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Info on Ballot Issue 1C:
What 1C would do
Ballot Measure 1C was placed on the ballot by the commissioners in a public hearing on Tuesday, September 7, 2004.
1C would do the following:
- Permit Boulder County to retain and expend revenues collected in excess of the TABOR limits for 2004, up to a maximum of $4.7 million, depending upon data the county will receive in March of 2005 on inflation for 2004;
- Include the retained revenues from 2004 in the county’s fiscal year spending and property tax revenue bases for future years;
- Commits an annual appropriation of $500,000 from the retained revenues and increased base to nonprofit human services provided by nonprofit organizations in Boulder County.
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Background
The Taxpayer Bill of Rights (TABOR) was a state constitutional amendment passed by the voters in 1992, when the state’s economy was growing. TABOR limits how much revenue a state or local government can collect, and also how much it can spend. In a good economy, this is not a problem. In a bad economy, state and local governments must reduce their funding and that reduced funding level becomes the base for next year, including after the economic recovery.
The State Legislature failed to come to agreement on resolution on how to address TABOR’s “ratchet” effect, which continually lowers the amount of funds that a state or local government can spend in an economic downturn. Even if it had placed a measure on the ballot, it was not anticipated to address the TABOR revenue effects faced by counties. As a result of TABOR’s effects on revenues, the state is anticipating a $215 million budget reduction in 2005.
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1C’s impact on county budgets, programs, and services
 All levels of county government services would be affected if 1C were to fail passage. The county offers many services to county residents, some of which are mandated by the state. If 1C were not to pass, all of the estimated $4.7 million reduction would have to come from critical county services provided by our agencies and departments. The county provides services used by every resident in the county, whether they live in the cities or in the mountains.
County-wide services include road maintenance, sheriff patrol and county jail, juvenile center, alternatives to incarceration, juvenile and probation, the district attorney’s office, child and adult protective services, domestic abuse prevention, child support collections, public health restaurant inspection, communicable disease prevention, conducting all elections and countywide voter registrations, county open space maintenance and trails, oversight of county agricultural leases to private farmers, emergency management during disasters, land use protections, Workforce Boulder County job training and placement, Head Start, Boulder County Youth Corps, Senior Tax Work-Off Program, low-income housing, the county recycling facility, property assessment,
and the treasurer’s office.
If 1C does not pass, Boulder County would be required to return an anticipated $4.7 million in 2006 in the form of a property tax credit – about $24 for a home valued at $300,000, or $29 for each
$100,000 of commercial property
All of the $4.7 million would be reduced from this year’s and future years’ county budgets, which would permanently reduce County programs
and services.
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County retention of 2004 revenues
TABOR requirements make it difficult for county budget planners to predict in a timely way the amount of funds they are permitted to collect from property taxpayers.
The amount over the 2004 TABOR limit will not be determined until the Consumer Price Index/Urban (CPI-U) data becomes available to the county in March of 2005, but could be as high as $4.7 million. The other factor in the formula, county property valuation growth, is also not definite until the end of the year. 1C limits any county revenue retention to $4.7 million above the current TABOR bases; the actual amount retained and not refunded, and built into future years’ TABOR bases, could be less than that.
If the amount collected in 2004 above the bases is more than $4.7 million the excess over that $4.7 million will be refunded in 2006 even if 1C passes.
If 1C fails, all of the amount exceeding the TABOR limit would be returned to property taxpayers, as a credit to their 2006 property tax. A homeowner with a $300,000 home would receive a credit of around $24, if that is the method of refund chosen. TABOR permits any “reasonable” method of allocation of a refund to be used.
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How TABOR revenue limits are calculated: Growth plus Inflation, explained
Revenue limits mean that, despite the amount of money available to a state or local government, there are limits to how much money can be spent.
TABOR limits county spending to growth plus inflation. The CPI-U refers to the Consumer Price Index - Urban, which measures inflation. Boulder County’s CPI is based upon the cost of all commodities in the Denver-Boulder-Greeley area; it’s not broken out specifically for Boulder County. Therefore, the economies of Denver and Greeley are figured into the CPI affecting Boulder County.
“Growth” refers to new, real construction in the county (newly constructed buildings, both residential and commercial) as determined by the County Assessor’s Office.
However, this definition does not necessarily result in a revenue limit that correlates to population growth, which is often the factor that directly drives the need for County services.
Together, the CPI - U plus growth determines how much Boulder County can spend over the previous years’ base. Compare the budget with a reservoir of water: In drought years, likened to a bad economy, the reservoir dries up. However, in good years where the economy revives, instead of being able to fill up the reservoir, the water increases just a small amount each year, never quite catching up to its previous “full” level.
During recessions, when actual revenue often declines or falls significantly below the growth associated with population and inflation, TABOR’s revenue limit for future years gets ratcheted downward. When the economy starts to recover, however, local governments can’t readily restore services to pre-recession levels, because the new base from which spending growth is determined is the low revenue level from the recession. Hence, TABOR makes permanent the cuts to public services imposed during the bad years. Because TABOR restricts growth in good economic times and turns back the budget clock permanently during bad economic times, its long-term impact on state and local government revenues is significant.
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How TABOR hurts the county budget process: The budget planning dilemma
TABOR requirements make it virtually impossible for county budget planners to predict in a timely way the amount of funds they are permitted collect from property taxpayers.
TABOR requires that county budgets may only grow by the combination of inflation plus growth. Inflation is measured by the Consumer Price Index - Urban (CPI-U).
The statutory deadlines for counties require them to develop and finalize their budgets long before counties know what the actual CPI-U figure is.
Here’s how it works:
To adopt the county budget for 2004, which runs from Jan. 1 to Dec. 31 of 2004, the county is required by the state to estimate and certify what the CPI-U will be in 2004, in November of 2003. According to state law, the county must adopt its budget by December 15th of the previous year, based upon an assumption of what the CPI-U will be the following year. The county’s CPI-U is based upon inflation in the Denver-Boulder-Greeley area. In November of last year, the county predicated its budget growth on an anticipated CPI-U growth of 3.5% for 2004. Right now, it doesn’t look like the CPI-U will grow by that amount. The August report from the state showed that the CPI for the
Denver-Boulder-Greeley area was down 0.7%, which stunned economists.
The final CPI-U figures from the U.S. Bureau of Statistics for 2004 don’t come out until March of 2005. That’s
16 months after the deadline the state mandates for Boulder County to make best estimates of CPI-U for its 2004 budget planning!
The budget planning dilemma is this: If Boulder County over-estimates what the CPI-U will be, TABOR requires the county to return the over-collection to the voters,
unless the voters approve county retention through a ballot initiative. If Boulder County under-estimates what the CPI-U is, then the county has lost an opportunity to keep up with inflation not only for that year, but for all subsequent years’ budget bases.
Other counties have faced this dilemma since TABOR passed in 1992. The voters in a number of counties have passed TABOR modifying measures in the past ten years. They include Adams, Arapahoe, Archuleta, Denver, Douglas, Grand, Lake, Larimer, Otero, and Pitkin.
Voters in all of the major incorporated municipalities within Boulder County have voted to modify TABOR provisions significantly. They include Boulder, Broomfield, Jamestown, Lafayette, Louisville, Longmont, Lyons, Nederland, and Superior.
Human services funding has been losing revenue steadily.
The state has been cutting funds to human service agencies over the past years. Prenatal care to low-income pregnant women, previously funded through Medicaid while eligibility was being determined, has been cut. Funds for health care to low-income kids whose “working poor” parents don’t qualify for Medicaid has been cut. Mental health services have been significantly reduced as a result of funding cuts.
County Issue 1C reserves $500,000 of the retained revenues in the base for Boulder County nonprofit human services operations annually. This allocation is being made part of 1C because the county is committed to support of the area’s nonprofit human services agencies that provide safety net services to low-income, at-risk county residents who use health clinics, special transportation, homeless programs, domestic violence services, mental health counseling, and emergency assistance to help them get back on their feet and regain independence and dignity.
The demand for these and other safety net services provided by county area nonprofit agencies is growing significantly while at the same time state and federal resources for these agencies are shrinking due to funding cuts. If 1C did not pass, funding to the Developmental Disabilities Center, which is funded by a dedicated mil levy, would be cut back $234,000. The budget for the county health and human service fund and the social services fund, that were established through passage of County Ballot Issue1A of 2002 (the Imagine! and state backfill tax), would exceed $333,000 in cuts.
1C would provide a consistent and reliable county funding mechanism for nonprofit human service agencies.
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Editorial Endorsement by the Daily Camera
Wednesday, October 6th, 2004
Wrong time to cut
Yes on 1C, but county must come clean with voters
In 2003, we supported a ballot issue to allow Boulder County to retain an estimated $2 million in excess taxes and fees, rather than give refunds of about $15 on a $250,000 home. We argued the money would do more good collectively than in such small, individual increments, especially in a time of tight budgets.
But we also urged the county to come clean with voters in the future and present a broader measure to deal in the long term with this provision of the Taxpayer Bill of Rights, or TABOR amendment, rather than pecking away year after year.
Under TABOR, counties must guess at what the rate of inflation will be...more than a year in advance. If they guess too high, they must either a) refund excess revenue or b) ask voters permission to keep it. If they guess too low, the lower amount becomes the "base" for increases in every subsequent year. This "ratcheting" effect of TABOR means lowballing has long term consequences.
Voters rejected the 2003 measure, and now the county is back with a new request to keep an estimated $4.7 million in excess taxes and fees - a refund of about $24 on a $300,000 home - instead of asking voters to consider a general "deBrucing" measure.
That's frustrating. We understand the absurdity of a formula that requires predicting the future, but this is still no way to run government - or to treat voters.
Nevertheless, taking away money at this time could do long-term damage to services. Everything from law enforcement to roads to social services for the most vulnerable would take a real hit. Even services for the developmentally disabled, funded by a property tax approved by voters last year, would be cut because of the racheting effect.
And at a time when federal and state funds for such vital services are declining, it wouldn't be fair to endorse serious cuts simply to send a message to the county commissioners.
So, despite concerns about this piecemeal approach, we recommend a Yes vote on County Ballot Issue 1C.
But the county must stop playing this game. If we need revenue to fund services, then let's be honest and ask voters for a broader waiver for TABOR limits, or even seek a tax increase.
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Letter to the Editor, Daily Camera, by John Taylor
Matt Appelbaum's recent article in the Daily Camera (September 26, 2004) brought to the attention of Boulder County voters' issue 1C, a confusing but necessary ballot issue to be voted on this November. While Mr. Appelbaum's comments do not clearly either support or oppose this issue, he does suggest that the failure to pass 1C could result in a "cut (in) essential services". He seeks a "believable list of potential cuts" to lend support to the need for this issue.
Unfortunately, we at Imagine! are in the unenviable position of starting that list. If 1C does not pass, there will be an estimated annual loss of $240,000 for services to people with developmental disabilities in Boulder County. The irony here is that the voters two years ago approved these funds in a county wide election, funds that will now be lost because of TABOR. Because TABOR requires that countywide spending not exceed a formula that depends on the rate of inflation and growth in our community, even if the revenues are there to fund these services, and because the cost of living figure for Colorado is very much less than was projected a year ago, the amount of funding for services for people with disabilities in Boulder County will actually be less than one mill this year, resulting in a very real "cut".
We certainly have not seen this purported reduction in the cost of living for the people receiving services from us, their families, our staff, or our neighbors. Have you? The Board of Directors of Imagine! discussed the implications of TABOR and 1C on our services, and unanimously voted to support the passage of 1C. We hope that the voters of Boulder County will join us in voting yes for 1C this November.
John Taylor
Executive Director
Imagine!
Vote Yes on Boulder County Measure 1C - Tabor Bypass
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