Colorado government in need of extreme makeover, both parties say
By Leigh E. Rich
Presenting far more challenges than any number of television reality shows, the 65th General Assembly is gearing up for an extreme session, complete with a budget and a state that are in crisis.
According to statistics compiled by the state’s Senate Democrats, “Colorado is currently one of only 10 states to see fiscal health deteriorate.” That means “40 other states (in the nation) are doing better financially than Colorado.”
And while the state leads the nation in bankruptcies and is the third highest in terms of traffic congestion, it ranks last in childhood immunizations; 49th in K-12 revenue; 48th in K-12 spending relative to personal income; 46th in special education funding; 35th in high school graduation rates; 32nd in per-pupil expenditures, even with Amendment 23’s mandated yearly increase; and 30th in the nation in sending its students to college.
What’s more, “Colorado unemployment went from 75,000” in 1999 “to 146,844” in 2003, according to the U.S. Department of Labor.
All of which makes Colorado akin to a house “in total disrepair,” said incoming Senate President Pro Tem Peter Groff, D-Denver, during a “chamber chat” with reporters earlier this week.
But what are state legislators to do?
“We bring in the extreme makeover team,” Groff said.
That team will be led this session by the Democrats, who took over both state houses in November’s election for the first time since 1960.
Unlike the start of the last session that was marked by bills concerned with socially conservative issues such as gay marriage, this year Colorado’s statehouse has no choice but to focus on the nuts and bolts of state maintenance. Both parties agree that the first item on their lengthy “to-do” list is to balance the state budget.
After that, they say, will come Colorado’s economy, educational systems and health care.
But “there is no agenda” if the fiscal crisis isn’t solved, incoming Senate President Joan Fitz-Gerald, D-Golden, emphasized during a recent taping of *The Aaron Harber Show*.
“This will be handled very early in the session,” she promised. “We need to talk about how Colorado pays its bills. We have to pay our bills right now.”
Though there has been much talk of constitutional constraints that effectively tie legislators’ hands when it comes to the budget, a large part of the financial crisis involving a $263 million shortfall has been caused by “forces beyond our control,” as House Speaker-elect Andrew Romanoff, D-Denver, said at Monday’s taping and Lt. Gov. Jane Norton underscored Tuesday at the City Club of Denver’s first gathering of the New Year. Because of nationwide economic recessions, Norton said, Colorado experienced a 19 percent decrease in revenues in the last two years.
And when revenues are down, thanks to the 1992 Taxpayer’s Bill of Rights (TABOR) amendment, the state has less to spend, despite an improving economy. TABOR dictates that each year’s revenue limit—the amount of taxpayer money the state can retain—is based on the previous year. During recession years, this has a “ratchet effect” that in more prosperous years does not allow revenue retention to automatically return to pre-recession levels.
“Nobody really thought this mattered” when TABOR was passed, Norton explained, because everyone assumed revenue would grow.
Decreases in the TABOR surplus also have affected Colorado’s budget in terms of Amendment 23, which was passed in 2000 and mandates yearly increases in K-12 funding. It was “envisioned that this increase in spending would come out of TABOR surplus,” Norton said. Now, “this funding source has gone away.”
But new House Minority Leader Joe Stengel, R-Littleton, told Harber and fellow legislative leaders that the wobbly state budget goes beyond TABOR. “We’re fixating on TABOR when there are three other amendments”—Amendment 23, 1982’s Gallagher Amendment that divides the state’s property tax burden between residential and commercial entities, and 2000’s senior property tax exemption, which was effectively postponed by the 2003 Joint Budget Committee until 2006.
While members from both sides of the aisle agree with Fitz-Gerald and Norton that “job number one is fixing the budget,” how Colorado’s newest General Assembly goes about renovating the house it inherited is still open for discussion.
At Tuesday’s City Club meeting at the Brown Palace, Norton reviewed Gov. Bill Owens’ five-point budget proposal unveiled last Dec. 20, which includes retaining $500 million of the $540 million TABOR surplus expected over the next two years; investing $100 million annually in transportation projects, allowing the state to bond up to $1.7 billion; reducing the state’s income tax rate from 4.63 percent to 4.5 percent; securitizing Colorado’s almost $2.7 billion portion of the 1998 master tobacco settlement into an immediate lump sum of approximately $800 million to $900 million; and eliminating the ratchet effect during and following recessions.
According to Norton, the $500 million and a portion of the money from a tobacco securitization would go toward short-term budget fixes, and the remaining tobacco money and other plans would ease Colorado’s strain in the long-term.
Securitization is also necessary, Norton said, because tobacco consumption is on the decline and there’s no telling whether money owed by the tobacco industry will continue to be a “reliably funded source.”
But securitization is controversial and unpopular with the Legislature, said Sen. Maryanne “Moe” Keller, D-Wheat Ridge, during Tuesday’s chamber chat. A similar attempt by Republicans to securitize failed last year. And it is unclear whether TABOR would allow establishing such a rainy day fund with the remaining tobacco securitization money.
In terms of reducing the state’s income tax rate—an idea proposed by Romanoff last summer—Norton assured her audience that “Democrats and Republicans are really warming up to this.”
For his part, Romanoff reiterated his plans to reduce the tax rate as well as put a “dent in the (transportation project) backlog” during Monday’s taping, leaving Stengel to issue his now familiar retort: “That’s a sound bite again. … The devil’s in the details.”
But the new House speaker insisted that “the math’s not that complicated” and pledged to “share the details … with any devil you pick.”
Other than this brief partisan scuffle, it seems both parties—the governor’s office included—are looking at similar blueprints for the coming session.
“The governor’s given us a good starting point,” said new Senate Minority Leader Mark Hillman, R-Burlington. On the revenue side of the TABOR equation, he said there is no sense taking in money that merely will have to be given back 12 months later. On the spending side, however, Hillman asked, “Does it make sense? We are always going to increase the amount of money on K-12.”
Also on the table could be the business personal property tax.
“Colorado’s taxation system has not been overhauled for the last 40 years,” Fitz-Gerald noted.
Higher ed couldn’t be lower
In addition to the recent legislative hubbub about the state’s fiscal crisis, Colorado’s economy tops the lawmakers’ short list as well. But to attract more businesses to Colorado and turn around the state’s slowed job growth will take a major renovation, both parties say.
“We need to get a broader perspective,” Fitz-Gerald emphasized at the chamber chat. “What vision do we have for this state? Where are we going?”
According to Keller, the state’s direction should be more in terms of science and technology, specifically the biotechnology and nanotechnology industries, “and less in the direction of tourism.”
“Nanotechnology is considered to be the new industrial revolution of the 21st century,” Keller said. “We are on the cutting edge and we should be better placed.”
One possible way to attract more high-tech industries to Colorado and, thus, as Fitz-Gerald phrased it, “jobs that have the potential of going forward into the future,” is to fight for a National Science Foundation grant that is looking to create a deep underground science and engineering laboratory (DUSEL) in the United States. Currently, only two exist, one in Japan and another in Italy. Colorado’s Henderson Mine in Clear Creek County is one of eight proposed sites and is considered a frontrunner, the state’s Senate Dems say.
“Our biggest role” as legislators, Fitz-Gerald explained, “is to send a message to people in Congress that we are interested in doing this.”
However, it could be at least eight to nine months before a site is selected.
In the interim, members of both parties emphasize, Colorado needs to focus on its educational systems.
“Europe is ahead of us” in terms of high-tech industry growth, said Keller, who is concerned with the expansion of graduate education programs elsewhere. “We’re losing ground in that area.”
That won’t continue to happen on this session’s watch, Romanoff and Groff said this week as both pledged to rescue the state’s higher education system from the “brink of extinction.”
“There is a connection there” between education and Colorado’s economic success, Groff said.
In fact, Keller added, the top priorities voiced by several chambers of commerce in Colorado are higher education and the state’s overall infrastructure. Colorado businesses, she says, want an educated workforce and cutting-edge research at their fingertips in addition to a beneficial tax structure, reliable transportation and a high quality of living.
But the state’s education systems, from preschool to college, seem to be in trouble.
There is a paradox in Colorado, Norton explained Tuesday. The state has more college degrees per capita “yet we rank in the bottom third in the nation” in terms of how many of our high school students complete college.
“We are importing our talent when we should be growing it at home,” she said.
Additionally, 27 percent of Colorado’s students require remedial classes when they do enter college at a cost of $21 million to the state’s higher education system. Bipartisan legislation is being proposed this session that would improve high school students’ preparation for college.
And because of several “tragic deaths in our state by kids poisoning themselves,” Norton pointed to the need to “look at the cultural dynamics” around the use and misuse of alcohol.
“We’re in this mentality of extremism. We have extreme makeovers, extreme skiing. … We have got to crack this problem.”
Several legislative solutions will be included in this session’s agenda, such as increasing penalties for providing alcohol to underage drinkers, employing a beer keg identification system, and closing a loophole in the law regarding the use of fake IDs that would punish those using false identification cards to purchase liquor, not just establishment owners.
Revealing the sleeping giant
Despite the “huge challenges ahead of us this year,” including those related to higher education, K-12 per-pupil funding and job growth, “we want to make sure the package of Colorado does not look like the house that Peter described,” Fitz-Gerald insisted.
“We’re talking about creating a climate” that encourages businesses to relocate to as well as grow in Colorado, she said. “The days of doing the easy thing—the tax credit—is not here. … Sooner or later, we have to realize we have an interdependency” that requires “pursuing what it takes to keep Colorado in the foreground.”
As one example, Fitz-Gerald said, long-term viability may involve investing in preschool education if it’s shown that that will keep Colorado students in school through high school and college.
“This is bite-the-bullet time,” she added. “We’re going to have to shift priorities.”
“When we untangle this mess, (Colorado companies) are going to be able to grow their businesses,” Groff pledged, reiterating his oft-heard plea that the Democrats “are really Colorado’s true voice.”
And this session, he says, they will begin “to wake up the sleeping giant that Colorado is.” 
Rich, L. E. (2005, January 7). The house that recessions built: Colorado budget in need of extreme makeover. The Colorado Statesman, pp. 1, 13, 15.
