Money woes place state in 11th spot

QUICKREAD

What is the Pew Center?

The Pew Center on the States is a nonprofit, nonpartisan online news site that reports on state policy and politics. It is funded by Pew Charitable Trusts. See the entire “Beyond California: States in Fiscal Peril” report at stateline.org.



Colorado isn’t in the top 10 states in “fiscal peril,” according to a new report from Pew Center on the States.

It’s number 11.

Along with Georgia and Kentucky, the Pew Center found that Colorado is worse off than 37 other states when it comes to money woes. Although the state has the 17th lowest unemployment rate change from a year ago and ties with Oregon and Louisiana for the 22nd lowest foreclosure rate in the United States, the Pew report pointed to Colorado tax policy as an obstacle to climbing out of its budget hole.

Namely, the report, titled “Beyond California: States in Fiscal Peril,” looked at the increased difficulty a state has finding revenue when, like Colorado, it requires a super majority or vote of the people to increase taxes.

“Finance experts generally agree that this institutional arrangement significantly reduces taxes or constrains a state’s ability to generate greater revenue by increasing taxes,” the report states.

Colorado requires a vote of its residents to raise taxes. Raising taxes was not a proposition that received many “yes” votes in the 2008 general election, especially in Mesa County, where local sales tax and property tax increase measures failed.

Rep. Steve King, R-Grand Junction, said he expects some may want to make tax increases easier to come by in the 2010 session. King is more interested in cutting government expenses and duties than cutting the Taxpayer’s Bill of Rights, better known as TABOR.

King said TABOR, which requires a vote of the people to increase taxes, has kept state spending trimmer than it may otherwise have been.

“In my experience in government and public service, government will grow to its size of containment,” he said. “If it is not contained, it will grow exponentially.”

Losing the TABOR requirement that the state leave 6 percent of revenue in reserve was a step in the wrong direction this year, said Rep. Laura Bradford, R-Collbran.

“That and TABOR helped keep us out of the top 10” in the Pew ranking, Bradford said.

Instead of blaming the Taxpayer’s Bill of Rights, Grand Junction Area Chamber of Commerce Executive Director Diane Schwenke said it’s the state Constitution that may be the true trouble-maker.

She used as an example Amendment 23, which requires K–12 education funding to increase by inflation plus 1 percent each year.

King said $1 billion worth of new fees this year, which he sees as a subversion of TABOR, helped fill a budget gap without raising taxes.

He predicted that higher taxes would have been a revenue-generator chosen in 2009 without TABOR.

But even with new fees this year, Gov. Bill Ritter still had to make a laundry list of cuts to balance the budget.

The state collected 2.1 percent less tax money in the fourth quarter of 2008 than it had in the fourth quarter of 2007, according to information gathered by The Nelson A. Rockefeller Institute of Government.

The state collected 10.1 percent less revenue in the first quarter of 2009 than it did in the first quarter of 2008. And Colorado took in 23.6 percent less tax revenue in the second quarter of 2009 than in 2008’s second quarter.

Only six states had a higher drop in the second quarter: Alaska (86.5 percent), New Mexico (30.8 percent), Oregon (27.3 percent), Arizona (26.7 percent), Delaware (25.1 percent) and Wisconsin (24.3 percent).

With decreased tax revenue, Colorado’s 18.6 percent budget gap for 2010 is a wider chasm than 27 other states will have to fill.

Tax collection numbers indicate there’s no particular place people are choosing to spend their tax dollars instead.

Five states — Alabama, Iowa, Montana, Nevada and Wyoming — gathered more tax revenue in the first three months of this year than they did in the first quarter of 2008. Wyoming had the greatest increase, 19.8 percent.

Vermont alone saw a tax revenue increase (2.2 percent) in the second quarter.


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