Locals say 21 spells disaster

Across Colorado, local governments have taken a stand against Amendment 21.

City councils, county commissions, fire district boards of directors and other taxing entities are passing resolutions opposing the amendment and its proposed tax cuts. Business organizations, such as the Fort Collins Economic Development Corp., have joined suit and are standing firm that 21 is bad for the state.

At stake in the Election Day decision on the measure is the loss of revenue that opponents say will translate to a loss of services to residents.

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But Amendment 21 architect Douglas Bruce, a former El Paso County legislator, said opponents of the tax-cut measure are using “emotional manipulation” to scare people into voting against it.

“I would expect nothing less,´ said Bruce, who also was the driving force behind the Taxpayers Bill Of Rights amendment. The same tactics were used in 1992 to campaign against TABOR, but the sky didn’t fall after the measure passed and it won’t fall if 21 gains approval, he said.

Local governments disagree. Collectively, the cities of Greeley, Fort Collins, Loveland and Windsor and Larimer and Weld counties say they’ll lose more than $16 million in revenues in the first year after 21 is approved by voters.

Amendment 21, which proposes a $25 reduction in property, sales and use, specific ownership and franchise taxes in 2001, and $25 more each subsequent year has taxing districts and city and county governments worried.

How deep the cuts?

“Conservatively speaking, the first-year impact to the general fund is a little over $5 million,´ said Greeley City Manager Leonard Wiest.

The city’s general fund is about $40 million, so that $5 million equals almost 12.5 percent of the budget, Wiest said. “In that $40 million, there are a lot of fixed costs we can’t reduce by 12.5 percent. The level of service we currently provide is going to suffer dramatically.”

Weld County stands to lose more than $1 million in revenue in 2001 if Amendment 21 passes.

Larimer County Manager Frank Lancaster said the first-year hit to the county’s budget would be about $2 million. He said the general fund, which totals $51 million this year, will likely shrink by 25 percent over five years.

“That means we start eliminating services,” Lancaster said.

Cities across Northern Colorado say cutting services is the only way they will be able to deal with the financial losses the amendment would bring.

Dean Moyer, finance director for the town of Windsor, said Amendment 21 would reduce the general fund by roughly $1 million in the first year. By the second year, he estimates the town will lose about $2 million, or about 43 percent of its general-fund revenues.

“Obviously, we’ll have to cut back on some of our services in order to fund necessary services like police and maintaining the streets,” Moyer said.

There are no specific plans for what would be cut first in Windsor, but Moyer said parks and recreation programs are likely to be among the first on the block.

Those programs also would probably be among the first to go in Loveland, said City Manager Roger Bates. Loveland estimates it will lose between $1.5 million and $2.5 million in revenues in the first year of tax cuts.

But cutting back budgets for parks, sports, libraries and museums won’t make a big impact, Bates said, because they are not “big money” programs. That means Loveland may have to look at “major service cuts,” he said.

It may also have to move to fee-based operations “for anything that’s out there,” Bates said.

Fort Collins also is looking deep into its budget to see what could be cut if the amendment passes. City Manager John Fischbach said the city stands to lose about $5.8 million in revenue in the first year of tax cuts. The second year, the loss would rise to more than $8 million, he said.

“I believe that we would have trouble meeting all the service needs of this community,” Fischbach said. “We’d have to get additional revenue sources or cut back or even eliminate some services.

Bruce: Growth will pay

Bruce says the amendment would not create the dire circumstances opponents assert it will. He pointed to a county-by-county survey that shows pre-21 property-tax revenues in the state at $198 million. In five years, with 21’s cuts, the total would be $211 million, he said.

“That’s an increase after five years of these supposedly horrible tax cuts,” Bruce said. “Personally I think the growth will be even more.

“They talk about the loss of revenue. It’s not lost. I can tell you where every dollar of the tax cut will be found. It will be found in your purse.”

Amendment 21 would save married homeowners with two newer cars $555 in 2002 if they pay six taxing districts, according to a figure posted on the pro-21 Web site, www.taxcut2000.com.

“They’re saying it’s so horrible,” Bruce said. “I don’t think it’s horrible to allow working families to keep a little more of what they earn.”

Those savings would be good for the economy, he asserts, giving people more money to spend, in turn increasing businesses’ sales and profits. “More money means more consumer power, more consumer demand for (businesses’) products and services.”

Opponents say that rosy picture masks the impact of the amendment. An example of that impact can be seen right now in Weld County. Last November, Weld County voters gave the OK for a new library. But plans to build the facility have stalled. The problem, said Weld Library District Director Steve Cottrell, is Amendment 21.

The library district had planned to issue about $10 million in certificates of participation to fund construction of the 38,000-square foot facility. But since Amendment 21 surfaced, the district can’t find an insurance company to insure those certificates at an affordable rate.

Sam Mamet, associate director of the Colorado Municipal League, said certificates of participation are essentially lease-to-buy agreements backed by a tax-revenue stream. The amendment throws a monkey wrench in such agreements because it would cut the source of revenue, he said.

If 21 passes, it’s likely the new library won’t be built at all.

“If it does pass, then we can’t afford to operate the buildings we have without making drastic cuts,” Cottrell said. “We would have to cancel the project and start reducing services and staff. It would have a dramatic effect on the future of the library district.”

Fire districts smoked

Ken Dillman, treasurer of the Wellington Fire Protection District, is drafting two budgets for the fire district ã one without the tax cuts of 21, one with. The latter calls for some of the district’s long-term plans to become more like pipe dreams.

About three years ago, the fire district put together a 20-year plan that called for buying land behind its Wellington station, expanding the station house, adding paid firefighters and replacing costly engines and tankers.

“We’re going to lose approximately $75,000 in revenue the first year this is enacted,” Dillman said. “Based on my rough calculations, if Amendment 21 passes and we don’t go out and ask for a tax increase from the voters every year to replace the revenue we’re losing, we would not have enough revenue to operate in about four years.”

The loss of services could mean that residents who save $25, then $50, $75 and so on their tax bills may will end up paying it back in insurance premiums, Dillman said.

Berthoud Fire Chief Steve Charles also sees insurance going up for residents in his district if the tax cuts pass. Berthoud Fire has a second mill levy for $116,000 starting next year and lasting 10 years to lease-purchase a 75-foot ladder truck and a hose truck capable of pumping large volumes of water. The intent of buying the equipment was to maintain or lower Insurance Service Office ratings for Berthoud and surrounding rural areas.

Berthoud Fire’s rating is a 5, Charles said. Without the trucks, or a second fire station that would be built from a $2 million bond issue on the Nov. 7 ballot, the insurance rating would likely climb to a 6 or 7. With each rate increment, insurance increases an average of $210, Charles said.

Poudre Fire Authority is also bracing for an impact if the amendment passes. PFA estimates it would lose $400,000 in the first post-21 year.

“By the third or fourth year we’ll be into layoffs,´ said Division Chief Ron Uthmann.

Right off the bat, Uthmann said, PFA would likely implement hiring and salary freezes and eliminate any equipment replacement. But those are short-term fixes that will create bigger long-term problems, he said.

“We could survive the immediate impact,” he said, “but it’s the long-term stuff that kills you.”