COLORADO ECONOMIC FUTURES PANEL University of Denver CEFP

COLORADO ECONOMIC FUTURES PANEL

University of Denver

CEFP

Colorado State Gross General Fund: Income and Excise Tax Collections

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04

Millions of Dollars

T o tal In co m e

T o tal Excis e

SOURCE: CO Legislative CouncilNote: State Education Fund subtracted from total income and gross general fund beginning in FY01.TABOR overrefund subtracted from sales taxes from FY00 through FY02.

CEFP

State Government General and Cash Funds

$0.00

$1,000.00

$2,000.00

$3,000.00

$4,000.00

$5,000.00

$6,000.00

$7,000.00

80-81

81-82*

82-83

83-84*

84-85

85-86

86-87

87-88

88-89

89-90

90-91

91-92

92-93

93-94

94-95

95-96

96-97

97-98

98-99

99-00

00-01

01-02

02-03

03-04

General Fund

Cash Funds

$ Millions

CEFP

Colorado Economic Futures Panel

State general and cash funds fell by $1.2 billion (13%) in FY 2002 and remained $500 million below FY 2001 levels through FY 2005.

General Assembly and Governor unable to agree and take action to stop the bleeding during the 2002, 2003 and 2004 legislative sessions.

CEFP


In the summer of 2004, a group of concerned business leaders approached DU Chancellor Dan Ritchie asking for the state’s leading private university to examine the situation and suggest a long-term roadmap.

CEFP


In November of 2004, a panel of accomplished citizens is appointed to undertake the task with the help of an experienced small staff.

In July of 2005 the Panel issued a preliminary report concluding that regardless of the prospects for passage of Referenda C and D, the PROMISE OF COLORADO IS IN PERIL.

CEFP


Panel members: James R. Griesemer, Professor and Dean Emeritus, Daniels

College of Business, University of Denver Robert G. Tointon, President, Phelps-Tointon, Inc. Richard G. Ballantine, Publisher, The Durango Herald Forrest M. Cason, CFO & Senior VP, U. of Colorado Hospital Richard F. Celeste, President, Colorado College Cathey Finlon, Chairman/CEO, McClain Finlon Advertising,

Inc. Jerry Groswold, Consultant/Retired Steven C. Halstedt, Managing Director, Centennial

Ventures Bill Kendall, President, Center for Business & Economic

ForecastingCEFP


Panel members (continued): Harry T. Lewis, Jr., Owner, Harry T. Lewis Jr.,

Investments Kim Patmore, Executive VP and CFO, First Data

Corporation Mary E. Ricketson, Dean, DU Sturm College of Law Dick Robinson, CEO, Robinson Dairy Marguerite Salazar, President & CEO, Valley-Wide

Health Systems Thomas Williams, Williams Group LLC Jon Zeschin, President, Essential Advisers, Inc.

CEFP


Panel Staff: Charlie Brown Bill Hanna Jim Jacobs Phyllis Resnick Geoff Withers

CEFP


Foundation Support Bonfils-Stanton Foundation Castle Rock Foundation The Denver Foundation Dobbins Foundation Donnell-Kay Foundation Joseph Henry Edmondson Foundation Gates Family Foundation David and Lucille Packard Foundation Piton Foundation Rose Community Foundation

CEFP


Conclusions of preliminary report: Our fiscal policymaking processes have

created a tangled web of overlapping and conflicting policies Gallagher Amendment Bird/Arveschough general/cash fund limit TABOR Amendment Amendment 23 Senate Bill 1 – transportation spending Debt limits

CEFP


Conclusions of preliminary report: Our governmental systems are fragmented,

disparate, and reflect a small state government and burgeoning local governments

We know little about our revenue and spending systems and how they relate to our economy

Our fiscal policies are inflexible because they are locked into a constitutional straitjacket

CEFP


Facts from the preliminary report:

Colorado has the smallest signature burden

(as a percentage of population) for initiatives among all direct initiative states

CEFP

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

AZ AR CA CO FL I L MI MO MT NE NV ND OH OK OR SD

SOURCE: The Book of the States, 2004 edition CEFP

Signature Requirements for Constitutional Initiatives As a Percent of Population, Direct Initiative States, 2004

Percent



Since 1910, only California and Oregon have voted on more initiatives than Colorado

CEFP

Summary of Colorado Ballot Measures (Excluding Debt Questions)

1964-2004

0

5

10

15

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1993

1994

1995

1996

1997

1998

2000

2001

2002

2003

2004

Total Ballot Questions Constitutional Questions Constitutional Measures Passed

CEFP


Facts from the preliminary report: In the last 25 years, Colorado approved 47

amendments to its constitution compared to only 27 amendments adopted to the US Constitution in the last 217 years (the first ten – the Bill of Rights – were adopted as a package).

Since 1990, Colorado voters have added over 21,000 words to the Colorado Constitution, equivalent to nearly three US Constitutions including the Preamble and all 27 amendments.

CEFP



National comparisons show Colorado 3rd fastest growing state in the 1990s, 7th in per capita income and 2nd in educational attainment at turn of century.

Colorado is a very diverse state. Population growth has been centered along the Front Range, the I-70 corridor and mountain resort areas. Per capita income is concentrated in the metro Denver and mountain resort counties. Educational attainment levels mirror high income areas.

CEFP

Bureau of Economic Analysis

SOURCE: U.S. Census Bureau, 2000 Census

StateAverage32.7%


Facts from the preliminary report: Colorado has nearly 2,600 local

governments – the state places in the top third for governmental units

Colorado has over 2,000 special and other districts. In national comparisons, Colorado is in the top ten for the number of special districts

CEFP

Governmental Units in Colorado, 2004

Total2,456


Facts from the preliminary report: Colorado counties have a per capita tax

base capacity difference from high to low of more than 20 to 1

Residential property is 74% of the state’s total taxable value, but pays only 47% of the property tax burden

At the time of the last tax study, only 10 units of government levied a sales tax, while today, 252 units levy sales taxes

CEFP

Per capita assessed value and state sales taxes.


Challenges for the Future:

Globalization – the loss of retail sales and knowledge-based jobs to cyberspace

Spiraling debt – state debt increased by 181% from 1995 to 2003, local government debt increased by 28% over the same period

CEFP

Statewide Debt Outstanding1980-2003

0

2

4

6

8

10

12

14

16

18

20

1980 1987 1990 1995 2003

State

L o cal

$ Billions

CEFPSOURCE: State Auditor’s Office and Division of Local Government



Aging of the baby boom generation – increased health care costs, softening of income growth.

CEFP

Medicaid Enrollees and Expenditures, FY 2004-2005

58.42%

16.17%

16.89%

18.04%

13.32%

33.13%

11.37%

32.66%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Enrollees Expenditures

388,257 $1,959,301,734

Elderly

Disabled

Adults

Children

Source: State of Colorado Department of Health Care Policy and Financing CEFP



Hispanics are the fastest growing segment of Colorado’s population. They are dramatically under-represented in high school graduation rates and college degrees. K-12 and higher education are the keys to tapping this important resource.

CEFP

Share by Ethnicity 1980-2000

50

60

70

80

90

100

1980 1990 2000

N-H Other

N-H Nat.Amer.

N-H Asian

N-H Black

Hispanic

N-H White

.

SOURCE: U.S. Census Bureau; revised 2000 by CO State Demographer’s Office – 10/04

CEFPN-H = Non-Hispanic

Fall 2003 All Certificates/ Baccalaureate2000 Census Public School 2003 Public In-State Degrees Awarded to Degrees Younger than Enrollment High School Ages 17,18,19 In-State Students Awarded to In-State

18 years Fall 2003 Graduates Undergraduates FY 2003 Students FY 2003

Asian 2.1% 3.1% 3.3% 4.0% 3.0% 3.9%Black 4.3% 5.8% 4.4% 3.7% 3.0% 2.6%Hispanic 23.5% 25.3% 14.8% 13.0% 9.2% 7.9%Native American 1.2% 1.2% 0.9% 1.3% 1.4% 1.5%White 66.2% 64.5% 76.7% 74.2% 79.4% 80.4%Other/Unknown 2.7% 0.0% 0.0% 3.5% 3.7% 3.6%NR Alien 0.0% 0.0% 0.0% 0.3% 0.3% 0.1%Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

CCHE, 8/04 - Census Bureau, CDE, CCHE

Demographic Percentage Breakdown of Population, Enrollment, HS Graduates, Higher Education Enrollment and Degrees

CEFP


Conclusions Colorado’s fiscal policymaking environment is

dominated by an out-of-balance initiative process resulting in a “one size fits all” constitutional straitjacket regardless of the state’s diverse circumstances and economic changes.

The choice of amending the constitution in lieu of the statutes demonstrates a growing mistrust of elected officials and public institutions.

CEFP


Conclusions

Meeting Colorado’s future challenges will require: Flexibility for state and local governments A strategic approach to public policy by elected

officials and representatives

CEFP


Colorado’s strategy and roadmap for the future should contain four objectives:

Keep the positive features of our current processes

Restore trust in government Create a healthy balance between representative

government and the citizen initiative Evaluate and address key problems

CEFP


Summary of Recommendations

CEFP

Current Constitutional Provisionsto be Retained

Citizen approval of new and increased taxes

Right of citizens to petition their government

Power of elected officials to allocate public funds

Balanced budgets for state government

CEFP

Steps to Rebuild Public Trust All government agencies should provide

citizens with annual performance reports. An Internet-based information system

should be developed to provide taxpayers with an estimate of their annual tax burden, as well as a summary of the programs and services supported by those tax dollars.

An independent fiscal policy research organization should be established.

Term limits for public officials should be eliminated.

CEFP

Steps to Create Flexibility and Responsiveness

Future fiscal limits or mandates should be enacted as laws, not part of the state constitution.

Existing detailed fiscal provisions should be moved from the constitution and made into laws, with protections so those laws can be amended only under extraordinary circumstances.

CEFP

Steps to Create Flexibility (cont.) Any index used with spending limits

or mandates should be relevant to the revenue or expenditure affected.

The signature requirement for initiatives should be changed from votes cast for the secretary of state to votes cast for governor in the most recent election.

CEFP

Steps to Create Flexibility (cont.) For initiated laws, the signature

requirement should be 5% of votes cast for governor; passage should require a simple majority of voters; and a supermajority vote of the legislature should be required for later amendment.

CEFP

Steps to Create Flexibility (cont.) For initiated constitutional

amendments, the signature requirement should be 10% of votes cast for governor; proponents should have to collect signatures equal to 10% of the district-wide vote for governor in a majority of the state’s congressional districts; and a supermajority of voters would be required to approve.

CEFP

Steps to Create Flexibility (cont.)

Referred constitutional amendments should require a supermajority of legislators to place on the ballot and a supermajority of voters to approve.

CEFP

Further Important Steps

There are currently disparities between property taxes paid by businesses and individuals. Disparities in other taxes may also exist. Fairness and economic competition require tax burdens to be equitably distributed.

Regional sharing of sales taxes among local governments should be considered; state revenue sharing with local governments expanded cooperation among governments.

CEFP

Further Important Steps (cont.)

Elected officials should strategically identify budget investments that will produce a significant return for tax dollars invested, generate long-term public benefits or avoid future costs.

CEFP

The Road Ahead

Restoring Colorado’s promise will not be easy.

Political will, risk-taking, and civic engagement will be required.

But, the task is crucial if we are to pass to our children and grandchildren a Colorado future filled with promise.

CEFP

Documents

COLORADO ECONOMIC FUTURES PANEL University of Denver CEFP