The economic future of Colorado will be written in the choices we make.
The stakes are high because the quality of life in Colorado is built on the foundation of the state’s economy. Economic and fiscal decisions made by elected officials and voters will affect the state’s success in attracting new businesses, creating jobs, navigating in a highly competitive global economy and maintaining reasonable tax levels.
We know that difficult and complex public policy choices lie ahead. We also are quite certain that, in a highly competitive world, the margin for error is small, and timely action is essential.
In suggesting what we hope will be a roadmap for decision-making and governance, the Colorado Economic Futures Panel does not intend to tell elected representatives and citizens what specific decisions to make in the future. Rather, our focus is on how to strengthen public trust and improve decision-making to enhance the economic future of Colorado.
Colorado is a place of great promise, with much to celebrate. Colorado is a high-income state with relatively low tax levels, an educated citizenry, a diverse and growing population and a place of breathtaking physical beauty.
But what about the Colorado of tomorrow? After a year of study, the panel has concluded that the promise of Colorado is in peril. The threat comes not only from immediate fiscal crises that make headlines and occupy the attention of officials and the media. Rather, and more fundamentally, the risk comes from underlying procedural, systemic and other factors that shape the way in which problems are understood and policy decisions are made.
Over the course of its study, the panel concluded that to create a sound economic future and a favorable quality of life for Coloradans, four conditions are desirable:
A most serious issue facing Colorado is the practice of making fiscal policy by public referendum through amendments to the Colorado Constitution. It is a haphazard approach in which citizens are asked to make major fiscal decisions in isolation, based on one-sided “facts” provided by proponents and opponents. Making fiscal policy by referendum is a process where over-simplification and under-analysis are the norm and where conflicting policies and unintended consequences are the outcomes.
Once a policy has been established by this process it is, effectively, cast in concrete. No one, not even elected officials, can change the policy except by going through another cumbersome election process that can take years, as well as millions of dollars. The result is the worst of all worlds – a random decision-making process that denies citizens meaningful information and then produces results that are extremely difficult to change. In a highly competitive economic world, this process of governmental roulette is unlikely to result in a winning number for Colorado citizens or businesses.
The panel recommends that future fiscal policies not be placed in the Colorado Constitution but be enacted as laws that can more easily be adjusted as conditions require. The panel further recommends that existing fiscal limitations and mandates be removed from the Constitution, as difficult as that process may be, and reestablished by law. This might be done either by constitutional convention or other appropriate means. Finally, the panel recommends more rigorous standards to amend the Colorado Constitution.
The practice of establishing fiscal policy by constitutional amendment has weakened representative government in Colorado by taking some of the most important fiscal decisions out of the hands of elected officials.
Representative government should be strengthened in two ways. First, after voters approve tax levels, elected officials should be allowed to make spending decisions unencumbered by constitutional revenue or expenditure limits. Second, the panel believes that term limits are arbitrary and inhibit effective leadership and institutional continuity and should be eliminated.
The disjointed process of creating fiscal policy through amendment also has strained public trust. The panel believes that a first step in restoring public trust is to document the degree to which Colorado governments and institutions are, or are not, creating value for the public by significantly improving the quality of government performance reporting.
The panel recommends that all major state agencies, the courts, educational and other public institutions and local governments be required to provide citizens with annual performance reports. Such reports would show, among other things, the comparative performance of a unit benchmarked against similar entities, a description of results achieved, and clear information as to why the entity should not be consolidated with similar or overlapping government agencies.
The panel also recommends that all public agencies and institutions be required to work with the state to produce an online taxpayer information system. It would allow citizens to quickly estimate the total amount they are paying in taxes, which governments are receiving their tax dollars, the major services provided by those governments, per capita costs and other funding sources.
And, the panel recommends the establishment of an ongoing fiscal research and reporting center. This would be an independent, non-government and nonpartisan organization that conducts ongoing research and provides regular updates on matters related to Colorado’s fiscal health, economy and significant trends affecting the state. It could provide the thoughtful, balanced, impartial analysis of issues and proposals that is noticeably absent now from decision-making.
During the course of our study, several other significant policy issues became apparent. The first of these is the need to improve the external competitiveness of the state by creating a balance between residential and business property taxes. While businesses clearly must carry their fair share of the tax burden, a disproportionate reliance on non-residential property for tax revenue can reduce the attractiveness of Colorado as a place to do business. Consideration should be given to a policy where property taxes are more equitably distributed between residential and non-residential property.
In addition, research also suggests that there are dramatic disparities in resources among counties. Perhaps even greater variations exist among cities.
The external competitiveness of Colorado on the world economic stage is not served by a tax structure that creates classes of rich and poor local governments, leaving some able to serve businesses and residents well and some with much less capacity to do so. The panel recommends that consideration be given to creating a mechanism that would share resources among local governments. We appreciate that resource balance or revenue sharing among cities and counties is a complex matter. Nevertheless, it is an important issue to address.
The Colorado Economic Futures Panel recognizes that implementing its suggestions will not be easy. Indeed, doing so will require an uncommon coalition and a particular determination. Yet, the economic future of Colorado, and the quality of life our children enjoy tomorrow, may hinge on our collective resolve today.
Jim Griesemer is professor and dean emeritus at the Daniels College of Business at the University of Denver. He served as chair of the Colorado Economic Futures Panel.
