Time to modernize Colorado’s fiscal landscape

Colorado has one of the most complex fiscal systems in the entire country. We are not, in our current form, adequately suited to deal with ever-changing economic realities. The Colorado General Assembly is currently debating a bill, Senate Bill 228, that would repeal an outdated budget formula and untie the state’s hands to get us out of the recession more quickly.

Known as the 6 percent provision, or Arveschoug-Bird after its original sponsors, the measure says that general fund appropriations can grow by only 6 percent each year. Money over that 6 percent is spent, but it can only be spent on transportation and capital construction.

It’s like having money in your pockets, but being told that the money in your left pocket can only be spent on a new car, while you have to pay for everything else—food, housing, health care, education, and more—with just the money in the right pocket.

Some will question whether the General Assembly can repeal Arveschoug-Bird. And the answer is yes, yes the General Assembly can.

The 6 percent provision simply limits how money is spent, not how much. Under current statute, in a good year, money over and above the 6 percent is still spent, but it’s mandated to be spent on important but inflexible areas, like transportation and capital construction. This hampers vital priorities like education, health care, public safety, higher education, local economic development, and safety net services such as job training.

Although TABOR requires that “limits on district revenue, spending, and debt” cannot be “weakened” without voter approval, the repeal of Arveschoug-Bird would not increase state revenues or spending. Therefore, the General Assembly has the authority under TABOR to repeal Arveschoug-Bird.

We have to keep in mind that for nearly two decades the state has been relying on an interpretation of TABOR from Legislative Legal Services, the legislature’s in-house lawyers, and that Legislative Legal Services takes an approach—as most any attorney takes—of avoiding a lawsuit for its client, in this case the legislature. However, that does not mean that the Legislative Legal Services’ interpretation is correct.

Additionally, after years and years of the legislature transferring money between different funds without going to the ballot, sending SB 228 to the ballot now would set a dangerous precedent. It would essentially mean that any financial transaction would require an election, forcing voters to choose between highways and health care, or between hiring teachers or prison guards. That’s what legislators were elected to do, and SB 228 makes sure they are held accountable for those decisions.

For years, we’ve heard from state officials, policymakers, advocates, opinion leaders, and community leaders alike, that Colorado can’t fulfill vital investment responsibilities because of our outdated constraints. Arveschoug-Bird came about in 1991, at time when even the authors of the provision admit they saw nothing but economic growth ahead for Colorado. Today though, there are economic realities that did not even exist eighteen years ago. Families and businesses must adapt to changing economic factors, and it’s long past time that state government adapts to the 21st century.

Critics of SB 228 falsely claim that repealing Arveschoug-Bird will lead to an explosion of government growth and turn Colorado into California. However, if the 6 percent were repealed, government cannot grow because the TABOR revenue limit would still be in place, meaning government would still only be able to spend what it takes in under the TABOR limit, just as it does now. Moreover, in California, 90 percent of the state’s budget is out of the legislature’s hands, and instead dictated and mandated by formulas, including a trigger for transportation spending.

Repealing Arveschoug-Bird does not raise taxes, it does not increase spending, and it does not eliminate nor weaken the TABOR limit for overall spending or the requirement of voter approval for tax increases.

What repealing this outdated provision does is ensure that we can maximize federal recovery dollars, avoid making current cuts permanent, and strengthen our long-term fiscal health so that we can get out of this recession quicker and so all Coloradans can get back on their feet.

Jean Dubofsky is a former Colorado Supreme Court Justice.