In Colorado, 2,000 voters approved Amendment 23, which set annual public school funding increases at the amount of inflation. For the first 10 years, it was inflation plus 1%. Fine in concept – Colorado’s schools have been historically underfunded and a good educational foundation can be the basis for a state’s success.
But that commitment, particularly when tax revenues plummeted after the real estate debacle of 2008-2009, could have made it impossible to reasonably fund multiple other areas of government. To avoid that, legislators created the “budget stabilization factor” excusing the state from what turned out to be the high level of school support in exchange for the promise to make it up in later years. Only in this just completed session of the Legislature was that able to be done.
Good intentions proved to be almost disastrous.
Two ballot questions pertaining to property taxes on this November ballot could have a similar result, applying a sledgehammer to taxes and thus to the diversity of funded organizations. Initiative 50 would cap tax increases at 4% statewide, with any increase beyond that first requiring a statewide vote. It would go into the constitution. Initiative 108 would cut taxes by an estimated more than $2 billion, requiring the state to backfill schools and special districts in many cases.
Property taxes are on everyone’s mind. Because of the popularity of many areas of the state and land and construction costs, property taxes climbed 20% and 30%. With extraordinary bipartisanship, the Legislature’s solution was to put on the ballot a package that sets lower residential assessment rates with a 5.5% growth cap and increases exemptions. Schools, a large exclusion, would see the assessment rate increase separately and be excluded from the cap.
A special session beginning on Aug. 26 will focus attention on making the Legislature’s ballot solution more appealing to those who want to reduce taxes, in exchange for withdrawing initiatives 50 and 108. A middle ground of sorts.
While we have a sense of what the new ballot question will contain, the special session will likely stamp it: additional tax reductions, a cap of 12% on school increases over two years and the pledge by the much lower tax advocates to not return to the ballot for 10 years. The latter seems severe, but if its incorporation helps ensures the passage of the significant tax reduction package it would be worthwhile. There is no certainty that either 50 or 108 will pass, and one complicates the other.
We hope they are gone. Their passage could easily create the significant fiscal challenge that Amendment 23 caused the state 20-plus years ago.
Property taxpayers will know the end of the month on this uppermost issue.
