Colorado’s public revenue system, how we fund our state, is broken.
Unless our public leaders engage in a robust conversation and put forward complete solutions, then Colorado’s wealth gap will continue to grow on the back of an unsustainable stream of public funding.
Our organization, committed to seeing every Coloradan thrive economically, sees a public funding picture that is contorted by piecemeal, insufficient, and problematic “fixes” that simply aren’t getting at the root of our challenges. We think complex problems deserve comprehensive solutions.
We’ve become a la carte Colorado – toll lanes, sin taxes, sticker shock fees, and community-level pay-to-play schemes that leave so many behind. The result is a regressive tax code where the bottom 95% pay more as a percentage of their income than the top 5% of taxpayers do.
With the exclusion of a handful of zip codes, the odds are this tax code isn’t working out for you. For some, particularly in communities of color, it’s really not working at all. At best, based on what we know about our tax code, it has given most of us short-term gains over the kind of long-term wins the wealthiest top 5% are bringing home with every permanent tax cut we pass.
Colorado’s contorted funding picture
Next year, Colorado will offer 10 hours of free pre-kindergarten across our state. Voters approved this through Proposition EE in 2020.
Families throughout the state will face tragic dilemmas. How do they balance these limited hours with the remaining 30 or more they’re still struggling to cover? If they live in the metro area but work in Denver, they’ll be struck by a stark contrast.
While the city they work in offers one of the richest early childhood programs in the country, their own communities may offer a mere patchwork of offerings. This won’t just be a problem for these parents. It will be a dilemma for employers as well.
The reality is that parents face difficult and sometimes heartbreaking decisions about finding appropriate care. Nearly half of Coloradans live in childcare deserts, many of which are in the surrounding Denver metro area, and universal pre-k will not provide the relief intended. In extreme cases, parents consider moving, if they can afford to, simply to find care or are forced to forgo wages, leaving them with little power in making decisions about their child’s care.
This is emblematic of how we do things in Colorado: partial funding and just barely scratching the surface of the need, exposing regional inequities in the process. While Prop EE is a helpful step forward, it does not come close to solving the issue for working families. Funding it with the revenue from nicotine and tobacco is the best we can do right now.
Another example is Colorado’s water plan – key to our entire way of life in this semi-arid land and underfunded by about $100 million per year. Unfortunately for sports bettors, the tax Colorado just passed isn’t enough to get the plan across the finish line. Once again, a partial fix gives voters the vague belief we’ve solved the problem.
Of course, both of these needs sit on top of longstanding underfunding of our schools and other critical needs like transportation, human services, and higher education. We owe billions to our schools under a constitutional amendment that was gutted a decade ago. There’s just no room in an arbitrarily limited general fund for other needs, such as addressing climate change, mental health and criminal justice. We have nowhere to go but sin taxes and cost-shifting to those who can afford it least.
And for those trickle-downers amongst us who believe we should just slash taxes and grow the pie, remember that in Colorado the more we grow the wealth of the wealthiest Coloradans, the more that potential tax revenue pours over the TABOR limit.
We need comprehensive solutions, not incomplete questions.
The key to solving our revenue problem is not just finding the nearest revenue stream – it’s paying for things the right way, in ways that we can be proud of, and that work together in a better system. This isn’t as simple as repealing TABOR or as easy as sin taxing our way to prosperity. Solutions must be adequate, fair, and sustainable.
To solve these challenges, we can’t only look at the state income tax system, but our property and sales tax systems as well. In our property tax code, we need more tools and options. In municipalities across the state, critical questions are emerging about whether private equity firms should control large numbers of apartment buildings and pay residential tax rates. Should Google headquarters pay the same assessment rate as the local barber shop? Should short-term rentals be taxed at a different rate? Should we be able to charge different assessment rates on luxury residential homes? These questions are profoundly important parts of our school funding puzzle, as well as funding other public priorities.
Leadership and public engagement is needed.
These are complex issues, and that’s why we need Coloradans to really focus on the big picture and important questions. This year, the alcohol industry spent more than $30 million dollars on issues of how and where Coloradans can buy alcohol. Groups like ours who wanted to call attention to the peril of permanent income tax cuts couldn’t get a word in edgewise.
Many groups have interesting ideas for how to better fund our systems, but because of onerous signature requirements and the need for extremely expensive campaigns, they can’t afford to get into the conversation either. It’s an unfortunate reality that unless a measure is referred by our legislature, the asking price for a successful ballot measure in Colorado is about $5 million.
Colorado is one of the only states in the nation that requires voters to weigh in this heavily on tax policy and yet our attention, capacity and support for doing so is virtually nil. If we’re all-in on direct democracy and we expect voters to make difficult decisions about complex and interrelated fiscal policies, then we need to offer them complex and interrelated fiscal solutions backed up by the information they need to vote yes or no. If not, we need to give our representative legislature back some of its tax authority. Neither path is an easy one.
Colorado’s elected officials need to have an open and transparent discussion with voters about how we fund public priorities. When multiple ideas – many of which may be good, but incomplete ideas – are presented on the same ballot they often interact in unintended ways and often result in consequences that elected leaders must address later.
Piecing together a complete fiscal quilt in Colorado should be one in which voters are asked to think deeply and holistically about the future they want for the state and the appropriate ways of funding their vision.
That is the only way to truly honor the power that voters have in defining and paying for a Colorado where everyone can thrive.
Angela Cobián, of Denver, is an advocate, former teacher and director of the Denver Board of Education and a Co-Chair of The Bell Policy Center Board of Directors. Stephen Berman, of Denver, is a pediatrician, professor of Pediatrics and Public Health at the University of Colorado and emeritus at Children’s Hospital Colorado, endowed chair in General Pediatrics, and Co-Chair of The Bell Policy Center Board of Directors.
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