On day one of his tenure, President Joe Biden announced the US $ 1.9 trillion bailout and called on the nation to “build back better than before.”
In Colorado, however, there is a problem. We have a major obstacle preventing us from truly building back better: the Taxpayer Bill of Rights (TABOR). While the US federal bailout law has bolstered Colorado’s budget in the short term, we are still a long way from having enough money to close the long term budget deficit created by TABOR.
Despite the money received from the federal government, Colorado remains crippled by the most restrictive tax system in the country. Years of artificial limits and underfunding in key areas have left a lasting legacy that we will deal with long after federal funding has ceased. According to our estimates, the state government has run out of about $ 40 billion to adequately fund state programs, infrastructure and services since 1993 – all because of TABOR.
To begin with, what is TABOR?
The TABOR is a constitutional amendment created by a voting initiative in 1992. It prohibits different tax rates for low-income families and dictates that the state budget can only increase by the rate of inflation plus growth. demographic, and any additional income the government collects is reimbursed. to taxpayers.
At first glance, this may seem logical. If you look a little deeper, however, you will find an issue that has forced our fiscal situation to deteriorate and that has resulted in a steady degradation of government services since TABOR took over. Inflation, as defined by TABOR, means “the percentage change in the United States Bureau of Labor Statistics consumer price index for Denver-Boulder.” The consumer price index is a measure of the prices paid by consumers for a normal basket of consumer goods and services: food, clothing, etc.
The state government, however, does not spend its money on these basic consumer goods. The state spends its money mainly on labor, building materials and health care. While the normal consumer basket benefits from global trade, the state basket is largely labor-based and consists of goods and services which, for the most part, can only be purchased here, in Colorado. If it costs less to make a shirt in Asia than in the United States, we’ll have it made in Asia. But Colorado can’t hire people in Asia to staff our schools.
It’s Colorado’s TABOR poison pill. The rate of inflation used by TABOR has increased to a fraction of the actual rate of inflation that the state of Colorado has had to pay for its goods and services. As a result, we are slowly losing our ability to provide the necessary services to Coloradans.
Take the example of K-12 education. In 1992, the year TABOR was approved, Colorado ranked 35th in the country in K-12 spending as a percentage of personal income. In 2012, the state ranked 47th, according to the US Census Bureau’s Public Education Finances report. In 1992, Colorado ranked 30th for providing teachers with a living wage. In 2020, we ranked last in the country according to Great Education Colorado. In 1982, Colorado spent $ 232 more per student than the national average. Today we are spending $ 2,410 less than the national average.
What about health care, higher education and public safety? Colorado fell from 32nd to 47th for health spending per capita, from 23rd to 48th for the percentage of pregnant women with adequate access to prenatal care, and from 35th to 46th for college and university funding as a percentage of income. staff. We’re also way behind in funding forest fire protection, and this past summer showed just how vulnerable we are to the huge impacts of fires. Voters of all political persuasions want these services – they are not extras or luxuries.
Almost 30 years after its adoption, TABOR continues to hold back our state’s progress and hamper our ability to invest effectively in services vital to the people of Colorado, hampering the state’s ability to prepare for downturns. economic, effectively reducing the state budget in real terms. .
In a difficult financial time like the one we have just experienced, we should be able to tap into our emergency funds and provide our state with the support it needs, just as other states can.
This coming year, taxpayers will see reimbursement checks, but they will come at the expense of better funding for public services that cuts costs for all of us. In addition, TABOR has reduced fiscal flexibility, which is hurting our state’s credit rating, thereby increasing the interest charges on any state public debt.
The long-term deficits associated with TABOR also make it clear that permanent and general tax cuts will only add insult to injury. Of course, everyone wants services and doesn’t want to pay for them, but we all know it’s not sustainable and cutting taxes without being honest about the harm it does to our schools and universities is dishonest at best.
The question for state government is how, despite TABOR and relentless electoral pressure for severe and permanent cuts, invest in hard-working Coloradans across our state and give them an opportunity to succeed. We will continue to seek innovative solutions to maintain funding for schools, maintain roads, and invest in future economic growth – because that is exactly what voters elected us to deliver.
Chris Hansen is a Colorado State Senator in Denver. Follow him @HansenforCO. Dominick Moreno is a Commerce City senator. Follow him @domoreno.
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