Steamboat Springs A proposed $25 tax cut will benefit every taxpayer in Colorado or begin a rapid disintegration of local government coffers, depending on whom you talk to.
Douglas Bruce, the author of the Taxpayer's Bill of Rights, has authored a new proposal which will be decided by voters across the state this fall. TABOR, approved by voters in 1992, limits the state and local taxing entities from keeping excess revenues.
Bruce's new TABOR, called Initiative 205, would amend the state constitution by establishing a $25 tax cut each year to reduce four state and local taxes.
The new TABOR would reduce a homeowner's property tax bill by $25 the first year, $50 the second year, $75 the third year and so on. The initiative would also lower, by $25 each year, taxes on vehicle sales, utilities, and income. The cut would continue to increase each year until the tax is eliminated.
County Treasurer Jeanne Whiddon said Bruce's new initiative would be disastrous to local governments and special districts.
"It's really taking the wind out of the sails of local government and anyone who depends on taxes to provide services to people," Whiddon said.
She said a majority of Routt County residents did not support the 1992 Taxpayer's Bill of Rights and she hopes voters this year recognize the impacts of the new TABOR.
"I might not have to pay $25 of my tax bill, but that money goes toward services the state can't provide," Whiddon said. "In this time of increased growth, people need more services at the local level."
Local governments, however, will be paid by the state, which is flush with excess revenue, for any shortfalls, according to Bruce.
"They aren't going to be hurt at all," Bruce said. "They came up with the same rubbish eight years ago, saying that schools will close, roads will crumble and there will be total disaster. That did not happen."
Bruce said the language in the proposed measure, which he calls Tax Cut 2000, makes it clear that the state will backfill, or replace, revenue lost by local governments and special districts.
"To think that I would write something that would wipe out those districts overnight is incredible," he said.
Steamboat Springs School District Superintendent Cyndy Simms said the proposed initiative would force the state to absorb more costs at the same time it's getting less revenue.
"Taxes are what fund our roads and schools. (The new TABOR) will have a rapidly negative effect on all services the people in our community use and hopefully appreciate," Simms said.
Bruce said it won't be an instant disaster and governments will have time to prepare. As the tax cuts increase each year, incomes, property values and car prices will increase. For example, Bruce said the impact from the property tax cut won't be noticed until 2002 when homeowners pay their 2001 taxes.
After a few years, smaller taxes could be wiped out by the increasing tax cut. However, Bruce said taxes on large commercial properties, such as Wal-Mart, will continue to increase as business grows, despite the $25 tax cut.
The new TABOR would mean the state might have to shift its funding priorities, many of which are already set, to cover services such as highway improvements across the state.
The bill would cut revenues to the state by at least $663 million in less than three years, according to state officials. The state also would reportedly incur costs of at least $1.1 million to administer the tax cuts.
While the state deals with millions of dollars in excess revenues, Whiddon said small entities are not out of control with surplus revenues and shouldn't be penalized.
West Routt Fire Chief Bryan Rickman said most residents across the state pay an average of $60 a year in taxes to a fire district. After three years of $25 tax cuts, that payment could be eliminated entirely.
"If no single-family residences are paying taxes for the fire district after three years, then what obligation does the district have to provide services?" Rickman asked. "That's just a question I have."
Rickman said he hadn't heard enough information about the state backfill component of the new TABOR to support it.
County Commissioner Ben Beall said the new TABOR is not the right solution to the state's excess revenue problem.
"Rationally, the approach just doesn't make any sense," Beall said. "How can a government ever creatively solve problems with these restrictions?"
Bruce said government officials may be more worried about their paychecks than the initiative's effect on residents.
"This will slow the increase in their pay raises over future years, but the government will still have more money than ever before," Bruce said.
The tax cuts will affect the county at budget time when officials might have to cut services if there are not enough funds, according to County Commissioner Nancy Stahoviak. Residents have voted to free the county from many of the revenue restrictions imposed by TABOR, but she said that option is taken away in the new initiative.
"Personally, I'm very irritated with Mr. Bruce that he's trying to dictate what happens in Routt County," Stahoviak said.
Bruce said Routt County can't be treated any differently from the rest of the state.
"You cannot have a local vote to overrule the state constitution. You can't have a patchwork of which jurisdictions choose to follow the constitution," Bruce said. "Do you think that Routt County can have a vote not to allow the freedom of speech or to say that black people can't own property or women can't serve on juries?"
The only effect on local districts will be a small, gradual shift toward broad-based state aid, Bruce said. Local governments will receive money from the state instead of its residents.
"Local governments are getting the same amount of money, they're just getting it from a different source," he said.
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