Colorado Springs may preview budget problems for state
Colorado Springs, is rapidly becoming the poster city for the kind of community Douglas Bruce and others seem determined to create. Thanks to Bruce’s efforts, Colorado Springs enacted its own Taxpayer Bill of Rights in 1991, a year before the state enacted similar legislation. Now the city is required to meet tax-limitation rules even more strict than the state’s.
Following a number of successful, anti-tax measures championed by Bruce and others — most recently in November when voters refused a hike in property taxes that would have restored $27.6 million to the city’s $212 million general fund budget — revenue has plummeted to the point that the city can no longer provide even the most basic services of a modern community.
According to a report by Michael Booth in The Denver Post, “This tax-averse city is about to learn what it looks and feels like when budget cuts slash services most Americans consider part of the urban fabric.”
Cuts to city services and amenities include reducing law enforcement and fire department personnel, closing day-care centers, permanently closing swimming pools and recreation centers, canceling programs for troubled youth and curtailing programs for seniors.
Maintenance of parks will be minimal, no flowers will be planted in city gardens, bus service will be curtailed, museums will close and the list goes on.
Cuts to economic development and programs marketing the city will add to the difficulty of recovering from the current recession. As sales taxes continue to fall, even more drastic cuts will need to be made in the city’s budget.
The state mitigated some of the worst effects of the TABOR “ratchet effect” by passing Referendum C in 2005, which enabled the state to retain taxes collected in excess of TABOR limits for the past five years. Lacking similar relief, Colorado Springs budgets continued to shrink as the economy was constricted by the economic downturn.
According to University of Colorado at Colorado Springs economist Fred Crowley, who modeled the city budget from 1998 until the present, the Colorado Springs budget has shrunk about 20 percent in inflation-adjusted dollars since 1998. “Eventually TABOR will reduce (the budget) to zero, under the ratchet-down,” he says. “How many years can you lose 20 percent before you are down to zero.”
The voters of Colorado Springs can draw their own lessons from the near collapse of city services. For the remainder of the state, the city provides an important lesson on the consequences of an inflexible constraint against raising taxes to meet legitimate state needs.
Now the same geniuses who brought Colorado Springs close to an economic meltdown are proposing new state revenue changes that “shall be strictly enforced to reduce government revenue.” Proposition 101 (“Concerning limits on Government charges”) would effectively “repeal Referendum C ... and impose a new, lower state spending limit moving forward.” According to a Bell Policy Center analysis. Proposition 101 when fully implemented would reduce the state budget by $1.7 billion per year.
Proposition 101 would also “impose new, lower spending limits in all cities and counties in Colorado.” Tax revenues to local governments would be reduced by $622 million annually, according to the Bell Policy Center analysis.
Amendment 60 would reverse recent property tax increases in communities that have “de-Bruced,” and cancel the mill levy freeze imposed by the state Legislature at the urging of Gov. Bill Ritter. The freeze keeps school districts from having to lower mill levies as assessed valuations increase.
Amendment 61 would prohibit local governments from going into any kind of debt without voter approval.
“These initiatives are massive over-reaction to the frustrations some people have,” said Bell Policy Center CEO Wade Buchannan. “Even without the current economic downturn, long-term trends show that state revenues are not keeping pace with the overall economy and will not be adequate to sustain existing public services, let alone any reform efforts.
“Look at what kind of community you are building,” Buchannan advises, “then you have a chance of better heads prevailing.”
With Colorado Springs as a cautionary example, voters should reject the failed policies of the past represented by these revenue-killing amendments. If not, we may be turning out the lights on the state of Colorado.