase.

In an e-mail message that might have been cribbed from Ritter talking points, Kazmierski urges Senate Minority Leader Andy McElhany to “take a hard look at the Governor’s suggested mill levy freeze.” The EDC president chides those who “claim this is a tax increase,” arguing that Ritter’s plan “holds residential property taxes at a consistent level, rather than allowing them to float downward at a time where there is clearly a shortfall in funding to support many critically important areas in the state budget.” Attached was a memo from the Office of Legislative Legal Services that “explains that the freeze is not a TABOR violation,” according to Kazmierski.

McElhany responded with a gentlemanly but tart tax-policy tutorial. Kazmierski was also reminded that McElhany happens to be one of those people who “claim” this a tax increase. “That is because it plainly is,” wrote McElhany, who continued:

“The mill-levy freeze would not, as you contend, hold ‘residential property taxes at a consistent level.’ It is only the tax rate that would remain consistent. The result, by definition, would be to raise the tax bills of residential — and commercial — property owners as their property values rise.

“After all, the extra $65 million has to come from somewhere, and there are only two options: cut elsewhere in the budget or squeeze more out of the taxpaying public. Obviously, the governor is proposing the latter.

“Especially given the EDC’s sensitivity to the disproportionate burden that property taxes create on business in our state under the Gallagher Amendment, it is surprising that you would even want to touch Gov. Ritter’s proposal.”

McElhany further points out the fact that the the $65 million would most likely not be used for transportation or higher ed, but for growing government through a new kindergarten program. “The way things work around here, any money freed up would be squandered on yet other programs precisely because the property tax hike will not be earmarked for highways or higher ed in the first place.

“It sounds like you could use a primer on where Republicans are on some of these basic fiscal issues,” McElhany concludes — though we think Kazmierski just got one, good and hard.

Smoke and mirrors on tax collections

Politicians using the specter of identity theft and privacy violations to fight contracting out IRS tax collections must think we all have amnesia. It wasn’t too long ago, after all, that federal employees were caught snooping through the tax returns of celebrities and others, digging for dirt and useful details.

A Treasury Department audit found that IRS “has done an effective job in setting up a program for private sector companies to collect federal tax debts,” according to GovExec.com. IRS has provided adequate background checks, training and oversight to ensure that the rights and privacy of taxpayers are protected. But certain members of Congress remain adamant that this work be kept in-house, despite the fact that privatizing collections work could boost revenues by an estimated $1.4 billion over 10 years.

Why the resistance? Because it’s not really about taxpayers or privacy, but about pandering to public-employee unions and padding the federal payroll. And with big-government Democrats running Congress, it’s almost certain to succeed.