DENVER -- Taxpayers might have outsmarted themselves in 1992 when a majority voted for a Taxpayers Bill of Rights, which is meant to limit tax increases and government spending.
But that's not all the bill does and its impacts are pulling down an already sagging state economy.
Legislators have been faced with the daunting task of cutting $840 million from the 2002-2003 state budget and schools, non-profit groups and health and human service agencies around the state are feeling the crunch.
"We're having to balance the budget by doing some fairly significant cuts," Sen. Ron Teck, R-Grand Junction, told a group of Craig and Grand Junction Chamber of Commerce representatives last week.
Teck serves on the Legislature's joint budget committee.
"The budget is all consuming," he said.
In Moffat County, the department of social services already has eliminated programs and lost $33,000 for its core services. Several other agencies have been affected by budget cuts and have responded by ending programs or services. The result is that people effected by an economic downturn have no place to go for help.
But it won't end here.
Legislators believe they'll have to cut $860 million from the state's 2003-2004 budget and will have to continue cutting $100 million a year for the next four years.
Federal funding to Colorado increased 9 percent last year but the federal government is in no position to bail out lagging states, Gov. Bill Owens has told Chamber representatives.
"We have to be realistic," he said. "Of course we want more money, but we can't take it in good conscience."
While funding won't increase for transportation, it is fairly immune to cuts because it is funded primarily through taxes appropriated specifically for transportation and through federal programs.
The state is required by the federal government to fund Medicaid and by Amendment 23 to fund K-12 education. The two take up a combined 60 percent of the state's general fund budget, meaning health and human services take the big hit during a budget crunch.
According to Teck, the Legislature has trimmed all it can from corrections facilities until sentencing guidelines are eased.
"Anything that's not mandated, we're probably going to look at eliminating," Teck said. "And we all know, once they've gone, they'll never come back."
The Taxpayer's Bill of Rights (TABOR) revenue-limit formula basically allows the state to keep last year's revenue plus an allowance for inflation and growth. For example, assume the state had a $100 revenue limit last year, coupled with 2 percent inflation and 1 percent population growth. That means its limit next year would be $103. But if a recession sent this year's revenue plummeting to $50, that would become the base for all subsequent budgets -- yielding just $51.50 for the upcoming fiscal year.
The state reported plummeting revenue because of lower-than-average tourism trade in 2002 and because stock market fluctuations meant people weren't paying as much capital gains tax.
Next year's allowable revenue growth will be based on this year's depleted revenue.
"TABOR allows us a 6 percent growth this year if we have any money and we don't have that money anyway," said Sen. Jack Taylor, R-Steamboat Springs. "Amendment 23 ties our hands because it designates a portion of that money."
Legislators estimate that in 15 years the only state-funded programs will be K-12 education and Medicaid.
That was the intent of the Taxpayers Bill of Rights.
In 1982, voters passed the Gallagher Amendment to guarantee that business would always pay 55 percent of the property taxes in Colorado while homeowners paid just 45 percent. To lock that 55/45 ratio in, the commercial assessment rate was permanently fixed at 29 percent of actual value, while the residential rate was adjusted every two years as necessary. Since 1982, residential values have risen much faster than commercial values -- which has driven the residential assessment rate steadily downward, from 21 percent in 1982 to about 9 percent today.
Prior to 1992, such fluctuations didn't pose a problem for local governments because they could just raise or lower the mill levy to keep revenue constant. A 65.8 mill levy in 2002 would yield the same amount that a person paid on 50 mills in 1982 -- though business owners would pay more and the homeowners less -- as Gallagher intended.
But even revenue-neutral increases were banned after the passage of TABOR unless they were authorized by a specific vote of the people. On the other hand, if shifts in the assessed valuations caused an increase in revenue above the limit allowed by TABOR, government was forced to roll back the mill levy to a revenue-neutral level.
State treasurer Mike Coffman estimates the Gallagher amendment has saved homeowners $7 billion in property taxes since 1987 but that lost revenue is blamed for much of today's budget crisis.
There are 57 TABOR provisions -- most of which lawmakers say tie their hands when it comes to the budget.
The city of Craig, Moffat County and the Moffat County School District all have been exempted from the provisions of the TABOR amendment by voters.
In 1988, the state paid 43.1 percent of K-12 public education costs. This year, the state is paying 59.7 percent. That costs the state's beleaguered general fund $400 million more than necessary to pay the 50 percent share of local school costs that authors of the school finance bill intended. That's about half of the estimated $859 shortfall in this year's general fund.
The increase stems from Amendment 23, passed by Colorado voters in 2000. Amendment 23 increases the per-pupil funding for public schools and total state funding for educational programs by the rate of inflation plus one percent and requires state aid under the School Finance Act to increase by at least 5 percent annually.
"We've been in a position where our hands are tied by voter-approved amendments," Owens said. "The fact is the state has done very well in funding education."
There has been tentative talk of loosening the straitjacket created by citizen-initiated constitutional amendments like TABOR and Amendment 23.
"I don't think we want to throw out all of either one of these but I think we need to tweak -- only we as a Legislature don't have the authority to tweak," Teck said.
Those kinds of changes would have to be approved by voters. The first chance to do that would be in November 2004 and the impact wouldn't be felt until the 2005-2006 state budget.
Meaning the state will face budget cuts for several years.
House Majority Leader Rep. Keith King, R-Colorado Springs, announced Wednesday that he will appoint a committee of lawmakers to modify TABOR and Amendment 23, along with the Gallagher Amendment.
King hopes the new committee will present several options to the Legislature, which would have to pick one and pass it by a two-thirds vote in order to refer it to voters.
"The problem with a legislative change is sole-issue legislation. If we introduce two and one passes, it may make things worse," Teck said.
Portions of TABOR are beneficial, such as the requirement that voters must approve any tax increase and those that regulate and limit government growth, said Rep. Gayle Berry, R-Grand Junction.
Coffman said he expects recommendations to be ready by the end of September. He said they would not be presented to the Legislature until next year and that nothing would be ready for the ballot until November 2004, if the Legislature were to accept the recommendations on changes to TABOR and Amendment 23.
"Any attempt to deal with one has to take the other into account," Owens said. "Any attempt to change one will have to be done in concert with the other."
Owens said he doesn't think TABOR would have passed if voters had fully understood its implications.
"I don't think if voters knew the whole story, they would've voted for it," he said.
Republicans have passionately defended TABOR and Democrats have vowed to fight tooth and nail any attempt to change Amendment 23 but most feel something has to be done.
"Times are tight," Teck said. "We're going to have to do something with the Constitution or we're heading for a train wreck."
Last week, the Joint Budget Committee said it will consider legislation to generate $200 million by selling 21 percent of the state's future annual payments from its tobacco settlement. The state's share of the national settlement is $2.9 billion. The $200 million would be placed in the tobacco trust fund, raided last year to help balance the 2001-02 budget. The fund, in turn, would be designated the TABOR reserve.
TABOR requires state government to maintain a 3 percent emergency reserve to deal with floods, fires and other disasters. While the state currently has the reserve, much of it is tied up in buildings and other non-cash assets, Coffman said.
The 2003-04 budget is expected to be presented to the full Legislature March 24.
Christina M. Currie can be reached at 824-7031, Ext. 210 or by e-mail at firstname.lastname@example.org.