Part III: The “T-Word” Solution to State Budget Problems
Colorado’s budget may seem hefty at $17 billion, when actually, it is less than other states at comparable sizes. Simply, there is not enough money to meet the needs of the people, road upgrades and educational standards for a growing state. Colorado Confidential continues its discussion about the state budget with Wade Buchanan, president of the Bell Policy Center and the subject in Part III is taxes. Q: No one probably wants to talk about this in the legislature, but let’s face it, won’t we need to raise some taxes to really get a handle on how to meet the needs of education, transportation, renewable energy, etc. for a better Colorado?
A: To protect our quality of life and ensure Colorado families have the opportunity to succeed in the 21st century, we need to renew our commitment to the public structures and investments that underpin a competitive economy. That means we need top-notch public schools that prepare all kids for the future, colleges that are affordable and accessible, a transportation system and other infrastructure to serve a growing economy, health care services so that no family goes without the basic care, and more.
According to a recent report by the Metro Denver Economic Development Corporation, Colorado has the 4th lowest effective state and local taxes, the 2nd lowest business taxes, the 6th lowest state sales taxes, and the 2nd lowest residential property taxes. Being near the bottom in taxes and spending would be just fine if we were near the top in performance. But with a 30 percent drop-out rate, low college attendance rates, some of the most restrictive Medicaid eligibility, and a massive backlog in transportation projects, that simply is not the case.
So, yes, it seems to me that a permanent solution to this problem will probably involve raising taxes.
But the first thing we need to do is better understand where we are headed with revenues and expenditures over the next 6-7 years.
At the Bell Policy Center, with the help of the Colorado Children’s Campaign and the Colorado Fiscal Policy Institute, we are working to figure that out. We will project likely state revenues over that period based on current tax rates, and we will project where state expenditures are headed over that same period based on current costs and demographic trends. Only then will we be able to have a truly informed picture of whether there will be a gap between revenues and expenditures in the future
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