fiscal education network a project of colorado nonprofit association 1

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Fiscal Education Network

A Project ofColorado Nonprofit Association

Conversation Ground Rules• Understand the fiscal challenge facing Colorado – not

everyone is ready to “debate” solutions.

• “Kitchen table” conversation – everyone participates; no one dominates.

• Keep an open mind. Listen carefully and try to understand others’ point of view.

• Help keep discussion on track.

• It’s okay to disagree, but don’t be disagreeable.

Adapted from Harwood Institute for Public Innovation2

Introductions

1. Name

2. Hobby or what is your interest in this topic?

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Opening Questions

• What makes our community a good place to live?

• What public services and infrastructure are important to our quality of life?

• What have you heard about what’s going on with Colorado’s budget and funds for public services?

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Colorado Voters Must Be Leaders

Colorado is facing an unprecedented, long-term fiscal challenge. Even a strong recovery and sustained job growth over the next 15 years is not enough [to solve the budget problems]. (DU: Center for Colorado’s Economic Future)

The costs to maintain public services exceed the revenues to pay for them.

Coloradans have a unique responsibility to make decisions at the ballot box – budget fixes must be approved by voters. It’s our duty to make choices about how to balance low taxes and maintain public services.

Yet, we often go to lengths to avoid divisive “political” conversations.

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What’s the right thing to do?

We don’t trust government: Coloradans, on average, perceive that government wastes 42 cents of every tax dollar. Trust in public officials at historic lows.

We oppose more spending cuts: Majority of voters agree cutting vital public services during a recession hurts our families and our economy, while reducing our quality of life.

We agree with state funding priorities: Majority agree education, basic health care, public safety, senior services, highways and transit are underfunded. Any cuts should be temporary.

We’re not sure if now is the time to act: Majority of voters are concerned about raising taxes during a recession.

Review of surveys6

Coloradans Value Public Services

Coloradans voted overwhelmingly to defeat 60, 61 and 101 in Nov. 2010 (all tax cut measures).– Amendment 60: No 75% Yes 25%– Amendment 61: No 73% Yes 27%– Proposition 101: No 68% Yes 33%

60, 61 and 101 defeated in every county.– No vote > 60% on all measures in 56 counties– No vote on 60 & 61 > 70% in 53 counties

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Colorado Voters must Decide

“[T]he ball is back in the voters’ court. It now is up to the people of Colorado to decide what kind of place

they want their state to be.”

- Durango Herald, February 16, 2011

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Imagine this Hypothetical Situation

• Imagine your child’s or grandchild’s elementary school grows from 250 to 300 students.

• Imagine that there is no increase in the budget. The school has to serve 20% more students with the same amount of money.

• How would you manage? Would that be sustainable?

• That’s what’s happening in the state of Colorado.

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The State Has GrownSince 2001:• 800,000 more Coloradans

• 70,000 more students in K-12

• 35,000 more college students

• 150,000 more Medicaid recipients

• 2,500 more prisoners

Colorado Fiscal Policy Institute and U.S. Census

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Growth v Revenues

Colorado Fiscal Policy Institute

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Revenues Only Slightly Higher

Colorado Fiscal Policy InstituteChart prepared by Colorado Legislative Services staff

6.6 5.5 5.5 5.8 6.1 7.0 7.5 7.7 6.7 6.4 7.1 7.34.04.55.05.56.06.57.07.58.0

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012D

ollars in B

illions

Fiscal Year

General Fund Revenue

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Tax Collections Are in Decline

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Taxes are Comparatively Low

Legislative Council

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High Average Colorado Low$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$180.00

Colorado State Taxes per $1,000 of Personal IncomeCompared to Nation

49 of 50

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Taxes are Comparatively Low

Legislative Council * - Collected Locally

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Sales & Use (44 of 45) Individual Income (28 of 43) Corporate Income (42 of 46) Property* (27 of 50) Motor Fuels (32 of 50)0.00

10.00

20.00

30.00

40.00

50.00

60.00

48.35

39.51

20.91

52.20

6.70

19.68 20.12

3.29

0.002.89

10.89

20.74

1.55

29.82

2.900.00 0.00 0.00

8.71

0.33

Colorado State Taxes Per $1,000 of Personal IncomeCompared to the Nation

High Average Colorado Low 15

Political Consensus:Long-term, Structural

Problem

The state’s budget problems arise not just from recent difficult economic times, but originate from structural spending problems that allow recurring crises.

Colorado must implement policy changes that address the structural nature of the problem.

Independence Institute, Citizens’ Budget

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What is a structural problem?

A problem that won’t go away even if the economy fully recovers.

The costs of desirable, mandated and/or politically popular services and infrastructure exceed revenues.

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Family Example

Bills for housing, transportation, food, clothing, education and entertainment exceed annual income.

Options:– Reduce expenses– Work more hours/take on another job– Borrow – put it on the credit card

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State ExampleColoradan’s expectations for education, public safety,

transportation, health care and human services and other public services exceed revenues.

Colorado must balance its budget each year. No credit cards.

Legislative options:– Reduce expenses (except for mandates)– Raise fees and close tax “loopholes” (controversial)– Use one time money and accounting “tricks” to get through

another year (e.g. Federal stimulus; move payday)

Voter options:– Eliminate mandates (e.g. Amendment 23; redirect GOCO funds)– Raise taxes

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What happens when…

• The costs for public services exceed revenues?

• There are no prospects of new revenues?

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Public services must be cut…

Governor Hickenlooper letter to JBC and Office of State Planning and Budgeting

Populatio

n

Infla

tion

K-12 T

otal A

ctual

K-12 P

er Pupil

K-12 "S

hould H

ave B

een"

Higher E

d

Human S

ervice

s

Health C

are

Safety

/Corre

ctio

ns

-20.00%

-15.00%

-10.00%

-5.00%

0.00%

5.00%

10.00%

15.00%

4.50%5.40%

0.80%

-5.00%

-16.36% -16.44%

-3.70%

9.23%

3.72%

Change in Colorado 2007-08 to 2011-12

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A note about K-12 EducationProposed Cuts 2011-2012

Governor Hickenlooper letter to JBC and EdNews Colorado

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Budget Total Reduction

Per Pupil Reduction

% Change Per Pupil

% ChangePer Pupil“old 23”

Gov. Hickenlooper

$332 million

$497 -7.3% -11.4%

Legislature – JBC

$250 million

$384 -5.6% -10.6%

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Public services must be cut…

Gov. Hickenlooper letter to JBC

Population Inflation Natural Resources

Local Affairs Agriculture Governor's Office

Department of Administra-

tion

Department of Revenue

-70.00%

-60.00%

-50.00%

-40.00%

-30.00%

-20.00%

-10.00%

0.00%

10.00%4.50% 5.40%

-23.33%

-3.64%

-41.18% -41.18%

-63.64%

-38.95%

Changes in Colorado 2007-08 to 2011-12

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Public safety services must be cut...

• Fort Lyons prison slated for closure (saves $3 million)Eliminates 240 jobs in Bent CountyNote: Debated in Legislature 4/13

• Eliminate prison educational programs (saves $3 million)

• Reduce mental health services for parolees (saves $2.6 million)

• Reduce corrections administrative costs (saves $1.3 million)

Denver Post summary of Gov. Hickenlooper budget, February 16, 2011

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Recreation services must be cut...

• Close Bonny Lake State Park (Burlington)

• Close Switzer Lake State Park (Delta)

• Close Harvey Gap State Park (Rifle)

• Close Paonia State Park


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Health and human services must be cut...

• Reduce spending on youth corrections

• Close youth mental health unit at Fort Logan

• Reduce Medicaid payments to doctors and nurses


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Public employee pay must be cut...

• Cut state employee take home pay by 4.5%

• Third consecutive year no salary increases

• Second consecutive year reduced take home pay

• Reduce mileage reimbursement from 90% of IRS rules to 75%


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“Expect more cuts.”

“The state budget should expect cuts of the same magnitude in 2012, although not necessarily to

schools.”

- Gov. Hickenlooper’s budget director, Henry SobanetDurango Herald, February 16, 2011

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Permanent reductions to public services…(Goal: at least $1 billion)

Summary of proposed reductions(Legislative Actions)

Estimated savings(in millions)

Education cost savings $338.2

Health care cost savings $325

Corrections and miscellaneous cost savings 112.1

Total reductions $775.3

Independence Institute Citizens’ Budget

$224.7 million short of goal.

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Proposed reductions to education(Legislative Actions)


Impose a statewide cap on teacher salaries – no pay “Bump” for earning a Master’s degree

$137.6

Study ways to reduce K-12 administrative costs $112.3

Tax credits to enable students to attend non-public schools(tax credits less than state per pupil funding)

$21.3

End direct funding to University of Colorado and Colorado State University systems – provide student stipends instead(competition will increase school efficiencies)

$67

Total education reductions $338.2


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Proposed reductions to health care(Legislative Actions)


Return to 2007 eligibility requirements $218

Return to 2007 spending levels $25

Repeal expansion of public health care assistance $15

Raise health care enrollment fees for inflation $18

Change 3rd party payer system to health savings accounts

$28

Reverse increases in Executive Director’s office $21

Total health care reductions $325


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Proposed reductions to corrections and misc.

(Legislative Actions)


Reduce incarceration of non-violent offenders $78

Cut in half parolees sent back to prison for technical violations

$20

Change retirement plans from defined benefits to defined contributions

$10.1

Other miscellaneous savings $4

Total corrections and miscellaneous reductions $112.1


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Examples of constitutional changes(Requires voter approval)


Redirect funds for Great Outdoors Colorado to education, health care, corrections and human services (general fund)

$137

Phase out Old Age Pension Plan; roll into welfare (income and medical assistance for low income adults age 60 and over).

$105

Repeal Amendment 23 – funding for K-12 Education ??

Total proposed constitutional changes $242+


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Discussion Questions

• What do you think about these options for permanent reductions to public services?

• How would these changes in public services affect the quality of life in Colorado?

• To what extent do you think these permanent reductions are in the best interest of our community?

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What happens if…

• Colorado voters want to maintain public services?

• What are the revenue needs of the state?

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Colorado Spending

Colorado Fiscal Policy Institute, 2009

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Total (45th) K-12 Education (32nd)

Higher Education (48th)

Medicaid (49th) Highways (48th)$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$5,246

$1,747

$270

$1,016

$342

$4,387

$1,523

$149

$540$224

Per Capita SpendingColorado v U.S. Average

US AverageColorado

Colorado Spending

Colorado Fiscal Policy Institute, 2009

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Total (47th) K-12 Education (48th)

Higher Education (48th)

Medicaid (49th) Highways (48th)$0.00

$20.00

$40.00

$60.00

$80.00

$100.00

$120.00

$140.00

$160.00

$140.52

$50.67

$7.16

$27.74

$8.87

$106.49

$41.16

$3.52

$13.11$5.44

Spending per $1,000 of Personal IncomeColorado v U.S. Average

US AverageColorado

-$57

$161 $190 $132

-$299

-$481

-$568 -$585-$696

-$793

-$660

-$875

-$1,397

-$1,600

-$1,400

-$1,200

-$1,000

-$800

-$600

-$400

-$200

$0

$200

$400

Difference between CO and National Average

K-12 Per-Pupil Funding: Colorado vs. National AverageSource: National Center for Education Statistics

Gallagher Amendment Passed

TABOR Passed

Amendment 23 Passed

38Great Education Colorado

39Great Education Colorado

Transportation Revenues Losing Value

Colorado Department of Transportation

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K-12 Education Needs?

Education News Colorado

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A-23 2011-2012 2010-2011 Actual 2011-2012 JBC 2011-2012 Governor$4,600

$4,800

$5,000

$5,200

$5,400

$5,600

$5,800

$6,000 $5,912

$5,440

$5,190$5,108

State Funding K-12 EducationMillions of Dollars

Millions

K-12 Education Needs?

Education News Colorado

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A-23 2011-2012 2010-2011 Actual 2011-2012 JBC 2011-2012 Governor$5,800

$6,000

$6,200

$6,400

$6,600

$6,800

$7,000

$7,200

$7,400$7,300

$6,823

$6,439

$6,326

State Per Pupil FundingK-12 Education

Higher Education Needs?

Colorado Department of Higher Education

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Competitive Restoration Losing Ground Erosion Governor's Budget$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600 $1,500

$1,000

$760

$550 $519

State Funding for Higher Education

Level of Funding

Millions

Higher Education Needs?

Colorado Department of Higher Education

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Competitive Restoration Losing Ground$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

$10,000$9,199

$7,062

$3,776

State Per Student Fundingfor Higher Education

Transportation Needs?


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Status Quo Conditions

“C” Level of Service

50% of roads and bridges in good/fair condition7% of roads and bridges in poor condition

Transportation Needs?


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Highway Repairs Bridge Repairs Maintenance Total$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

$380

$31 $50

$461$500

$57$131

$688

$830

$276$203

$1,309

Additional Transportation Revenue Requiredby Level of Service

C+ B A-

Level of Service

Millions

Estimated Spending Needs for Select Service Areas

Service Area Goal Additional Need Source

K-12 Education “Old” 23 $722 million+inflation/year

Governor’s Estimate

Higher Education

Keep up with Inflation

$241 million/year Dept. of Higher Education

Higher Education

Restore lost ground


Higher Education

Nationally competitive


Health Care Universal Coverage

$1.23 billion/year Blue Ribbon Commission on

Health Care

47CU Denver School of Public Affairs

Estimated Spending Needs for Select Service Areas

Service Area Goal Additional Need Source

Transportation Current “C” level service

$461 million/year Dept. of Transportation

Transportation “B” level service

$241 million/year Dept. of Transportation

Transportation Service and corridor planning

$1.3 billion/year Dept. of Transportation


Estimated Revenues Per Tax Rate Change

Tax Type Current Rate

Tax Rate Change Est. Revenue

Individual income

4.63% Every 1% increase $1.0 billion

Corporate income

4.63% Every 1% increase $74.0 million

State sales & use

2.9% Every 1% increase $750 million

Motor fuels $0.22/gallon

Every 1 cent increase $29.0 million

Property n/a For every 1 mill increase

$88.0 million


Discussion Questions

• What do you think about these options to increase state revenues?

• How would these changes in taxes affect the quality of life in Colorado?

• To what extent do you think these tax increases are in the best interest of our community?

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Learn More

• BackstreetBudgeter.com by Engaged Public — www.backseatbudgeter.com • Bell Policy Center — www.bellpolicy.org

• Center for Colorado’s Economic Future (DU) — www.du.edu/economicfuture

• Colorado Department of Higher Education — http://highered.colorado.gov

• Colorado Fiscal Policy Institute — www.cclponline.org/fiscal_policy

• Colorado Tax Tracks — www.colorado.gov/taxtracks

• Independence Institute’s Citizens’ Budget — http://tax.i2i.org/citizens-budget

• U C Denver School of Public Affairs — www.ucdenver.edu/academics/colleges/SPA

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http://www.backseatbudgeter.com/

http://www.bellpolicy.org/

http://www.du.edu/economicfuture

http://highered.colorado.gov/

http://www.cclponline.org/fiscal_policy

http://www.colorado.gov/taxtracks

http://tax.i2i.org/citizens-budget

http://www.ucdenver.edu/academics/colleges/SPA

Learn MoreColorado Nonprofit Association

Renny Fagan: [email protected]

Mark Turner: [email protected]

Andrew Lindstad: [email protected]

(303) 832-5710Coloradononprofits.org

Fiscal Education NetworkJohn Creighton: [email protected]; (303) 682-0907

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mailto:[email protected]



http://www.coloradononprofits.org/


fiscal education network a project of colorado nonprofit association 1

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