Fall is here, and a new measure that may affect school funding is on the ballot this November. Proposition CC asks voters to decide if the state can retain revenue it collects over the TABOR revenue limit, and use it to invest equally in three areas of the state budget: roads and transit, PreK-12 public schools, and higher education.
This is not the first time voters have been asked to consider a similar measure.
In 1992, Colorado voters passed TABOR (the Taxpayers Bill of Rights), which limits state tax revenue. Any increase in state tax revenue collected is limited to the growth of inflation plus population. TABOR also requires that revenue collected above the TABOR revenue limit be refunded to taxpayers. Due to the strength of Colorado’s current economy and strong revenue projections for the current year, experts are predicting a refund for taxpayers next year. In good economic times, when state revenue exceeds the TABOR revenue limit, the state cannot put the extra revenue into public services that may have been cut during bad economic times.
In 2005, voters passed Referendum C, which allowed a five year “time-out” from this refund. The measure was intended to shore up funding for schools and other public services following a period of budget cuts. Proposition CC differs from Referendum C in that it is a permanent change, with no sunset after five years. It is worth noting that since 1992, more often than not, state revenues have not exceeded the TABOR revenue limit, with less than 25% of those years generating any refund at all. In fact, when Referendum C was passed, it was intended to capture five years of revenue which exceeded the TABOR limit. But instead, when the economic downturn hit, revenues did not meet the limit in two of those years.
To understand the situation, it can be helpful to think of a family budget. If salary or wages decrease, the family would make cuts to their budget. But if their income increases, the family may add back the items cut from the budget, or put some money into savings. Now think about if their income could only increase by population growth (adding a child for instance), and the rate of inflation on consumer goods. Any salary earned above that, they would not be able to keep. This approach would only allow them to keep up with existing expenses…but what happens when there is an urgent new need, such as a serious illness or major home repair? This scenario helps to explain how Colorado got to its current situation of a soaring economy with growing revenues, yet our transportation needs total in the billions and the budget stabilization factor in school funding, or the amount we have fallen behind inflation, still totals over $500 million every year.
Most of Colorado’s city, school, and fire districts have already passed a similar measure that allows those districts to keep the revenue it already collects. If passed, one third of the revenue would be allocated for public schools towards non-recurring expenses for the purpose of improving classrooms.
Proposition CC does not change TABOR’s most well-known provision, which requires voters to approve all tax increases. TABOR also requires voters to approve any changes to the constitution and TABOR itself, which is the very reason why Proposition CC and all other funding related measures are on our ballots.