Our State of Colorado is facing an ongoing, serious budget problem with our General Fund. The current legislature has availed itself of almost all the available one-time fixes, from raiding cash funds intended for other purposes, to the Federal stimulus money, which will end this year. All of this while growing our state budget by as much as 6%, in a year with minimal inflation and little population growth. And while hiring more state employees, despite a “hiring-freeze” and declining statewide employment. As a result, we are now facing a shortfall of as much as $1 billion in the upcoming fiscal year.
Some would like to cast this problem as “The Gordian Knot,” a convergence of three state laws: Amendment 23, that mandates increased spending on public schools; the Taxpayer Bill of Rights, that requires taxpayer approval for tax increases, and The Gallagher Amendment, that limits personal property taxes. In fact, many would prefer not to “Cut the Gordian Knot,” but to loosen your purse strings.
This past year, the legislature raised and imposed new state sales taxes, almost none of which will generate the amount of revenue projected, some of which will actually cost the state money to defend in federal court, and all of which will discourage new hiring. Despite those increases, we still face a substantial shortfall. Our solutions lie in responsible spending, not in asking Coloradans – currently suffering with 8% unemployment, and higher rates of underemployment – and Denverites, whose unemployment rate is almost 9% – to pay more of what they don’t have.
Ultimately, when the government says that it needs more of your money, it’s saying that the least important thing it can do with that money is more important than the most important thing you can do with it. In order to make sure that that’s true, every time the government says it, the legislature needs to take its jobs of setting priorities seriously.
- Return to Fiscal Discipline
Make no mistake, this is a problem with spending, not taxing. Referendum C removed limits on spending increases for 5 years, eliminating the so-called TABOR refunds, and produced much more revenue for the state than had been projected. The legislature not only managed to spend all of that income, but also built in new, unsustainable structural spending during the good times. This needs to stop
- We must hold the line on taxes
We must leave Coloradan free to invest, and to create new wealth and new jobs. We must repeal the job-killing sales taxes that reduce the money that businesses have to hire.
- We must increase spending transparency
While this legislature took some steps towards enhancing citizen oversight of government spending, it balked at others. We should take the final step – that so many other states have taken – and put the government credit card online so that even minor expenses are open to public scrutiny
- Address PERA Seriously
Right now, the state government pension fund is seriously underfunded. Despite an attempt to address this problem in the last legislature, continue to show a large, unfunded liability on its books. The plan assumes unrealistic returns on its portfolio. Ultimately, this means that we, the citizens of Colorado, will be called upon to fund these benefits.
We must transition PERA from an unsustainable defined-benefit plan that will ultimately bankrupt the state, to a defined contribution plan, where state workers, like the rest of us, are called upon to take responsibility for their own retirement security.
- Create a Serious Rainy-Day Fund
Our tax structure is heavily dependent on the individual income tax, which is more volatile than the economy as a whole. It would be unfair to increase the amount of the state GDP that the government takes from its citizens during a recession. Therefore, it is more important than ever that we create a reliable, serious rainy-day fund to stabilize the state’s finances.
