Colorado’s history demonstrates that while the “boom and bust” economic cycle is inevitable, it is also unpredictable. Understanding this cycle and the complicated mechanisms that have been created to raise state and local government revenue and deliver public services are critically important if we want to strategically position Colorado to compete in the global economy.
Yet the last comprehensive analysis of Colorado’s system for financing state and local governments occurred nearly 50 years ago. Our ability to adapt to ever-changing economic circumstances and developments is a key factor in Colorado’s future success.
The complexity and interrelationships of our federal, state and local tax structures, the wide array of public services provided by state and local governments (often involving complicated program and financial relationships between the federal, state and local levels of government), Colorado’s incredible regional economic and demographic diversity and the self-imposed financial limitations in the state constitution and laws have combined to cause unexpected and unintended negative consequences to the long-term financial stability and health of Colorado.
Given the fiscal structure we have in place and our active citizen initiative and referendum process, we make critical financial policy decisions at the ballot box. A mechanism, outside of the control of state and local government, for ongoing independent research, data collection and analysis is needed to assist in determining the best long-term solutions for future fiscal policy.
An innovative public policy research center could play an important role in examining current and future economic challenges. The center could offer an objective and multidisciplinary perspective on public financial issues that are complex and demand an unbiased, systematic examination of the underlying facts and forces that will ultimately shape Colorado’s future.
A central function of a research center would be to operate from a “big picture” point of view, preparing detailed financial models, and providing critical thinking around extremely complex data sets including “what if” analysis that could help shape recommendations.
Through this form of expert insight, we might avoid, or at least mitigate, the succession of referendums and legislation, inflexible legal structures and unintended consequences and provide solutions to alleviate some of the incompatible policies that exist today. Through careful economic analysis and policy proposals, more progressive and effective alternatives will emerge, including consideration of opportunities to invest now in preventive programs versus expensive, pay-later programs.
A Colorado public policy research center could be developed in conjunction with our private higher education institutions including citizen, government and business participation. Why limit the center to private institutions rather than public colleges and universities? Quite simply, because private institutions do not depend on public funds, they can be perceived by the public as speaking from an unbiased, objective point of view on to government taxes and spending. By establishing a center of excellence focused on understanding and modeling proposed changes to our public policies, we will create access to information and alternative solutions to complex problems for our citizens and policymakers to consider. This center would have the added benefit of creating highly skilled college graduates in the area of critical thinking related to the complex interrelationships of government, taxing and public policy, business, economics, demographics and education. We, as voters, would benefit from a research center that delivers unbiased information and solution sets to complex issues facing our state.
Successful government policy decisions, like successful business decisions, are the result of fact-based analysis including unbiased risk assessment and recommendations for alternatives. Providing insightful recommendations through a consortium of the brightest students, professors, legislators, citizens and business executives, Colorado will be best equipped to determine and drive its fate and foster a strong and thriving economy for the long term.
Kim Patmore is executive vice president and chief financial officer for First Data Corp.
Editor’s note: The Colorado Economic Futures Panel was formed last year by the University of Denver to study the state’s government and public finance systems. This is the final installment in a series of columns by panel members. The group’s recently issued first report is available at www.du.edu/economicpanel (click on Preliminary Report). A second report containing proposed solutions will be issued later this year.
