City likely can’t fix economic troubles by relying on kindness of voters

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How can the city be rescued from its current funding crisis, which will almost certainly worsen during the coming months and years?

In considering the problem, city residents seem to fall into several, sometimes overlapping, categories.

There is no problem – the city is run by sleepy, incompetent bureaucrats who throw money around with obscene abandon! Don’t give them any more money – they already have too much!

It’s too bad that the city has to make cutbacks, but times are tough. We’ve all had to tighten our belts, so why should the city be any different?

Thanks to the Taxpayers Bill of Rights, Douglas Bruce and ignorant, reactionary voters, the city is in real trouble. Unless voters see the light and vote to undo two decades worth of lunatic initiatives, the city’s going down the drain.

It’s hard to figure this stuff out – I don’t want higher taxes, but I don’t want city services to keep decaying. Not watering the parks? That seems crazy – can’t the mayor and the city council figure out how to solve these problems?

My guess is that most of us fall into the fourth category. We might support a carefully structured proposal to tap the taxpayers for a little more dough, given enough information.

The well-meaning folks who have been volunteering their time on the city’s Sustainable Funding Committee have been charged with the task of analyzing the city’s various dilemmas and, hopefully, coming up with succinct, coherent recommendations that a majority of voters will support come November.

Good luck.

To assist the committee’s deliberations, the city hired a national consulting firm, Public Financial Management, to analyze both city service delivery and the revenue structure that supports service delivery. In draft form, the reports total 252 pages.

As such reports go, these are well done. They’re interesting, factual and profoundly disheartening.

PFM summarized the city’s core dilemma:

“The largest constraint the city is currently faced with is its local Taxpayers Bill of Rights (TABOR). TABOR in Colorado Springs has two key provisions: all tax increases require voter approval and city revenues are capped based on the previous year’s growth combined with a formula that incorporates inflation and local population growth. Of importance, if the previous year’s revenue collections are less than the TABOR limit, then the lower figure – the actual collections – is used in the formula to determine next year’s TABOR limit.”

In less abstract terms, that means that “A jurisdiction like Colorado Springs that is spending its revenue without significant waste finds that cuts in revenue during difficult times hampers the delivery of essential city services … Complicating Colorado Springs’ fiscal future, in light of a recession, is that TABOR can slow recovery once economic conditions improve. Once the national and local economy rebound, it can take years for the city to return to the level of service it provided prior to the downturn.”

That’s the notorious TABOR ratchet, which voters statewide removed for a five-year period by approving Referendum C during 2005.

Is there a solution? In the reports (characterized as a “draft – discussion purposes only”) PFM makes no recommendations.

But the dismal facts seem to suggest two options.

Initiative 1A: Repeal TABOR, thereby ensuring long-term fiscal health.

Initiative 1B: New taxes.

According to the draft, available tax options include:

Double the city’s lodging and automobile rental tax. Estimated annual take: $1.5 million.

Increase the city sales tax from 2.5 percent to 3 percent. Annual take: $27 million (now we’re talkin’!)

Expand the sales tax to include services. Annual take: $21 million, from taxing a range of services, including those provided by funeral homes. Now here’s a real death tax!

Tax cell phones. As landlines disappear, cities across the country have “begun taxing cell phones as a replacement mechanism.” Annual take: $899,720.

Both as a politician and as a journalist, I’ve found that elections are tough to predict. But let me go out on a limb, and predict that this November, Springs voters will not agree to repeal TABOR or increase taxes.

If that’s the case, City Council has few options. Members can forget about TABOR and try for a couple of piddling tax increases (e.g., doubling LART) which will give them a few bucks and are unlikely to arouse much opposition.

Or, if they so choose, they can simply ignore the mulish, dimwitted voters and impose a nice, fat fee without the trouble and expense of an election. How about a “transportation utility fee,” similar to those imposed upon similarly mulish voters in other jurisdictions? “A broad approach would be to build the entire cost for maintaining the city transportation system into a Transportation Utility.”

And who would pay? “There were 316,706 vehicles registered (in Colorado Springs during 2007) … estimated annual cost would be about $65.16 per vehicle.”

Sounds great, doesn’t it? But, as City Council surely knows, imposing such a fee would be political suicide … which leaves us, after 252 pages, about where we started.

Any more suggestions?

John Hazlehurst can be reached at John.Hazlehurst@csbj.com or 227-5861.

One Response to City likely can’t fix economic troubles by relying on kindness of voters

  1. Good article. Instead of scrapping TABOR, why not revamp it? Change the formulas or something similar to relieve the ratcheting effect. TABOR in theory is a good idea, it just needs to be tweaked for reality.

    Carl Smith
    June 18, 2009 at 12:02 pm