A threat of rate hikes, service cuts

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Three of the voter initiatives that will appear on the November ballot sure sound attractive.

Among other things, they promise to lower state income taxes, eliminate vehicle-registration fees, require government-owned authorities to start paying property taxes and forbid the state from assuming debt of any kind.

What’s not to like?

A lot, it seems.

Critics have all along asserted that the amendments would strangle school funding, among other government functions. According to the nonpartisan Bell Policy Center, state and local government revenue could be cut by more than $3 billion under the initiatives.

Now, according to a series of new analyses, Colorado Springs hospitals, airports, water utilities and road projects all face a bleak, if not disastrous, future should voters embrace Proposition 101 and Amendments 60 and 61.

Colorado Springs Utilities estimated the two amendments together will cause increases of more than 150 percent for its ratepayers and potentially force the abandonment of the Southern Delivery System water project.

Memorial Health System also looked at the impact of the measures and concluded its costs would increase by $24 million a year.

The city’s airport said it would no longer be able to support economic development projects or finance major capital improvements.

And the already cash-strapped city said Proposition 101 alone would reduce its revenue by at least $50.5 million over the next four years.

In another of the new analyses, CSU-Pueblo economics professor Kevin Duncan said Amendment 61’s ban on the use of state bonds would affect transportation projects such as Powers Boulevard and the proposed rebuilding of I-25 in northern El Paso County.  And if the state isn’t allowed to borrow the money, alternative funding is unlikely to be found any time in the foreseeable future, resulting in the estimated loss of 3,000 jobs in El Paso County, he said.

Property tax changes

Amendment 60 would require government-owned “enterprises and authorities” to pay property taxes and require local governments to lower property taxes to offset the new revenue. In theory, the measure is revenue-neutral. In practice, it would create winners and losers in the revenue-collection game, with Colorado Springs among the losers.

Memorial’s projected property tax bill is estimated at $24 million, which would force the hospital system to either raise rates or cut back on indigent care.

The airport is exempt from property taxes under federal law, so Amendment 60 would not affect its operations. However, the borrowing restrictions created by Amendment 61 could severely hamper airport operations.

Assistant Aviation Director Gisela Shanahan said the amendment’s restrictions would make major capital projects such as the construction of a new terminal unaffordable and would likely result in the loss of air service.

Remarkable cost-shifting

Colorado Springs Utilities and city ratepayers would be particularly hurt by the interaction of Amendments 60 and 61.

CSU estimates that Amendment 60 will cost the utility $441 million in property taxes during the next six years, while Amendment 61’s restrictions on borrowing will increase debt costs by $210 million during the same period.

“The passage of Amendment 61 would essentially place CSU into a cash-basis funding model that cannot accommodate the financial needs of a public utility of its size,” the utility said in its analysis.

Amendment 61 would limit all government debt to 10-year terms — too short a time to repay multibillion-dollar projects unless huge rate increases or tax hikes are imposed.

Amendment 61 would “more than double” CSU’s minimum annual debt payments, presenting it with the option of either increasing utility rates by a cumulative 152 percent during the next six years, or of abandoning the Southern Delivery System.

Even doing that would cost ratepayers. The estimated $150 million already invested in the project would have to be written off, and all contracts and agreements already in place would be terminated, at considerable expense.

And thanks to rate hikes, CSU ratepayers will most likely find themselves paying off the $441 million in property taxes that Utilities would be required to pay under Amendment 60.

Some of the rate increases will be offset by lower local property taxes, but a large percentage will not.

That’s because CSU’s operations extend through many counties and jurisdictions. Property taxes collected by Teller, Lake, Fremont, Park, Chaffee and Pueblo counties will not be offset by reductions in city property taxes.

“If (Amendment 61) passes, the assessors will have their hands full,” said Wade Buchanan of the Bell Policy Institute. “The amount of cost-shifting that will take place is truly remarkable.”

CSU’s analysis ends with a warning.

“No private utility of (CSU’s) size and complexity has ever had to, or could, endure and serve its customers under (these) restrictions.”

Click here to read the full analysis.

2 Responses to A threat of rate hikes, service cuts

  1. Having read the attached “Click here to read the full analysis ”
    I did not find a single comprehensive analysis of theTOTAL impact but instead a surmised impact on some of the entities that could be effected.

    So, in the current economic climate, one might guess the voters answer will be to approve anything that might be felt to cut taxes by as much as we are having to cutting our personal expenditures.

    From the above statement ~ “No private utility of (CSU’s) size and complexity has ever had to, or could, endure and serve its customers under (these) restrictions.” ~ perhaps not yet.

    Total dollar amounts set out have no value if not compared to current total expenditures. Decisions made with insufficient information result in insufficient or warped impact.

    S. Martin

    S. Martin
    May 15, 2010 at 11:10 am

  2. We the people have been forced to pay for the ‘indigents’ healthcare, etc for a long time. It is about time we got relief. We need an Arizona law to identify every CRIMINAL INVADER and turn them in, no matter if they show up at our schools, hosptials or welfare lines. How about billing Mexico for every CRIMINAL INVADER as we ‘export’ them home. If the are sick, fine, take care of them, and then send home with the bill for health care, feeding them, jailing them and the ticket home. If they have any money, then confiscate it as an offset to their expense to the system.
    If we didn’t have to take care of every indigent that showed up at the hospitals door, the hospitals would be able to break even.
    Denver is a sanctuary city and basically invites these CRIMINAL INVADERS. Denver Health is considered a ‘DESTINATION HOSPITAL’. In other words, if you are sick in Mexico, all you have to do is show up at Denver Health and you will get all of the free health care you need, courtesy of the citizens of Colorado. You don’t need to show citizenship or ability to pay. Of course, us poor Americans can’t get that kind of free health care.

    May 15, 2010 at 7:45 pm