A handful of Democrats stood behind Sen. Rollie Heath, D-Boulder, as he announced today a citizens’ initiative to roll back tax rates to 2000 levels in hope of generating $1.63 billion over three years for higher education and K-12 education.
Heath said that he would ask voters to put in place the three-year increase just until analysts and lawmakers can figure out how to handle restraints on the budget by TABOR and Gallagher, amendments Heath said do not work well together. He emphasized that the statutory change would only be a stop-gap measure.
“I am taking a reasonable approach and saying in three years this is what we need to do to stem the tide and we need to come back to you, the citizens of the state, in two years and say ‘What do we need to do long-term,'” Heath said. “I want to emphasize that this is a stop-gap measure at best, and it is designed to stop the bleeding but it is designed frankly to force this conversation about what kind of state do we want to have.”
Heath said that general fund revenues are basically the same as ten years ago, yet the state has over 100,000 more students, increases to Medicaid, and 700,000 more people using the state’s amenities. “Can you always cut expenditures?” Heath asked rhetorically. “Yes, but at what cost.”
According to Heath’s office the initiative would raise $417.7 million in individual income taxes, $42.2 million in corporate income taxes and $77.7 million in sales and use taxes in 2012-2013 alone with $562.3 million and $593.7 million coming in fiscal years 2013-14 and 2014-2015 respectively.
The initiative would reinstate a sales and use tax rate of 3 percent which was cut to 2.9 in 2000. It would also increase corporate and individual tax rates from 4.63 percent to 5 percent, again back to where it was in 2000.
Gov. John Hickenlooper’s budget cuts to education forced Heath to action, according to the former businessman. Noting education as a prime driver for a state’s economy, Heath said the $375 million cut to education and the proposal to maintain cuts over subsequent years, was understandable but unacceptable.
“In my mind allowing this to deteriorate any further is just not an option and not doing something is not an option. I sat here way too long and did nothing… I think it is time for us to stand up and at least have the courage to ask the citizen jurors what do they think,” Heath said. “That is all I am asking them to do.”
Heath said that he had not yet brought on financial supporters to help back the initiative, but said, without stating names, that he had been speaking to a number of individuals who are interested.
Asked by the Colorado Independent how he would be certain that those dollars would not be used to prop up other programs supported by the general fund. Heath read off a portion of his bill that said that the revenue acquired would be provided to K-12 on top of amounts already apportioned to it. However, he admitted that money being fungible, it would be up to later General Assemblies to make certain the intent of the people was followed.
Republicans did not buy into Heath’s proposal. They said that businesses were not as interested in education as they were in tax rates and stability. They said they agreed with Hickenlooper on his cuts.
“Republicans believe that the solution to this problem is to live within our means and reduce the spending and when the recession is over our state revenue will recover,” Sen. Greg Brophy, R-Wray, said. “The fact of the matter is this, businesses migrate to states with low taxes and a reasonable regulatory scheme–period. …You can make this claim that businesses are interested in your education system, but what they are interested in is the environment that they can work in and is sustainable to the business.”
Still, Brophy said that working with Hickenlooper they believed they would not have to cut K-12 spending as much as is currently being proposed.
House Majority Leader Amy Stephens, said she agreed with Heath that education is an economic driver but said the answer is not higher taxes.
“I think Gov. Hickenlooper in this case is correct,” Stephens said. “This is where he is making the tough cuts, this is where he is making the tough choice. And this is where me and the Speaker and I stand with him and say we absolutely think that you are doing the right thing.”