September 1, 1998

TABOR limits spell trouble for capital improvements

On Sept. 14, the Colorado General Assembly begins a special session to address the issue of too much money. The session is predicted to last three days.

No matter how many days the legislators meet, the correct answer for Colorado’s future will not be forthcoming.

Instead of reinvesting our growth dividend, countless hours will be spent devising a misbegotten refund.

For the year ending June 30, 1998, the State of Colorado raised $562 million of “excess revenues” according to the 1992 voter-passed TABOR Amendment. TABOR limits annual budget growth and requires that any excess revenues be returned to the taxpayers unless voters choose otherwise.

Because of a current successful economy and population growth, Colorado’s revenue collections have boomed. But under TABOR, spending can rise only by a yearly linear increase tied directly to inflation and population gains.

TABOR is terribly flawed because it does not allow for expansion or improvement of capital systems. It provides only for maintenance of current efforts.

Colorado is currently collecting huge revenue increases as a “growth dividend”-greater tax revenues from more people earning higher incomes than accounted for by inflation and population growth. But the Legislature is powerless to spend this growth dividend on needed capital expansions and improvements.

During its regular 1998 legislative session, the General Assembly managed to agree to refer one issue to the voters on this Novembers ballot. From the current surplus of $562 million and from surpluses arising in the next four years, the Legislature is asking voter approval to reserve $200 million annually (for a total of five years) to fund roads and educational programs.

Unfortunately, this proposed spending increase is less than 20 percent of already-identified needs. So, instead of finding ways to capture today’s remaining $362 million of excess revenues already collected for use on sorely needed highway programs, the Legislature will literally spend three days making refunds.

The Legislature is also likely to spend time trying to prevent future “surpluses.” Expect the introduction of plans to temporarily reduce individual income-tax rates. The governors call for this special legislative session prevents any consideration of permanent tax cuts or eliminating any general taxes.

Before the special session ends, Gov. Romer will threaten to veto at least one of the drafted bills, and the Legislature will counter by offering to postpone action on the refund mechanics until early in the next legislative session (when Romer will no longer be around).

After the dust settles on the tax-reduction side show, the real energy will be spent on deciding which Colorado taxpayers are entitled to refunds. The only point of agreement so far is that 2.6 million adult Coloradan’s are eligible to participate in the process. But the refunds amount depends on the referendum passing in November É and on which side wins the battle of who is entitled to a refund.

The governor has proposed a three-tiered formula to refund something to all Colorado adults.

The Republican-dominated Legislature will put forth a plan to eliminate the $95 refund for the 600,000 adults paying no income taxes, and distributing this $57 million among the remaining 2 million taxpayers.

The best answer for Colorado’s future is not to refund any excess revenue, nor to seek tax decreases. Instead, ways should be found to apply these much-needed resources to our long-neglected transportation needs.

Former Fort Collins mayor John Knezovich is a certified public accountant.

On Sept. 14, the Colorado General Assembly begins a special session to address the issue of too much money. The session is predicted to last three days.

No matter how many days the legislators meet, the correct answer for Colorado’s future will not be forthcoming.

Instead of reinvesting our growth dividend, countless hours will be spent devising a misbegotten refund.

For the year ending June 30, 1998, the State of Colorado raised $562 million of “excess revenues” according to the 1992 voter-passed TABOR Amendment. TABOR limits annual budget growth and requires that any excess revenues be returned to the taxpayers unless voters choose…

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