COLORADO ECONOMIC FUTURES PANEL University of Denver

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COLORADO ECONOMIC FUTURES PANELUniversity of
Denver
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Colorado State Gross General Fund Income and
Excise Tax Collections
Note State Education Fund subtracted from total
income and gross general fund beginning in
FY01. TABOR overrefund subtracted from sales
taxes from FY00 through FY02.
SOURCE CO Legislative Council
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Millions
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Colorado Economic Futures Panel

• State general and cash funds fell by 1.2 billion
  (13) in FY 2002 and remained 500 million below
  FY 2001 levels through FY 2005.
• General Assembly and Governor unable to agree and
  take action to stop the bleeding during the 2002,
  2003 and 2004 legislative sessions.

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Colorado Economic Futures Panel

• In the summer of 2004, a group of concerned
  business leaders approached DU Chancellor Dan
  Ritchie asking for the states leading private
  university to examine the situation and suggest a
  long-term roadmap.

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Colorado Economic Futures Panel

• In November of 2004, a panel of accomplished
  citizens is appointed to undertake the task with
  the help of an experienced small staff.
• In July of 2005 the Panel issued a preliminary
  report concluding that regardless of the
  prospects for passage of Referenda C and D, the
  PROMISE OF COLORADO IS IN PERIL.

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Colorado Economic Futures Panel

• Panel members
• James R. Griesemer, Professor and Dean Emeritus,
  Daniels College of Business, University of Denver
• Robert G. Tointon, President, Phelps-Tointon,
  Inc.
• Richard G. Ballantine, Publisher, The Durango
  Herald
• Forrest M. Cason, CFO Senior VP, U. of Colorado
  Hospital
• Richard F. Celeste, President, Colorado College
• Cathey Finlon, Chairman/CEO, McClain Finlon
  Advertising, Inc.
• Jerry Groswold, Consultant/Retired
• Steven C. Halstedt, Managing Director, Centennial
  Ventures
• Bill Kendall, President, Center for Business
  Economic Forecasting

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Colorado Economic Futures Panel

• Panel members (continued)
• Harry T. Lewis, Jr., Owner, Harry T. Lewis Jr.,
  Investments
• Kim Patmore, Executive VP and CFO, First Data
  Corporation
• Mary E. Ricketson, Dean, DU Sturm College of Law
• Dick Robinson, CEO, Robinson Dairy
• Marguerite Salazar, President CEO, Valley-Wide
  Health Systems
• Thomas Williams, Williams Group LLC
• Jon Zeschin, President, Essential Advisers,
  Inc.

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Colorado Economic Futures Panel

• Panel Staff
• Charlie Brown
• Bill Hanna
• Jim Jacobs
• Phyllis Resnick
• Geoff Withers

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Colorado Economic Futures Panel

• Foundation Support
• Bonfils-Stanton Foundation
• Castle Rock Foundation
• The Denver Foundation
• Dobbins Foundation
• Donnell-Kay Foundation
• Joseph Henry Edmondson Foundation
• Gates Family Foundation
• David and Lucille Packard Foundation
• Piton Foundation
• Rose Community Foundation

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Colorado Economic Futures Panel

• Conclusions of preliminary report
• Our fiscal policymaking processes have created a
  tangled web of overlapping and conflicting
  policies
• Gallagher Amendment
• Bird/Arveschough general/cash fund limit
• TABOR Amendment
• Amendment 23
• Senate Bill 1 transportation spending
• Debt limits

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Colorado Economic Futures Panel

• Conclusions of preliminary report
• Our governmental systems are fragmented,
  disparate, and reflect a small state government
  and burgeoning local governments
• We know little about our revenue and spending
  systems and how they relate to our economy
• Our fiscal policies are inflexible because they
  are locked into a constitutional straitjacket

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Colorado Economic Futures Panel

• Facts from the preliminary report
• Colorado has the smallest signature burden
• (as a percentage of population) for
  initiatives among all direct initiative states

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Signature Requirements for Constitutional
Initiatives As a Percent of Population, Direct
Initiative States, 2004
Percent
SOURCE The Book of the States, 2004 edition
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Colorado Economic Futures Panel

• Facts from the preliminary report
• Since 1910, only California and Oregon have voted
  on more initiatives than Colorado

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Colorado Economic Futures Panel

• Facts from the preliminary report
• In the last 25 years, Colorado approved 47
  amendments to its constitution compared to only
  27 amendments adopted to the US Constitution in
  the last 217 years (the first ten the Bill of
  Rights were adopted as a package).
• Since 1990, Colorado voters have added over
  21,000 words to the Colorado Constitution,
  equivalent to nearly three US Constitutions
  including the Preamble and all 27 amendments.

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Colorado Economic Futures Panel

• Facts from the preliminary report
• National comparisons show Colorado 3rd fastest
  growing state in the 1990s, 7th in per capita
  income and 2nd in educational attainment at turn
  of century.
• Colorado is a very diverse state. Population
  growth has been centered along the Front Range,
  the I-70 corridor and mountain resort areas. Per
  capita income is concentrated in the metro Denver
  and mountain resort counties. Educational
  attainment levels mirror high income areas.

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(No Transcript)
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Bureau of Economic Analysis
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State Average 32.7
SOURCE U.S. Census Bureau, 2000 Census
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Colorado Economic Futures Panel

• Facts from the preliminary report
• Colorado has nearly 2,600 local governments the
  state places in the top third for governmental
  units
• Colorado has over 2,000 special and other
  districts. In national comparisons, Colorado is
  in the top ten for the number of special districts

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Governmental Units in Colorado, 2004
Total 2,456
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Colorado Economic Futures Panel

• Facts from the preliminary report
• Colorado counties have a per capita tax base
  capacity difference from high to low of more than
  20 to 1
• Residential property is 74 of the states total
  taxable value, but pays only 47 of the property
  tax burden
• At the time of the last tax study, only 10 units
  of government levied a sales tax, while today,
  252 units levy sales taxes

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Per capita assessed value and state sales taxes.
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Colorado Economic Futures Panel

• Challenges for the Future
• Globalization the loss of retail sales and
  knowledge-based jobs to cyberspace
• Spiraling debt state debt increased by 181
  from 1995 to 2003, local government debt
  increased by 28 over the same period

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Statewide Debt Outstanding1980-2003
Billions
SOURCE State Auditors Office and Division of
Local Government
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Colorado Economic Futures Panel

• Challenges for the Future
• Aging of the baby boom generation increased
  health care costs, softening of income growth.

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Medicaid Enrollees and Expenditures, FY 2004-2005
Source State of Colorado Department of Health
Care Policy and Financing
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Colorado Economic Futures Panel

• Challenges for the Future
• Hispanics are the fastest growing segment of
  Colorados population. They are dramatically
  under-represented in high school graduation rates
  and college degrees. K-12 and higher education
  are the keys to tapping this important resource.

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Share by Ethnicity 1980-2000
SOURCE U.S. Census Bureau revised 2000 by CO
State Demographers Office 10/04
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N-H Non-Hispanic
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Colorado Economic Futures Panel

• Conclusions
• Colorados fiscal policymaking environment is
  dominated by an out-of-balance initiative process
  resulting in a one size fits all constitutional
  straitjacket regardless of the states diverse
  circumstances and economic changes.
• The choice of amending the constitution in lieu
  of the statutes demonstrates a growing mistrust
  of elected officials and public institutions.

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Colorado Economic Futures Panel

• Conclusions
• Meeting Colorados future challenges will
  require
• Flexibility for state and local governments
• A strategic approach to public policy by elected
  officials and representatives

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Colorado Economic Futures Panel

• Colorados strategy and roadmap for the future
  should contain four objectives
• Keep the positive features of our current
  processes
• Restore trust in government
• Create a healthy balance between representative
  government and the citizen initiative
• Evaluate and address key problems

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Colorado Economic Futures Panel

• Summary of Recommendations

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Current Constitutional Provisionsto be Retained

• Citizen approval of new and increased taxes
• Right of citizens to petition their government
• Power of elected officials to allocate public
  funds
• Balanced budgets for state government

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Steps to Rebuild Public Trust

• All government agencies should provide citizens
  with annual performance reports.
• An Internet-based information system should be
  developed to provide taxpayers with an estimate
  of their annual tax burden, as well as a summary
  of the programs and services supported by those
  tax dollars.
• An independent fiscal policy research
  organization should be established.
• Term limits for public officials should be
  eliminated.

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Steps to Create Flexibility and Responsiveness

• Future fiscal limits or mandates should be
  enacted as laws, not part of the state
  constitution.
• Existing detailed fiscal provisions should be
  moved from the constitution and made into laws,
  with protections so those laws can be amended
  only under extraordinary circumstances.

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Steps to Create Flexibility (cont.)

• Any index used with spending limits or mandates
  should be relevant to the revenue or expenditure
  affected.
• The signature requirement for initiatives should
  be changed from votes cast for the secretary of
  state to votes cast for governor in the most
  recent election.

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Steps to Create Flexibility (cont.)

• For initiated laws, the signature requirement
  should be 5 of votes cast for governor passage
  should require a simple majority of voters and a
  supermajority vote of the legislature should be
  required for later amendment.

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Steps to Create Flexibility (cont.)

• For initiated constitutional amendments, the
  signature requirement should be 10 of votes cast
  for governor proponents should have to collect
  signatures equal to 10 of the district-wide vote
  for governor in a majority of the states
  congressional districts and a supermajority of
  voters would be required to approve.

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Steps to Create Flexibility (cont.)

• Referred constitutional amendments should require
  a supermajority of legislators to place on the
  ballot and a supermajority of voters to approve.

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Further Important Steps

• There are currently disparities between property
  taxes paid by businesses and individuals.
  Disparities in other taxes may also exist.
  Fairness and economic competition require tax
  burdens to be equitably distributed.
• Regional sharing of sales taxes among local
  governments should be considered
• state revenue sharing with local governments
• expanded cooperation among governments.

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Further Important Steps (cont.)

• Elected officials should strategically identify
  budget investments that will produce a
  significant return for tax dollars invested,
  generate long-term public benefits or avoid
  future costs.

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The Road Ahead

• Restoring Colorados promise will not be easy.
• Political will, risk-taking, and civic engagement
  will be required.
• But, the task is crucial if we are to pass to our
  children and grandchildren a Colorado future
  filled with promise.

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