Election Guide: State income, sales tax increases would fund education

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Election 2011

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Proposition 103

Shall state taxes be increased $536.1 million annually in the first full fiscal year and by such amounts as are raised annually thereafter by amendments to the Colorado Revised Statutes concerning a temporary increase in certain state taxes for additional public education funding, and, in connection therewith, increasing the rate of the state income tax imposed on all taxpayers from 4.63% to 5% for the 2012 through 2016 income tax years; increasing the rate of the state sales and use tax from 2.9% to 3% for a period of five years commencing on January 1, 2012; requiring that the additional revenues resulting from these increased tax rates be spent only to fund public education from preschool through twelfth grade and public postsecondary education; specifying that the appropriation of the additional tax revenues be in addition to and not substituted for moneys otherwise appropriated for public education from preschool through twelfth grade and public postsecondary education for the 2011-12 fiscal year; and allowing the additional tax revenues to be collected, kept, and spent notwithstanding any limitations provided by law?

Routt County voters this year will help decide whether Colorado’s sales and income taxes should be raised for five years to provide additional revenue for public schools, including colleges and universities.

If passed in November, Proposition 103 would increase funding for public schools by an estimated $2.9 billion over five years for K-12 and higher education by raising Colorado’s sales and income taxes. The increased taxes would sunset in five years.

Supporters of the measure gathered the signatures of more than 140,000 Colorado voters to place Proposition 103 on the ballot. To increase public school revenue by an estimated $532 million in its first year of passage, Proposition 103 would increase the state’s income tax rate from 4.63 percent to 5 percent and the sales and use tax rate from 2.9 to 3 percent until 2017.

Proponents of the measure argue the increased revenue will help school districts in Routt County survive expected state funding reductions, while opponents say it would hinder job growth and harm taxpayers during dire economic times.

After the tax initiative earned the blessing of the Colorado Association of School Boards and the Colorado Education Association, the Steamboat Springs and South Routt school boards unanimously endorsed the measure last month, saying they could use additional funding to sustain programs that were at risk of being cut last year. However, the Hayden School Board declined to offer a formal endorsement of the measure after some of its members questioned whether it was the best solution to help stop anticipated funding decreases.

Hayden School Board member Sharon Nereson said at a September meeting that Hayden’s successful mill levy override, which this school year has increased the district’s budget by $323,000, makes Proposition 103 unfavorable.

Residents “have granted us this generous gift … and I think adding another tax to them would be counterproductive,” Nereson said. “I don’t agree with it.”

Opposition

An opposition campaign called “Save Colorado Jobs” led by former state Rep. Victor Mitchell, R-Castle Rock, was launched last month in Denver. The campaign has been using social media sites Facebook and Twitter to link to editorials that have criticized the measure.

Mitchell said it’s “a terrible time for a tax increase” and that Proposition 103 would hurt taxpayers from Steamboat Springs to Denver.

Opponents also criticize the measure for not including specifics in how the additional revenue will be allocated, instead leaving those spending decisions up to state lawmakers.

Impact on schools

It is still unclear how revenue from a successful Proposition 103 would be distributed to Colorado public schools. However, a study conducted by the nonpartisan Colorado Center on Law and Policy, which has endorsed the measure, estimates it would be lucrative for Routt County school districts.

If current funding formulas are followed, Terry Scanlon, a fiscal policy analyst at the center, estimated Proposition 103 would net $1.2 million a year for the Steamboat Springs School District, $263,000 for the South Routt School District and $267,000 for the Hayden School District.

Steamboat Springs School Board Vice President Brian Kelly said although he considers the tax initiative a Band-Aid instead of a long-term solution, the increased revenue could help the district sustain programs like fifth-grade band, which he said was close to being cut last year after the district’s program budget was reduced by $1.5 million.

And in South Routt, School Board President Tim Corrigan said his district could use additional revenue to increase the length of teacher contracts and provide step increases for staff who have been passed over because of budget cuts.

Economic impact

If Proposition 103 is passed, the nonpartisan Legislative Council of the Colorado General Assembly estimates it would cost a single person who makes $35,000 annually an extra $101 a year until 2017.

Those who earn $70,000 annually can expect to see their taxes increase an extra $180 a year until 2017, and married couples who file jointly with an annual income of $125,000 will see an increase of $315.

The sales tax increase would add 5 cents to $50 purchases, and five dollars to $5,000 purchases.

Election Guide 2011

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