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Referendum C: Colorado Economic Recovery Act, HB 05-1194

Referendum D: Financing of Critical State Needs, HB 05-1333

 

Overview: Colorado Economic Recovery Plan

On November 1, 2005 Colorado voters will be asked to approve Referendum C and Referendum D, ballot measures dealing with the state’s fiscal crisis.  The ballot questions represent the compromise reached in March between the state Legislature and the Governor and together are called the Colorado Economic Recovery Plan.  It is a bipartisan plan and will be supported by the broadest and deepest grassroots and business coalition in the state’s history.

 

Referendum C

Referendum C does three simple things that will help Colorado recover from the slumping economy and steep drop in state revenues:

 

1.      The plan provides for a temporary, five-year “timeout” from TABOR limit allowing state government to keep and spend the revenues from existing taxes – there is no tax increase.  The current estimate of the total amount of revenue to be retained by the plan is about $3 billion

2.      The plan resets the TABOR limit at the highest revenue limit the state will attain between now and 2011.  This keeps the TABOR limit intact but will base the limit on a year of economic recovery rather than a year of recession in order to with the “ratchet effect”

3.      It requires that revenues under the new limit be spent on those state services that underpin the state economy, specifically:

a.      Transportation infrastructure, i.e. roads and bridges

b.      State Colleges, Universities and Community Colleges

c.       Public health care

If voters approve Referendum D, Referendum C will also add an additional $100 million to the state revenue limit to pay for the bonding debt created by Referendum D.

 

Referendum D

Referendum D can only become law with the passage of Referendum C and will allow the state to issue $2.1 billion in new multi-year bonds to fund critical road and capital projects:

 

Ø      Dedicate up to $1.7 billion to speedup high priority road and bridge projects across the state

Ø      Fund up to $147 million in crucial repairs and maintenance in public school buildings – helping to meet Colorado’s obligation from a recent lawsuit

Ø      Fund up to $50 million in critical repairs to state college, university and community college buildings

Ø      Pay off Colorado’s long time commitment to fund the pensions of retired firefighters and police officers up to $175 million

 

If both Referendum C and D are approved by the voters a new law will become effective in 2011 that will reduce the state income tax rate to 4.5 percent in years when TABOR revenues allow the tax cut.

 

Previous Proposals

Throughout the summer and early fall of 2003 a committee convened by State Treasurer Mike Coffman met to discuss the fiscal crisis that has been created by the interaction of TABOR, Amendment 23 and the Gallagher Amendment.  At the conclusion of the series of meetings, the participants were asked to submit a proposal for fiscal reform.  The various proposals can be viewed by clicking here.

In December, 2003, the Rocky Mountain News editorialized in favor of a fiscal proposal that would establish a sizeable Rainy Day Fund.

In November, 2003, The Bell Policy Center filed a proposal for fiscal stabilization with the state title board.  Filing with the title board is the first step in the citizen-led ballot initiative process. 

In December, 2003, State Treasurer Coffman unveiled his proposal for fiscal stabilization.

2004 Proposed Legislation:  During the fall of 2003 an interim committee met to discuss potential solutions to the state budget crisis.  According to Legislative Council, the following legislation will be introduced during the 2004 session.

  • Bill A:  Submit to the registered electors of the state of Colorado an amendment to section 20 of article X of the constitution of the state of Colorado, concerning the exclusion of tuition paid to public institutions of higher education from the definition of "fiscal year spending", and, in connection therewith, limiting the effect of the exclusion on state fiscal year spending limits by requiring such limits to be calculated based upon prior state fiscal year spending limits, with adjustments for inflation and population growth, without being subject to reduction due to declines in state revenues.
  • Bill B:  Submit to the registered electors of the state of Colorado the proposal for the holding of a constitutional convention to revise, alter, and amend section 17 of article IX and sections 3, 3.5, and 20 of article X of the constitution of the state of Colorado, with any referred measure from the convention requiring the vote of two-thirds of the delegates thereto.
  • Bill C:  Submit to the registered electors of the state of Colorado amendments to section 17 of article IX and section 20 of article X of the constitution of the state of Colorado, concerning the harmonization of the requirements of section 20 of article X (TABOR) and section 17 of article IX (Amendment 23), and, in connection therewith, suspending the required one percent spending increase in certain state education funding in years when the TABOR revenue limit is not met, creating the state rainy day fund consisting of a portion of excess TABOR revenues and other moneys appropriated by the general assembly, authorizing the general assembly to transfer a limited amount of moneys from the rainy day fund to the general fund by a two-thirds vote, authorizing the governor to spend a limited amount of moneys in the rainy day fund in a disaster emergency, and reducing the "ratchet" effect of TABOR by the amount deposited in the state education fund and any amount transferred from the rainy day fund.
  • Bill D:  Submit to the registered electors of the state of Colorado amendments to section 17 (1) of article IX and section 20 of article X of the constitution of the state of Colorado, concerning the stabilization of government revenues, and, in connection therewith, suspending the required one percent increase in certain state education funding during an economic downturn, requiring fiscal year spending limits for state and local districts to be calculated based upon prior fiscal year spending limits, with adjustments for inflation and growth, without being subject to reduction due to declines in revenues, and allowing local districts to seek voter approval to impose a fluctuating mill levy for a specified period in order to allow the local district to collect property tax revenues not to exceed the amount of such revenues collected in the prior year, as adjusted for inflation and local growth.
  • Bill E:  Submit to the registered electors of the state of Colorado amendments to section 17 of article IX and section 20 of article X of the constitution of the state of Colorado, concerning state spending, and, in connection therewith, replacing the requirement that statewide base per pupil funding for preschool, primary, and secondary education and total state funding for all categorical programs for each of the ten state fiscal years starting with the 2001-02 state fiscal year increase by at least the rate of inflation plus one percentage point with a requirement that the general assembly set the statewide base per pupil funding and total state funding for all categorical programs at no less than the levels of the statewide base per pupil funding and total state funding for all categorical programs for the prior state fiscal year in any state fiscal year that follows a calendar year in which state general fund revenues did not increase by at least the sum of inflation plus the percentage change in state population for the prior calendar year; replacing the requirement that statewide base per pupil funding for preschool, primary, and secondary education and total state funding for all categorical programs for state fiscal years starting with the 2011-12 state fiscal year increase by the rate of inflation with a requirement that the general assembly set the statewide base per pupil funding and total state funding for all categorical programs at no less than the levels of the statewide base per pupil funding for preschool, primary, and secondary education and total state funding for all categorical programs for the prior fiscal year; increasing the state fiscal year spending limits for the 2005-06 and 2006-07 state fiscal years by one percentage point each; including each one percentage point increase in the state fiscal year spending base for the purpose of calculating subsequent years' state fiscal year spending limits even if state revenues decline; and requiring some of the additional moneys under the increased state fiscal year spending limits to be expended first to compensate local governments for revenue losses from the senior property tax exemption, next to provide a state credit against business personal property taxes, and lastly for refunds to taxpayers.
  • Bill F:  Submit to the registered electors of the state of Colorado an amendment to section 20 (7) of article X of the constitution of the state of Colorado, concerning a requirement that the fiscal year spending limits be calculated based upon prior fiscal year spending limits, with adjustments for inflation and growth, without being subject to reduction due to declines in revenue.