Denver Mayor Michael Hancock’s Lack of Vision

The following is a Guest Commentary published this morning in the Denver Post.  For the uninitiated, since 1992, Colorado has had a law on the books called TABOR, or the “Taxpayers Bill of Rights.”  The bane of tax-raising legislators statewide, it limits revenue growth to inflation + population, year over year.  In the case of cities, this means that a city  may only be entitled to keep a portion of the mill levy on a property’s assessed value, returning the rest to taxpayers. TABOR includes a provision known as “De-Brucing,” after TABOR author Douglas Bruce, whereby the residents of a district may opt out of those limitations, and allow the city to keep the full mill levy on the entire assessed value of a piece of property.  To date, Denver has not done so, and this year, Mayor Michael Hancock is proposing that the City Council approve a referendum for Denver citizens to do just that.

At the invitation of the Independence Institute, I wrote the following piece, opposing the proposed tax measure:

UPDATE: The Post edited the piece somewhat for space.  An earlier version of this post just used what they printed.  I’m replacing it here with the slightly longer version that was submitted to them.

Denver’s a big city, a major element of Colorado’s economy, and of the Rocky Mountain West. And its governance is not for the faint of heart. But the Hancock Administration is not asking the hard questions, Instead the administration is seeking the easy way out of a budget deficit through a proposed permanent property tax increase for the November ballot.

Instead of proposing bold changes to Denver’s fiscal structure, Mayor Hancock has opted to tinker around the edges of city finances, and stick Denver homeowners with the bill for his lack of vision.

Denver is just beginning to recover some of its housing value.  Yet, only a month ago, the Denver Post reported that “another wave of foreclosures appears to be looming.”  A sudden increase in property taxes strikes at the heart of households’ precarious financial stability, even as government take a bigger bite of homeowners’ slowly increasing equity.  Renters would also be affected, as property owners pass along the increased expense.

The mayor’s proposal assumes that rising home values necessarily mean rising incomes.  But the Bureau of Labor Statistics reports Denver’s weekly income fell nearly 5% in 2011, 305th out of 323 major counties surveyed.  The mayor’s mill levy override scheme would mean an immediate property tax increase of 20% for households who are still finding it difficult to make ends meet.

Denver’s unemployment rate remains stubbornly high, at 8.7%.  The Mayor’s Structural Financial Task Force cites a failure to create jobs as one reason for lower revenues.  That’s hardly a reason to penalize the employed and unemployed alike.

Another of the mayor’s proposals, eliminating the business personal property tax for new purchases, is a smart and welcome revenue enhancing move, but merely shifting the tax burden from struggling business owners to struggling families – often the same people – will leave us no better off.

When the government proposes a tax increase, it’s claiming that the least important thing it can do with that money is more important than the most important thing you can do with it.

Many households’ finances are just beginning to stabilize after years of uncertain employment.  People have savings to rebuild, retirements to plan for, and children to feed, clothe, and put through school.  Maybe even take the odd vacation they’ve been putting off for years.

The government has a moral obligation to exhaust all reasonable efforts at cost savings before asking taxpayers for more.  But the mayor hasn’t just “gone small” on savings, he’s also “gone vague.”  With the exception of specific personnel moves, the overwhelming proportion of savings includes studies and promises to find cost savings, rather than actual cost savings.

The mayor’s proposals to increase retail sales and identify unused parcels of land assume that private developers are incapable of doing this themselves.  At a recent hearing on the redevelopment of the old Health Care District near 9th Ave. & Colorado Blvd., the developers identified that parcel as one of the most desirable retail spaces in Colorado.

The mayor’s rejection of specific fees for libraries and trash collection may avoid taxpayer ire, but it’s hard to escape the feeling that the decision had more to do with avoiding the accountability imposed by earmarked revenues.

Genuinely bold proposals would include privatizing or outsourcing such city services as vehicle fleet maintenance, building and road maintenance, and park maintenance and rec centers.

Big city Democrat mayors have championed similar moves across the country, including Rahm Emanual in Chicago, Antonio Villaraigosa in Los Angeles and Alvin Brown in Jacksonville.  Newark Mayor Cory Booker has been at the helm of an astonishing and ongoing turnaround of that troubled city.  Facing a fiscal crisis during his first term, Mayor Hickenlooper made ends meet without resorting to tax increases.  One reason he became governor was his understanding that Colorado has “no appetite” for tax increases.

In California, where cities like Stockton and San Bernardino have declared bankruptcy due in part to crushing public pension obligations, voters in San Diego and San Jose voted overwhelmingly to significantly reform public employee pension and health plans.

Earlier this year Newark’s Mayor Booker was the featured speaker at the Colorado Democrats’ Jefferson-Jackson Day Dinner.  While he spoke largely about his personal story, he no doubt talked city business with Mayor Hancock privately during his visit.

Unfortunately for the citizens of Denver, Mayor Hancock’s proposed permanent property tax increase for the November ballot shows that he wasn’t listening.

Denver voters should recognize this proposal for the lost opportunity that it is, and instruct their leaders to try again.

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