Archive for category Colorado Politics

Nose. Face. Spite.

Tuesday’s elections here in Colorado did not quite mirror those in the rest of the country.  Yes, we elected Rep. Cory Gardner (R-Yuma) to replace Sen. Mark Udall (D-Birth Control).  But we also re-elected Gov. John Hickenlooper, and left the State House of Representatives in Democrat hands, while winning the statewide down-ticket races handily, and narrowly retaking the State Senate.  In fact, I don’t think many people saw the State House of Reps. as a reasonable goal before the election, so coming so close in that was really a surprise week of suspense.

Statewide, Republican House candidates outpolled Democrats by 189,000 votes, but Democrats will hang on, probably 34-31.  There were an unusual number of close races, and in a number of cases, the Libertarian candidate got more votes than the Democrat’s margin of victory.  This has led to the usual back-and-forth between Republicans and Libertarians, with Republicans blaming the Libertarians for running, and Libertarians arguing that their voters were never ever ever getting back together with Republicans.

The events in HD29 make a very strong case for politics as a team sport.  Libertarian-minded Republican Susan Kochevar got into the race late, and ended up losing by about 1500 votes to the Democrat, Tracy Kraft-Tharp. The Libertarian candidate got about 1900 votes.

Kochevar isn’t just about as libertarian as any Republican, she’s about as libertarian as any Libertarian.

In order to defend this, some Libertarians have shown a flexibility worthy of the doowopoly they complain about.  In the course of one FB post, a leading Colorado Libertarian argued that what happened in HD29 wasn’t the fault of:

  1. Susan, who had no control over what the Libertarian Party does – this is true
  2. The Libertarian Party, who nominated a candidate in that race before Susan entered, and were powerless to remove him from the ballot once nominated – this is also true, but with caveats
  3. The Libertarian candidate, who stayed in the race
  4. Those who voted for the Libertarian candidate

Apparently, the fact that 1900 people voted for a particular candidate just…happened.  Nobody was responsible for what they did.  As I understand libertarian philosophy, that conclusion may be in violation of it.

Number 2) is true, as far as it goes.  In fact, the main proponent of this argument points to the Republican party’s impotence in the face of Dan Maes winning the 2010 nomination for governor.  Yes, it’s true that, once nominated, Maes couldn’t be pulled from the ballot.  But the party went through a very public show of trying to persuade him to withdraw, and explaining that he wouldn’t be getting any monetary support at the expense of other who knew how to make fundraising phone calls.  The bulk of the party faithful, unhappy though they were with what appeared to be Tancredo’s opportunism, nevertheless ended up voting for him on the American Constitution Party line, because he seemed the only viable conservative candidate in the race.  The Libertarian Party apparently shrugged and said, “Well, what can we do?”

While it’s a lot to ask of a candidate to step back in favor of a more electable nominee who shares his political philosophy, it’s not unheard of.  People in Kansas may be able to advise us about that.

Even if we just focus on the people who voted for the Libertarian, we’re left with two options, neither of which really exonerates them.  Either: 1) they didn’t know what they were doing, and just voted for the guy with an (L) by his name, in which case they were voting tribally.  I am reliably informed – ad nauseum – by this same Libertarian figure, that only doowopoly voters do that.  So we know that can’t be true.

Which leaves us with option 2):  they knew what they were doing and deliberately chose NOT to vote to have a libertarian voice and vote in the legislature, because that person had an (R) by her name.  If that’s true, it means that the Libertarians came within 216 votes of costing them everything they say they want in the legislature.  That’s the margin that  Joe “Whistles-And-Call-Boxes” Salazar (D-Defenselessness) won re-election by.  Had he lost, Kochevar would have been the potential 33rd member of the Republican caucus.  Along with Justin Everett, they would have been the swing votes on every bill coming through the State House of Representatives. And according to Libertarian electoral strategy – such as it is – that’s exactly what they say they want.

This is exactly the fallacy of “statement voting:” votes aren’t to make a statement, they’re to elect a legislator.  The Libertarian candidate got 5% of the vote, but the Libertarians voters missed out on a chance to get 100% of the swing seat in the State House.

I’m not one of these people who thinks that just because it was a 3-way race in which the Democrat won with less than 50% of the vote, that automatically means that the Libertarian “cost” the Republican the election. Libertarians are pretty orthogonal to the two main parties: liberal on social issues, free-market on economic ones, more or less isolationist on foreign policy.  Historically, most Libertarians voters (if by “voters” we mean, “people who answer pre-election polls”) have ended up abandoning their third-party quixotism to vote Republican, making the ones who don’t look really stubborn.  Instead, maybe they disagree with both parties on enough matters to make them go their own way.  And indeed, Libertarian stalwarts have increasingly been making that case that the only way they can make a difference is by building up their own party’s vote.

But consider this.  Those who voted Libertarian instead of Republican took a major step towards devaluing the only currency they have – their votes.  If you’re a sliver of the electorate, and your entire strategy derives from being the 6% that might add to someone’s 47% to put them over the top, don’t you want to do everything possible to make sure one side doesn’t get to 50% of the electorate?  That’s what HB13-1303 and HB14-1164 (a.k.a. the Vote Fraud Weaponization Acts of 2013 and 2014) were all about, with their same-day registration and all-mail balloting.  In fact, here’s a staffer for none other than the very same Joe Salazar, at 5:30, not seeming disturbed at all by the idea that someone might vote in Oregon and vote in Colorado in the same election.

If there’s one party that’s determined to undermine the election process, and another that’s trying to preserve its integrity, why on earth would you not vote for the party that’s trying to make sure that whatever “statement” you’re trying to make with your ballot remains meaningful?

Consider on other point.  If you spend your time complaining that the doowopoly never nominates anyone libertarian enough for you, and then one party nominates a LIABLE (Libertarian In All But Label), and you continue to split your vote along partisan lines, then you’re setting up a bad incentive system there.  I realize that for some Libertarians, that too is a win, since it encourages a libertarian exodus from the Republican party.  Somewhere down that line, Nirvana may lie, but along the way you’re going to miss a lot of opportunities to make things better.

The irony is that Libertarians may have been saved from their inability to take yes for an answer by’s 216-vote margin in a race where they didn’t even run a candidate, and whose staffer seems determined to make them ever more irrelevant.

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Denver Jobs Market – Mile-Hi Unemployment

With the 2014 mid-terms mercifully (almost) behind us, it’s time to start thinking about the next cycle – the May 2015 Denver municipal elections.  All City Council seats and the Mayor will be up for election.  You can already hear them touting Denver’s remarkable recovery from the recovery, and no doubt will be citing the city’s reported 4.2% unemployment rate in their campaigns.

If only it were so.

Over on Watchdog Wire, I’ve been keeping track of the Colorado unemployment rate, if you adjust for the state’s increasing population and decreasing labor rate participation.  The situation is even more disconnected in Denver.  I’m going to go through this in some detail, because it’s worth doing that once.  Future posts will certainly shorthand this.

First, here’s the nominal unemployment rate, as reported in most of the media:

Looks pretty good.  We’ve been on a nice, downward trajectory since early 2010, and we’re almost back to pre-recesssion levels.  Also, take this chance to note the seasonality of Denver’s employment, mostly around the school year and holiday retail.

Unfortunately, the number of jobs hasn’t kept pace with the population growth:

Since the previous peak of employment, in 2008, Denver has 15,000 more jobs, but around 90,000 more people.  So why is the unemployment rate down?  Because a smaller percentage of the population considers itself part of the labor force:

At its peak, in June 2008, 57.1% of the population considered itself part of the labor force – meaning that those people were either working or looking for work.  Since then, the percentage has declined, even as Denver’s population has increased substantially.  What would the labor force look like if participation had kept pace with population growth?

That’s about 40,000 people who would be int he labor force who aren’t.  If we counted those people as being in the labor force, what would the unemployment rate look like?  Honestly, it looks like depression-level unemployment:

That’s right, just under 14.5% unemployment for the City and County of Denver, if people hadn’t exited the labor force in such numbers over the last few years.  In order for the real unemployment rate to match the stated unemployment rate of 4.2%, Denver would need to have created about 38,000 more jobs than it has.

When this calculation is made nationally, one counter-argument has been that as the Baby Boomers get older, Americans are basically aging out of the work force, with a higher percentage of the population 65 or older.  Those people naturally shouldn’t be counted in the labor force.  But that argument doesn’t hold for Denver.  In fact, the opposite is true.  Here in Denver, according to Census estimates, the percentage of the population that’s 18-64 has increased since the recession, as the city enacts pro-density zoning and planning policies:

It’s not much of a difference: 65% to 68.5%, but it certainly doesn’t sustain a story of large families and urban retirees.

Either many people working aren’t being counted in the employment figures, or else the employment situation – and thus the state of Denver’s economy, is far more fragile than we’re being told.  Either way, this has serious policy implications for the route that Denver’s government is taking.  The increase in population is not an accident – it’s the result of a deliberate policy of densification.  And if the increase in property values and “recovery” in jobs is for an increasingly narrow portion of the city, it also means that fewer and fewer people will be paying the higher and higher taxes needed to pay for politicians’ desiderata, making Denver less and less friendly for the middle class.

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Hickenlooper’s Bullying Attitude

John Hickenlooper likes to affect an aw-shucks demeanor, although there are times when his body language reminds me more of the Trivago Guy than a governor.  It’s disarming, and plays into his general image as a regular guy, and reinforces people’s impression that he’s a centrist.  True or false, that impression is one of his greatest political assets.

Unfortunately, Hickenlooper has a bit of a touchy streak when he’s treated like the politician that he is, and has been for over a decade.  That touchiness seems to have trickled down into his campaign.  Earlier this year, one of his staffers threatened to have Watchdog.org reporter Arthur Kane arrested when he showed up at a campaign office seeking income tax records that had been released to other media outlets.

And earlier this week, a campaign supporters pushed, blocked, and stalked Ellie Reynolds, a tracker for Revealing Politics.  As can be seen in the video below, one of Hickenlooper’s campaign workers, identified as Political Organizer Preston Dickey, follows Reynolds to a nearby coffee shop and then to her car:

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Hickenlooper can be seen standing literally a few feet away, either oblivious to or passively approving of the behavior of his supporters.  And here I thought we weren’t supposed to push girls around.

These are not isolated incidents. In March of 2013, Evan Ebel, out on parole, shot and killed Tom Clements, head of the Colorado Department of Corrections.  Hickenlooper was obviously deeply affected by the killing.  It turned out that Jack Ebel, Evan’s father, was a contributor to Hickenlooper’s campaign.  There is absolutely no reason to believe there was any connection between that fact and Evan Ebel’s parole.  Nevertheless, Hickenlooper got testy with 9News reporter Brandon Rittiman when Rittiman asked him about it on camera.  It’s unpleasant, to say the least, but it’s what reporters do, and Rittiman all but apologized for having to ask the question as part of his job.

I’ve had my own experience with Hickenlooper’s wrath.  After I recorded him admitting that Amendment 66 money could go to PERA, I have it on excellent authority that he blew his stack and took it out on a lobbyist who was unconnected to the incident.

The world is full of politicians who have tempers, and some of them can be very effective with them.  Lyndon Johnson was known to lose his cool – sometimes even for real, not just for effect – but generally had his way with a friendly Congress.  Any number of big city mayors know how to put on a show behind closed doors.  Knowing how and when to intimidate enemies and even friends is a valuable tool in an executive’s toolbox.  But that generally happens away from the cameras.  It isn’t done in public, and it sure doesn’t trickle down to how staffers treat the public.

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PERA Benefits Among Most Generous in the Country

Late last week, the redoubtable Andrew Biggs of the American Enterprise Institute published a state-by-state comparison of full-career public pension retirement benefits, in that organization’s monthly Economic Perspectives.  While news of PERA’s long-term fiscal problems won’t be a surprise to anyone reading this blog, it may come as a surprise to learn that Colorado ranks among the most generous states when it comes to that measure.

In nominal dollars, Colorado ranks fourth in the country, at just over $60,000 for an employee who spends his entire career in the state civil service.  The $60,420 per annum figure ranks just behind California and Alaska, and considerably behind Nevada’s $64,000.  When adjusted for the states’ relative cost of living, as calculated by the Council for Community and Economic Research, Colorado jumps well past both California and Alaska, into 2nd place.

Biggs also noted that the present value of these benefits can create “pension millionaires,” whose benefits exceed $1 million in today’s money.  When Colorado’s benefit is compounded at the maximum 2.0% COLA, and then discounted using a 3.5% risk-free discount rate, the total comes in at $1.25 million in 2014 dollars, assuming the beneficiary retires at 60 and lives to 82.5 years of age.

As Biggs points out, the need to stay for an entire career in order to collect benefits, at the same time that they forego Social Security benefits for those years, is a serious disincentive to retaining qualified and motivated public employees.  Those who leave – or arrive – in the middle of their career get shortchanged the most, since vesting and benefits are not proportional to the years served.

The problem here isn’t that workers are greedy, or that these benefits themselves are unsustainable.  It’s that the results are unfair to the majority of workers, who find their own benefits shortchanged in order to fund the retirements of full-career public servants.  A conversion to a defined contribution plan, where workers are always fully vested in their own contributions would help to solve this problem, and be much fairer to the majority of workers who do not spend their entire careers with the government.

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Dudley Brown, Self-Beclowns

I tend to avoid attacking Republicans here on this page, figuring that there are plenty of Democrats, and Democrats-with-bylines, who are paid to do that work.  Sometimes, though, you have an obligation to keep your own house clean.

Edgar Antillón, former Republican legislative candidate who now runs Guns For Everyone, a NRA Firearms Instruction company, suggested a “gay night” as a promotion.

Dudley Brown, head of Rocky Mountain Gun Owners, and would-be Colorado Republican kingmaker, posted this comment last night on Facebook:

This is beneath contempt, but it shouldn’t be a big surprise.  Brown has previously been implicated in a lawsuit over an anti-gay flyer used in a state senate primary.

Some will no doubt leap to Brown’s defense, pointing to his having been helpful in the two successful recalls, and the Recall Hudak Too campaign which resulted in her resignation.   That rather rings hollow when here he his, making an ugly attack on gays on the page of someone who’s on his side on his signature issue.  So much for building alliances and coalitions.

Worse than that, this kind of garbage makes principled opposition to redefining marriage, and principled support of religious conscience much harder to maintain.  It is not only possible, it is necessary, to make those arguments without rancor and hatred.  Brown’s very public bigotry makes it all to easy for those on the other side to caricature traditional conservative positions.

Full disclosure: I’ve had personal experience with Brown, although not over gays, but over guns.  Or rather, over his gun group.  In 2010, Brown took to my campaign Facebook page to complain that I hadn’t returned his candidate questionnaire, using that as the standard for calling me “not conservative.”  Given that the outcome of the race was just under 2-1 in favor of my Democrat opponent, Dudley’s efforts probably did not constitute her margin of victory.

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Act Now to Ensure a Solvent Colorado Public Employee Pension Plan

My introductory at-bat in the Independence Institute’s lineup at the Greeley Tribune:

The assumption of a 7.5 percent return masks considerable risk and volatility. Although catastrophic market years such as 2008 have historically been rare, smaller routine losses are to be expected. Those losses can force an already-underfunded system to eat its seed corn by paying benefits out of assets that should be earning returns.

As a result, considerable risk exists that in the future, the state will still need to cut benefits to those who are already retired, to raise taxes, to cut services, or all three.

There is a way out.

I suggest three reforms that would help solve the problem.  We’re no longer in a budget crisis.  The Democrats’ passion for spending every last dime that comes in on new programs that will cry poor in the next recession may fix that.  In the meantime, though, now would be a good time to fix this.

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What Does Morgan Carroll Have Against Middle-Class Health Insurance?

Democrat State Senate President Morgan Carroll is preparing to kill, for the second time in her legislative career, a bill that would provide Coloradans greater choice and lower cost in health insurance.  She has assigned to the so-called “Kill Committee” Senator Greg Brophy’s (R-Wray) bill that would permit out-of-state health insurance purchases for Colorado residents.  The “Kill Committee” is the State, Veterans, and Military Affairs Committee, which is stocked with reliable partisans of the majority party, who can be counted on to vote down unpopular legislation without its having to be assigned to a relevant committee of record.

Brophy’s stated hope is that somewhere, some insurance company will figure out how to offer an affordable plan, and that Coloradoans should be able to buy such a plan.

The idea has been offered before, both in Colorado and in other states, and it faces an uphill battle.

The National Conference of State Legislatures has compiled a list of similar state legislative efforts over the last few years, including some since Obamacare was passed.  This bill most closely resembles a law passed in Georgia, which permits out-of-state insurers to issue policies in that state.

A similar bill, HB08-1327,  was introduced in Colorado in the 2008 legislative session.  It was killed in Business and Labor Affairs, with then-Representative, now-Senate President Morgan Carroll casting the deciding vote against.  It would have permitted out-of-state insurers to sell here, regardless of whether they met the in-state licensing requirements.  By contrast, SB14-040 would require out-of-state insurers to meet licensing requirements for doing business in Colorado.  However, neither bill requires insurance policies to carry all of the individually mandated items that may raise the cost of health insurance here in Colorado by as much as 50%.

At the time, objections were raised that no interstate compact had been attempted; one wonders whether the Democrats will object to SB14-040 on the basis that interstate compacts are now explicitly permitted under Obamacare.

If so, Republicans can point to HB09-1256, and HB10-1163, both of which proposed Interstate Insurance Compacts, and both of which were killed in the Democrat-controlled legislature.  The former was passed out of committee as a study, and killed in the House Appropriations Committee.  The latter was permission to form an interstate compact, and was killed on a 7-4 party-line vote in the House State, Veterans, and Military Affairs Committee, the House “Kill Committee.”

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More On PERA & GASB

Today at PERA’s testimony in front of the Colorado legislature’s Joint Budget Committee, the subject of the revisions of GASB’s public pension accounting rules came up.  While PERA produced the usual song and dance about discount rates, one portion of the discussion was illuminating.

It turns out that each district that participates in PERA will have to show a pro-rated portion of that fund’s liability on its own balance sheet.  PERA makes a couple of comments about this; first, that this is an unusual liability that can’t be brought forward, and second, that there’s nothing that the district can do to reduce it.  The first comment is the usual stuff that public pensions always use to justify their higher discount rate.  The second requires a little explanation.

You need to remember that the unfunded liability is PERA’s, and it’s only being distributed for accounting reasons to the various districts.  The PERA funds are managed by PERA on behalf of the individual members, not on behalf of the districts.  The districts have an annual required contribution based on the salaries of the individual PERA members working there, but that’s it.  Their contributions go into the appropriate PERA fund, and become the property of PERA.  There’s no “JeffCo School Account” at PERA, or “Mesa County Employees” account.

Which means that there’s also no way for the individual district to discharge it own portion of PERA’s unfunded liability, even if PERA were permitted to take additional contributions from employers, which it’s not.

Suppose the School Fund has an unfunded liability of $10 billion.  Suppose 5%, or $500 million of that, is attributable to JeffCo School.  And suppose JeffCo, in a Herculean effort, raises $500 million in taxes to pay it off, and ensure that they never have to worry about their portion of PERA’s unfunded liability again.  JeffCo School cuts a check to PERA for $500 million.  And that money goes into the Big Barrel called, “PERA School Fund,” reducing its unfunded liability by 5%, to $9.5 billion.  And the next year, JeffCo’s Schools gets a Thank You Note, along with a notice from PERA that they are responsible for 5% of PERA’s School Fund unfunded liability, or $475 million.  That’s what PERA means when it says that this is a unique liability for districts – they can’t really do anything about it on their own, but there it sits, on their balance sheets, screwing up their ratios.

Wait, ratios?

Yes, ratios.  It turns out that the Colorado Department of Education does a Fiscal Health Analysis on the various school districts, and a key part of that analysis is certain ratios, three of which (Asset Sufficiency, Operating Reserve, and Change in Fund Balance) depend on the districts’ General Fund Balance.   CDE hasn’t disclosed yet how they’ll deal with this change, but if it were up to me, I’d more or less ignore it in that analysis.  The liability really belongs to PERA, not to the district, and since the legislature will ultimately fix (or not) the problem, it’s almost impossible to know how it relates to any district’s current demographics, employment, or finances.

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Greg Smith, and PERA’s Survivability Analysis

Last Thursday, Colorado PERA Executive Director Greg Smith gave his annual SMART Act testimony to the Joint Finance Committee of the Colorado General Assembly.  Since 2012, all departments of the Colorado state government have been required to testify during the interim concerning their operations, their efficiency, and the degree to which they are fulfilling their mission.

PERA recently changed its assumed long-term rate of return from 8% to 7.5%.  In light of that change, its amortization period – the time when PERA will have no unfunded liability, assuming a constant rate of return – has grown from 30 years, probably to something near 40 years.

During the Q&A session, State Rep. Lori Saine (R-Dacono) asked Smith about using a Monte Carlo simulation to test PERA’s long-term soundness.  As described in more detail here, averaging a given return over a period of time isn’t the same thing as getting that rate of return every year.  PERA’s portfolio might well average 7.5% over 40 years, and still go bust because its returns in the next few years are below average, leaving to try to make up the difference from a lower balance.  Rep. Saine was asking if PERA did or could run a simulated 40-year set of returns, and see how often the fund went bust and how often it stayed solvent at the end of that 40-year window.

Mr. Smith replied that yes, they do Monte Carlo simulations, and then proceeded to describe not those, but instead a sensitivity analysis available in the Comprehensive Annual Financial Report (CAFR).  The sensitivity analysis is something else altogether.  It looks as what happens to PERA if the returns over 40 years are 6.5%, 7.5%, 8%, up to 9.5%, but it still assumes a constant rate of return.  This is a completely different analysis, one that admits the possibility of lower-than-expected long-term returns, but ignores the danger in a few years of very low short-term returns, or even a couple of years of severe losses.

Monte Carlo simulations model the year-to-year variability in return that is an inherent function of risk.  As a result, even funds that appear to be well-funded, or that appear to have a long-term path to being fully-funded, can show low likelihoods of staying solvent through their amortization periods.  Doing such an analysis helps to prevent unpleasant surprises, and is to be preferred to a simple sensitivity analysis such as the type PERA performs and publishes.

Regardless of one’s preference, the two shouldn’t be confused for each other.

You can hear the entire exchange here:

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Devolving the Gas Tax

Over at Complete Colorado, the Independence Institute’s Dennis Polhill writes in support of a proposal to devolve the lion’s share of the federal gas taxing authority back to the states, and remove federal restrictions on the states:

The Transportation Empowerment Act, introduced by U.S. Sen. Mike Lee, R-Utah, and Rep. Tom Graves, R-Ga., gradually would lower the federal gas tax from the current 18.4 cents to 3.7 cents per gallon over five years. The legislation also would lift federal restrictions on state departments of transportation.

Not only would devolving the federal gas tax to the states result in a major boon to Colorado roads and bridges, it also would honor a promise made to the American people more than 50 years ago. In 1956, Congress passed the National Defense Highway Act to construct the Interstate Highway system. The temporary federal gas tax was promised to expire when construction was completed.

For all practical purposes, interstate highway construction was finished in 1982. Unfortunately, taxes almost never go away, or get smaller. Nor do government agencies or programs. Coincidentally, 1982 marks the same year roads outside the interstate system became eligible for federal funding. By tripling eligible mileage, the U.S. Department of Transportation used road revenues to fund other things more aggressively. Increasing amounts of gas tax revenue were siphoned to fund non-road programs, and congressional earmarks mushroomed.

For Colorado voters, the salient point is that we’ve been shorted on the deal, sending five cents per gallon to Washington that we never see back.  There was a time when federal development of large-scale road projects made sense, in order to avoid things like the Kansas Turnpike dead-ending in an Oklahoma field, because Oklahoma couldn’t get its act together:

But given that much of this money isn’t going to roads any more, anyway, putting an end to the Colorado-DC-Colorado round trip makes sense.

It’s certainly better than this monstrosity from Rep. Earl Blumenauer (D-OR) that would add 15 cents to the federal gas tax in order to make up for the money that they’re siphoning off to pet projects, a prospect he doesn’t want to admit to:

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