Home > Awareness Alerts, District Finances, Informational > NOVEMBER 2010 COLORADO STATE BALLOT MEASURES – impacting school finance

NOVEMBER 2010 COLORADO STATE BALLOT MEASURES – impacting school finance

September 11, 2010

UPDATED:September 11, 2010 (original post on July 8, 2010 with First Drafts)

There are 3 ballot measures proposed for the November 2010 general election that if passed, would directly affect the financing of public schools in Colorado. DIRECTION 38! encourages all voters to inform themselves on these issues.

Please refer to Colorado General Assembly Website: www.leg.state.co.us/ for complete wording on Drafts and Blue Book print that includes Summary and Analysis, Current law, Arguments for, and Arguments against. (Ballot Analysis link)

AMENDMENT 60

(link to pdf of Blue Book printing for Amendment 60)

Property Taxes

Proposes amending the Colorado Constitution to:

  • repeal the current voter-approved authority of local governments to keep property taxes above their constitutional limits;
  • establish expiration dates for future voter-approved property tax increases;
  • cut local property tax rates for public schools’ operating expenses in half over ten years and replace this money with state funding each year;
  • require publicly owned enterprises to pay property taxes and reduce local property tax rates to offset the new revenue; and
  • provide new voting rights to certain property owners in Colorado and permit citizens to petition all local governments to reduce property taxes.

Summary and Analysis (go to link to view table)
Amendment 60 changes several aspects of Colorado’s property tax system to reduce the amount of property taxes paid by individuals and businesses to school districts, counties, special districts, cities, and towns. The measure phases in a reduction in school district property taxes over ten years and requires that the reduced
property taxes be replaced with state funding. Table 1 shows the projected impact of the amendment in today’s dollars on an average homeowner and commercial business, school districts, and state government, in both the first year and when the measure is fully implemented. The fully implemented impacts provide the best projections of the measure’s final effects.

In the first year, property taxes for school districts are expected to fall by $337 million, which the measure requires the state to replace. This represents a property tax reduction of the same amount for individuals and businesses. An average homeowner’s property tax bill is projected to fall by $87 and the property taxes for an average commercial business are estimated to fall by $1,181.

When the measure is fully implemented, the property tax reduction for school districts is estimated to increase the state’s obligation for kindergarten through twelfth grade education (K-12) by $1.5 billion, which represents a property tax decrease of the same amount for individuals and businesses. An average homeowner will pay $376 less and an average commercial business will pay $5,106 less in property taxes annually. In future years, the actual amounts will differ as inflation and growth increase the size of the economy, but the comparable budget impacts on taxpayers and governments are expected to remain consistent over time. Cities, towns, counties, and special districts will also lose property taxes, but the amount will vary by locality.

IMPACT:  Public schools in Colorado are funded from a combination of federal, state, and local sources.  In budget year 2008-09, local property taxes accounted for 37% of school district funding.  Amendment 60 requires all public school districts to cut their 2011 property tax rates in half by 2020.

AMENDMENT 61

(link to pdf of Blue Book printing for Amendment 61)

Limits on State and Local Government Borrowing and Debt

Proposes amending the Colorado Constitution to:

  • prohibit all new state government borrowing after 2010;
  • prohibit new local government borrowing after 2010, unless approved by voters;
  • limit the amount and length of time of local government borrowing; and
  • require that tax rates be reduced after borrowing is fully repaid.

Summary and Analysis

Amendment 61 places new restrictions on government borrowing. Currently, the state and local governments borrow money to build or improve public facilities like roads, buildings, and airports and repay the money over multiple years. Borrowing is also used for other purposes, such as financing loans for small businesses.

Beginning in 2011, Amendment 61 prohibits all future borrowing by state government and limits future borrowing by local governments, including cities, counties, school districts, special districts, and enterprises. The measure also requires that governments lower tax rates after borrowed money is fully repaid, even if
16 the borrowing was repaid from a source other than taxes. In certain cases, governments borrow money on behalf of private entities. Because the private entities are solely responsible for repayment, it is unclear if this borrowing is covered by the provisions of Amendment 61.

IMPACT: Restricts school district borrowing practices.  Future debts (like school construction or improvements) must be paid within 10 years, versus 20 or 30 years.

PROPOSITION 101

(link to pdf of Blue Book printing for Prop 101)

Income, Vehicle, and Telecommunications Taxes and Fees

Proposes amending the Colorado statutes to:

  • reduce the state income tax rate from 4.63 percent to 4.5 percent in 2011, and to 3.5 percent gradually over time;
  • reduce or eliminate taxes and fees on vehicle purchases, registrations, leases, and rentals over the next four years;
  • eliminate all state and local taxes and fees on telecommunication services, except 911 fees; and
  • require voter approval to create or increase fees on vehicles and telecommunication services.

Summary and Analysis

Proposition 101 reduces or eliminates various taxes and fees on income, vehicles, and telecommunication services. Table 1 shows the annual impact of Proposition 101 on three different households, and Table 2 shows the impact on government budgets.

Some of the reductions in Proposition 101 are phased in over time. The impact will be smaller in the first year and will grow in size over the next 15 to 20 years. Estimates of the impact in the first year, as well as the impact once the reductions are fully implemented, are based on today’s dollars. The fully implemented impacts provide the best estimates of the measure’s final effects. Although the actual dollar amounts will differ in the future as inflation and growth increase the size of the economy, the comparable budget impacts on taxpayers and governments are expected to remain consistent over time.

In the first year, the tax and fee reductions are expected to be $1.4 billion — $744 million in state reductions and $629 million in local government reductions. Once fully implemented, the impact is expected to be $2.9 billion in today’s dollars — $1.9 billion in state reductions and $1.0 billion in local government reductions.

IMPACT:  Vehicle specific ownership taxes and fees are one of several sources of funding for public schools in Colorado.  A reduction in specific ownership and fees will further reduce public school funding.

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