Propositions CC and DD: Context and Content

1. Propositions CC and DD: Context and Content Carol Hedges Executive Director

2. Colorado Has One of the Best Economies in the Country 4thfastest growing state according to personal income growth from 2016 to 2017 4thin Median Home Value at $348,900 compared to $217,600 of United States 11thhighest median household income among states. Colorado’s average family earns $69,117 compared to $60,336 of United States

3. But State Spending is Suppressed

4. Schools FY 19-20 Appropriation Kept up with inflation and per pupil funding plus an additional $150 million Still about $550 million below A23 levels

5. Schools—Teachers’ Salaries WY #2 $45,241 NE #36 $34,465 UT #15 $38,499 CO #51 $33,483 KS #25 $35,769 AZ #47 $34,473 OK #41 $32,010 NM #17 $36,405 Average starting teacher salary Rank of teacher salary to average salary in the state Source: NEA average starting teacher salary 2018 May OES by state average salary of all occupations.

6. Schools—4-day School Week In FY2018-19, 91 districts of 178 had all their schools on 4-day weeks, another 13 had at least one school in the district on 4-day weeks.

7. Higher Education FY 19-20 over $100 million increase for higher education to keep tuition flat.

8. Higher Education—Shift to Students Schools—Teachers’ Salaries

9. Transportation

10. Transportation

11. Explanation: TABORMajor Provisions Limits Revenue Collections Limits The Legislature’s Ability to Raise Revenue Limits Tax Options Sets Election Provisions

12. Explanation: TABOR (Article X Section 20)Major Provisions Limits Revenue Collections Limits revenue collections to a cap that, for the state, is set to the rate of inflation (CPI) and population growth---requiring rebates be sent to taxpayers if revenue exceeds that cap.

13. Formula Doesn’t Reflect Government Spending • CPI-U measures what consumers buy like food and housing but doesn’t accurately measure the cost of providing for the growing cost of services like education, transportation and healthcare. • The formula’s blunt measure of population growth doesn’t acknowledge that some of the fastest-growing populations place a higher demand on government services. Source: Institute on Taxation and Economic Policy “A Closer Look at TABOR”

14. Reasonable Means to Return Money “…districts may use any reasonable method for refunds under this section, including temporary tax credits or rate reductions” -Colorado Constitution—Article X Section 20 Currently there are 3 Rebate Mechanisms

15. TABOR Revenue and Cap Source: March 2019 Legislative Council Forecast

16. Legislators decide the method to return money above the cap Currently 3 Mechanisms: Senior Homestead Property Tax Exemption ($140m) Six-tier sales tax mechanism Temporary reduction in the income tax rate (If rebates are greater than approximately $400m)

17. FY2018-19 Rebate Distribution 25% of Colorado taxpayers would get zero dollars from an income tax cut because they have no income tax liability. Source: CFI analysis of Tax Year 2016 IRS SOI data

20. Prop CC

21. Limits Revenue Collections TABOR CONTEXT—Voters can approve keeping revenue above cap

22. Proposition CC Prop CC allows the state, beginning in FY 19-20, to keep and use all revenues collected under the current tax rates. Current law requires refunds of any revenue collected in excess of a cap that is equal to CPI plus inflation.

23. Proposition CC Language “Without raising taxes and to better fund public schools, higher education, and roads, bridges, and transit, within a balanced budget, may the state keep and spend all the revenue it annually collects after June 30, 2019, but is not currently allowed to keep and spend under Colorado law, with an annual audit to show how the retained revenues are spent?”

24. How will the retained money be used? In addition to the language in the ballot measure, requiring that it be used “to better fund public schools, higher education, and roads, bridges, and transit”, a separate statute divides the retained money equally among the 3 authorized uses.

25. Prop CC would impact $264 million in FY2019-20 and onward TABOR Revenue and Cap $428.5 million to be refunded Source: March 2019 Legislative Council Forecast

26. Rebates Foregone from CC Source: Legislative Council Sept 2019 Forecast

27. History of “De-Brucing” 174 of 178 school districts have “de-bruced” 62 out of 64 counties have “de-bruced” 85% of municipalities have “de-bruced” State debruced all funds for 5 years and some funds permanently in 2005 (Ref C)

29. Proposition DD Proposition DD authorizes sports betting in Colorado and creates a ten percent tax on the proceeds earned by sports betting operations. The revenue will be used to fund the administration and regulation of sports betting and creates the Water Plan Implementation Cash Fund.

30. Prop DD

31. Limits The Legislature’s Ability to Raise Revenue TABOR CONTEXT—Tax increase requiring prior voter approval

32. Who can get a Online Sports Betting License? • Licensed gambling/casino operations in the State of Colorado • There are currently 40 gambling licenses issued in Colorado • Licensees can, with voter approval in communities, have onsite casino sports books.

33. How Much Money Will it Raise? Authorizes up to $29 million annually Revenue estimates An Annual Average of $16 million for the first 5 years Prop DD, Fiscal Impact Statement, Colorado Legislative Council Staff, August 27, 2019

34. What will the money be used for? Projected FY 20-21 Distribution • Hold Harmless Fund – $960,000 • Office of Behavioral Health - $130,000 • Water Implementation Cash Fund - $14.9 M The types of projects that can be funded, including those addressing: water storage and supply, conservation and land use, engagement and innovation activities, agriculture, the environment, and recreation. Decisions made by the Colorado Water Conservation Board. Prop DD, Fiscal Impact Statement, Colorado Legislative Council Staff, August 27, 2019

35. Vision 2020

36. Vision 2020 working on Fiscal Reform Vision 2020 is a network of organizations and individuals whose missions are adversely impacted by Colorado’s outdated constitutional fiscal framework. This Public Investment Majority is working to develop a long-term coordinated and inclusive approach to make permanent and substantial change to Colorado’s constitution (Article X, Section 20) that will forever reshape debates on taxes and budgets in Colorado.

37. Network Overview • Policy: meets twice a month with the goal of exploring options for significant structural change to Colorado’s tax code • Communications: meets once a month, develop messaging to reframe conversation about taxes, government and community investment • Outreach: meets once a month to develop a strategy and connections to extend this conversation across Colorado While originally convened in 2015 as a 15 member planning group, Vision 2020 is now a network of over 50 organizations operating through three teams Policy, (seeking community input),Communications, andOutreach.

38. Questions? Colorado Fiscal Institute 720-379-3019 www.coloradofiscal.org Hedges@Coloradofiscal.org Join Our Emailing list