Arguments in favor of Amendment 61 rest on the assertion that the state must stop spending beyond its means.
“Our national economic depression was caused largely by excessive debt,” said Natalie Menten, campaign coordinator for CO Tax Reforms, the group supporting the initiative. “When you are in a deep hole of debt, the first thing you do is stop digging.”
Amendment 61 would prohibit the state from any kind of borrowing and would limit local governments to borrowing for only 10 years — and only then with voter approval.
“By prohibiting state debt, it will save taxpayers millions which can then go to services,” Menten said.
Opponents say Amendment 61 would make Colorado the only state in the nation with no ability to borrow, and they estimate $2 billion a year in publicly financed construction would cease if the plan passes.
The measure would explicitly prohibit the state from using certificates of participation, essentially lease- back instruments, to construct new buildings. Certificates of participation have been used for buildings on college campuses, such as the Fitzsimons medical campus in Aurora, as well as for prisons and the state’s new history museum.
Proponents of Amendment 61 say certificates of participation are a legal end-run around a provision in the state constitution that prohibits borrowing, although opponents say the prohibition is meant to cover only general bonding.
And opponents say Amendment 61 would make it difficult for school districts and local governments to construct new buildings or repair old ones.
“The proponents want to apply arbitrary, unreasonable restrictions on local bonding, taking away local control,” said Dan Hopkins, spokesman for Coloradans for Responsible Reform, the coalition of business, labor groups and nonprofits opposing Amendment 61.
A ban on borrowing by the state might have unintended consequences. Officials with the Department of Labor and Employment say they would no longer be able to issue unemployment checks because Colorado, like dozens of other states, is now borrowing money from the federal government to help keep its unemployment insurance fund solvent in a long period of high unemployment.
Without the ability to borrow and thus keep the fund solvent, the state’s program will not be certified by the federal government. That, in turn, means Colorado employers will no longer be eligible for a credit on their federal unemployment taxes, which will increase by at least $700 million.
Meanwhile, many school districts say they won’t be able to keep their doors open for the whole school year because the interest-free loans they get from the state to help meet monthly operating costs between biannual property-tax collections won’t be available.
And cities and special districts, like the Regional Transportation District, say it will be much harder to start construction projects because debt payments on a 10-year schedule will be significantly higher than on 20- or 30-year notes.
Supporters of 61 say these arguments are just scare tactics by government bureaucrats and the businesses that live off of taxpayer spending.
State agencies pay about $200 million a year on borrowings. With all of the state’s “enterprises,” which include public universities and colleges, that total comes to about $2 billion annually.
Tim Hoover: 303-954-1626 or thoover@denverpost.com
