State economists painted a rosy picture Monday in describing the condition of Colorado’s economy. That is generally good news, except that the hash Colorado voters collectively have made of the state’s Constitution may prevent state residents from taking advantage of that growth.
What lawmakers heard at the Capitol is that consumer spending is up, job growth is good, unemployment is less than the national average, the state’s housing market is better than the rest of the country and Colorado is growing at 6.3 percent, the fastest since 2008. As Greg Sobetski, an economist for the Colorado Legislative Council told lawmakers at the Capitol, “The Colorado Economy is outpacing the national economy.”
With that, Colorado also is looking at increased tax revenue. Existing tax rates, applied to a growing economy, put more money in the state’s coffers.
The sensible thing to do would be to start catching up on the billions of dollars the Colorado Department of Transportation says is needed for highways and other transportation infrastructure, to better fund higher education and, above all, start paying the roughly $1 billion the state is already behind on money for K-12 schools.
There is, however, nothing sensible about the interplay between three voter-approved constitutional amendments and a statutory provision voters approved last year.
Amendment 64, passed in 2012, legalized recreational marijuana with the explicit understanding that taxes on pot sales would benefit education. Proposition AA, which the voters approved last year, codified a high tax rate on marijuana sales with the proviso that the first $40 million in revenue go to schools. And Amendment 23, approved in 2000, says per-pupil funding for public schools must keep pace with the rate of inflation. (It also added an additional 1 percent per year beginning in 2002, but that provision expired in 2011.)
Clearly, the voters want to fund education. During the recession, however, lawmakers let school funding fall behind Amendment 23’s goals. And the state Supreme Court went along. The voters also approved the Taxpayer’s Bill of Rights – or TABOR – Amendment in 1992. One of its provisions is that state revenue cannot increase from one year to the next by more than the rate of population increase and inflation. And any revenue that exceeds that limit has to be refunded to the taxpayers. The upshot being that while the state has more money, growing needs and has been told by the voters where to spend that money, it may well end up giving much of it back.
That is particularly weird in that the marijuana tax money can be seen as what most likely will trigger a refund by putting total state revenue over the TABOR limit. But that money is itself constitutionally earmarked for schools.
If all this seems crazy and confusing, that is because it is. These constitutional amendments were enacted with no thought as to how they might interact. (And in the case of TABOR with outright malice toward state government.) Nor is there a clear mechanism for declaring that one amendment takes precedence over another.
But as this budgetary train wreck continues to unfold, perhaps there will be growing pressure to do something to resolve both conflicting constitutional requirements and the process that enacts them. The voters approved TABOR primarily on the idea that all tax increases must be voted on. The notion that a voter-approved tax on marijuana would indirectly trigger cuts to transportation or higher education makes a mockery of that, and of Colorado’s Constitution as well.
