Budget desires and economic reality
To meet the level of services that Coloradans desire, the state would need another $8.5 billion in revenue a year. At least that’s what legislative analysts told the state’s Long-Term Fiscal Stability Commission last week.
We’re not sure where all those Coloradans are who demand a much higher level of state services. But we’ll go out on a limb and suggest there aren’t many people in Mesa County who would like to see the state’s 2.9 percent sales tax jump to at least 13.4 percent.
That’s the minimum amount of sales-tax hike that would be required if Colorado were to raise $8.5 billion more a year entirely through the sales tax, based on information provided by state Sen. Josh Penry. Each 1 percent of sales tax generates about $800 million per year, he said.
If you thought the recent town hall meetings on health care were heated, imagine the temperatures that would be reached if some Colorado politician were to propose bumping the sales tax to 13.4 percent.
They won’t, of course. Few politicians are eager to commit political suicide. In fact, no one is currently proposing tax increases to fund even a quarter of the unfulfilled state wishes, according to a story about the revenue needs in The Denver Post.
The recession understandably puts a big crimp in those sorts of ideas. But that’s not to say all of the proposals for more spending are frivolous.
Take transportation, for instance. As a column on the facing page makes clear, the higher vehicle registration fees we all began paying this year will raise about $250 million a year in new revenue for roads, bridges and other transportation needs. But transportation experts say we need at least $1.5 billion more a year to keep up with our needs, and perhaps as much as $2.5 billion.
Higher education continues to take a big hit in every economic crisis in Colorado. The Fiscal Stability Commission was told Colorado needs $750 million more in revenue each year for higher education.
We also need almost $200 million more each year for prisons, $800 million for human services and $1 billion for health care.
That’s the needs list. On the flip side, there are people such as Indiana Gov. Mitch Daniels, who said in a Wall Street Journal Op/ed piece last month that states may never recover the kind of revenue they had in the early part of this decade.
“What we are being hit by isn’t a tropical storm that will come and go, with sunshine soon to follow,” Daniels wrote. “It’s much more likely that we’re facing a near permanent reduction in state tax revenues that will require us to reduce the size and scope of our state governments.”
Meanwhile, high-tax states such as California — from which businesses have been fleeing and which is now facing far worse budget problems than Colorado or nearly any other state — serve as a warning to those who would argue higher taxes are the easy answer.
Colorado is not likely to become California regarding tax policy. But, even though we’re still in a recession, it is fair to begin asking questions about the level of state services we need and how we should pay for them.
For example, it’s clear this state needs more money for roads and bridges. With that in mind, we continue to believe that toll roads for certain highways with large needs — such as portions of Interstate 70 — are one appropriate means of adding to highway revenue.
We also agree with the numerous groups that say we must address the conflicting budget issues in the Colorado Constitution, even if they aren’t the cause of our immediate revenue problems.
The revenue needs handed out to the Long-Term Fiscal Stability Commission last week are far higher than the people of this state are going to approve any time soon. But they provide an appropriate starting point for a much-needed public discussion on how this state should fund its future.