When the Colorado Economic Futures Panel set about its task of understanding the fiscal structure of Colorado, we assumed we were looking at one state with a relatively consistent taxing-and-spending structure. We now know that we are looking at an unbelievable array of taxing entities with diverse taxing-and-spending philosophies. There are those who argue that we have at least 64 states and as many as 2,500.
How can this be? Find your property tax notice for 2004. Locate the listing of the taxing authorities, and that will tell you the taxes you paid on your real property. If you are a renter, ask your landlord for the list of taxing authorities or call the assessor in your county for the list. Realize that the cost of these taxes is included in your rent, so you are paying for those services that are taxed.
I live in a rural area of northwestern Colorado and pay taxes to two water conservancy districts, a library district, a metropolitan recreation district, a fire district, a school district, a water and sanitation district and the county, which includes a specific mill levy for emergency medical service. I also pay state income tax, state and local sales tax in several different jurisdictions – each at a different rate ranging from 2.5 percent to 9.3 percent – license plate fees, and a myriad of other taxes and fees including special taxes and fees for specific items like tobacco and booze.
I live in one state planning region, a different Department of Transportation district, yet a different judicial district and even a different council of governments. Even worse, I live on the Western Slope and thus have a different point of view from some of the folks with whom I may share ownership in or indebtedness to all of these various districts and taxing entities.
And yet we all have considered ourselves to be in one state with a single taxing-and-spending philosophy. Nothing could be further from the truth.
I am paying for K-12 education even though my children graduated from public schools years ago. I don’t mind paying for the cost of the schools because I am a strong believer in education for all of our children, but I am amazed at the different ways that I pay. It is quite obvious from my tax bill that I pay for education through the real property taxes that I pay to the school district. But I also support education with the money I pay to the state in the form of income tax and any other taxes that go to the state general fund, which are then appropriated for education.
But I do not know how to determine exactly the amount of my support. The amount that I pay to support education in my school district is different from the amount paid by people in comparable situations in other counties in this state. There is no logical way to justify those differences. And all of this does not include the amounts that are spent on higher education.
The panel certainly has learned that we don’t live in one state, at least from a taxing-and-spending point of view. Our fiscal structure is overly complex and hopelessly intertwined in more than 2,500 taxing-and-spending authorities that take money from our pockets every day to provide us with services.
We have learned that constitutional constraints on particular pieces of this puzzle don’t always work the way that the voters believed they would. And we have learned that fiscal constraints and earmarking requirements in our constitution have a very negative impact on representative government – to such an extent that we have eliminated the ability of most elected officials to make reasoned and intelligent decisions on the fiscal matters that they were elected to decide. On top of tying their hands with constraints, we have also placed term limits on them.
We get unintended consequences from the Band-Aid approach that has been used to address the fiscal “perfect storm” we have found ourselves in for the last few years, often with much more severe negative results than the problem we sought originally to solve.
While temporary fixes may get us through short-term financial difficulties, a more permanent and reasoned solution must be found for Colorado to function as one state with the quality of life we all seek in the competitive environment in which we now live and work.
Unfortunately, we have not learned what that solution might be – at least not yet.
Denver native Jerry Groswold, a member of the Colorado Economic Futures Panel, is a consultant to ski resorts.
