View From a Height

Rep. Lois Court sent out her blast email yesterday, trying to put in a few bullet points the fiscal tangle we're in.  Give her credit, she did mention Amendment 23.  But the bulk of the bullet points were about Bird-Arvescough, TABOR, and a claim that the Tax Foundation says we're 6th from the bottom in state tax burden.

Look again.  Maybe we're 6th from the bottom in state tax burden only, or in per capital dollars taken in by the state.  But what counts is state and local tax burden, since a large proportion of state outlays go to localities.  Unless you're freezing property taxes, local taxes can replace state funding, and vice-versa.

• In 2008, according to the aforementioned Tax Foundation, Colorado wasn't 46th (counting DC), it was 34th in percentage of personal income taken for state & local taxes
  
• According to a calculation I made from Census Bureau data, we were 40th in per capita dollars
• According to Governing Magazine, in 2006, we were 20th in dollars, and 38th in percentage of personal income taken for taxes

Lois also stated that "we can't borrow our way out of the problem."  No, but the state can - and has - issued debt to pay for capital projects.  Oh, has it ever.  Also according to governing, we're 6th in the country in state & local debt as a percentage of state & local revenue at 97%.  According to the American Legislative Exchange Council, we're 48th in debt service as a percentage of the state budget, at over 11%.

No, we can't borrow our way of the problem; we've borrowed our way into the problem.

Finally, Lois claims that "Taxes + Fees = Revenues = Services."  Well, sort of.  A number of programs and departments have done little more than hire more staff, and a considerable amount of state government goes not to providing services but to writing and enforcing regulation and to re-distributing wealth.

Posted by Joshua Sharf at 10:47 PM | Permalink | Comments (0)

What part of "Constitutional Amendment" do the Democrats have a problem with?

Now, they're floating a proposal for an end-run around TABOR using fees and cash funds as a Trojan Horse. You have to put together the various pieces, but there's a point where a piecemeal attack on TABOR turns into a successful nullification.

Warning: Extended Geekery Below

TABOR, the Taxpayer Bill of Rights, requires tax increases, or any change in tax policy that would result in a tax increase, to be approved by the voters. But fees can be increased ad infinitum, and according to a recent Supreme Court ruling, can be increased without limit, by the legislature, and the money taken in needn't be spent in any relation to the service on which the fee is levied. This means that money taken in by a vehicle registration fee, for instance, can be used for any purpsoe whatsoever.

Now when TABOR - a Constitutional Amendment - was passed, it stated that any pre-existing spending limits would be made permanent. Byrd-Arvescoug, passed in the late 80s, limited the general fund spending, discretionary spending, to a 6% per year increase. (This was passed as an attempt to head off TABOR, which limits overall spending increases to inflation + population increase, but TABOR passed anyway.)

There are also separate cash funds, supposed to be used for specific purposes, and funded by fees levied on government services and registrations. However, the legislature recently began raiding those funds - supposedly temporarily - to make up the general fund shortfall.

Now, Democrats in the legislature - along with the help of one Republican - are floating the novel legal theory that Byrd-Arvescoug isn't a spending limit, but an, "allocation strategy." This means they'd be able to pass a bill - without going to the people - to increase general fund spending by whatever they want.

And they'd fund that spending by taking the money out of cash funds, and raising fees until people screamed for a "more fair" allocation of the burden.

It seems that even in a recession, the least important thing the government wants to spend money on is more important that the most important thing you'll spend money on.

Progressively More Intrusive. Progressively More Restrictive. Progressively More Expensive.

Posted by Joshua Sharf at 5:11 PM | Permalink | Comments (0)

Yesterday, Senator Moe Keller, who has been working with the Department of Revenue in dealing with Colorado's $600 million budget shortfall for this year, actually said that they were being "forced to examine the core functions of government."

Nonsense. So far, nothing has been considered non-core enough to be cut to zero. In fact, as she pointed out later on in her testimony, 17 or 18 departments receive under 2% of their overall funding from discretionary spending, so cutting their money from the general fund entirely wouldn't barely affect their operations. Clearly, those departments are not subject to this committee's appraisal of the "functions of government."

On the other hand, this kind of rhetoric coming from a Democrat is a gift to Republicans, who ought to be talking this way.

Posted by Joshua Sharf at 8:09 AM | Permalink | Comments (0)

Governor Ritter and too many legislators have been counting on the oil and gas industry to protect us against a recession. Note that these are the same people who argue against shale oil on the basis of Black Sunday a few decades ago.

Here comes the bad news your mother warned you about:

Energy companies are slashing operating budgets as Colorado's once-booming oil and gas industry struggles with plummeting commodity prices, a tight credit market and an uncertain regulatory environment.

Hiring freezes have been implemented in an industry that just six months ago struggled to fill open positions. The effects of the cutbacks are trickling to other companies, such as law firms that provide service to oil and gas operators.

News flash: it ain't just the law firms. It's trucking companies, hotels, housing, construction, pipeline companies, metalworking, logging, and everything else upstream from the hole in the ground. It's not just severance taxes, guys.

They'll base the budget on a cyclical industry, but won't allow it to grow to take advantage of the upturns.

Posted by Joshua Sharf at 7:41 PM | Permalink | Comments (0)