Proposition 103 is being billed (in my opinion, disingenuously) as a “five-year timeout from school cuts” in Colorado. In reality, it raises taxes an estimated $2.9 billion in that time, purportedly to fund education.

Listen to this explanation from state Sen. Rollie Heath, D-Boulder, to Club 20 earlier this month…

“I think everybody feels we’ve hit the bottom. God forbid if we haven’t. The way I talk about this is a rising tide raises all ships. But let me just kind of walk you through it a little bit, because those who want all the money to go to education get disappointed when I talk about this.

“We must fund to the ’11-’12 level [if Prop. 103 passes]. The assumption is that the economy is going to gradually increase. And if you – I don’t have the table here – but if you would go to it, this assumes, in the economic forecast that we’re going to start at $536 million [$514.7 million, according to the Blue Book] going in the first year to this. And it goes up to $644 [million] in year five. So it assumes a gradual increase…

“We must fund to the ’11-’12 level. So, as the economy grows, the legislature – rather than putting 47 cents on the dollar into K through 12, as that economy grows – is only going to have to fund to the ’11-’12 level. All of this goes into education, but that allows that revenue that would go – and of course the General Assembly can do whatever they want with that excess revenue – which you would hope it would go into all the other functions of government, if you follow me on that.

“So, basically, as the general fund grows, as we elect to fund the ’11-’12 level, that leaves other money to go into the other areas of government.”

Prop. 103 includes a provision that sets a base spending level for education at 2011-2012 expenditures, then requires that all additional tax revenues collected by higher income and sales tax rates under Prop. 103 also be allocated to education. The point that Heath makes is that if the economy recovers, additional tax revenue that might have been allocated to education in that time could be freed up for other purposes.

So, as I’ve written previously, it’s easier to sell a tax increase by saying that it’s “for the kids,” when the the truth is that the money is fungible in Colorado’s General Fund, and could be spent however future legislatures see fit. Just another reason to vote no on Prop. 103.

[Updated 10/5/11]

At the Club 20 fall meeting in Grand Junction this month, state Sen. Rollie Heath, D-Boulder, was asked about the different tax increases that some Colorado voters will face on the Nov. 1 ballot.

Some counties will have a mill levy override on the ballot to raise money for local school districts. Meanwhile, Heath is pushing the statewide Proposition 103 to raise sales and income tax rates, resulting in $514.7 million in spending (purportedly for schools) in its first year, and an estimated $2.9 billion overall over five years.

“Any mill override, all it can do – at best – is replace some of that loss, so to me they work in tandem with each other,” said Heath. “If there is a reason to do a mill levy override now, which would hopefully take them back, it would be complementary to what we do. So I think it’s a dual…it’s a plus, because I’m assuming the mill levy override is there because we have taken away so much. Don’t forget we have been cutting really since 2003, this is not a new phenomenon.”

So, while the entire state faces sales and income tax rate hikes via Prop 103, those in Douglas and Mesa Counties – for example – also face paying more property tax!

Douglas County will be voting on a $20 million mill levy override and a $200 million bond issue, according to the Castle Rock News Press.

In Mesa County’s School District 51, the mill levy override proposal is $12.5 million, according to the Grand Junction Sentinel.

Sen. Heath – whom we’ve anointed “The Taxman” – may think that if people will vote for one tax hike, they’ll vote for them all. But on Nov. 1, as Colorado voters in those districts work their way down the ballot, it’s just as likely that tax fatigue will set in and that Prop. 103 may help doom those local initiatives.

[Updated 10/5/11]

Colorado state Sen. Rollie Heath, D-Boulder, is pushing a $3 billion tax increase onto the ballot for “education” funding. But assuming you even wanted such a tax increase (and I don’t) what are the assurances it would actually go for education?

Coloradans have been burned before.

Amy Oliver of the Independence Institute recently noted that Referendum C, passed by voters in 2005, lifted spending caps for the primary purpose of benefiting “health care, K-12 education and higher education,” but some went to transportation and there appears to be no definitive accounting.

“Legislative Council staff member Kate Watkins confirmed what the Independence Institute has said all along,” wrote Oliver, based on a Colorado News Agency report. “Because money is fungible, no one really knows how the Referendum C money was spent.”

A similar concern is being raised about the tax increase proposed by Heath, which would raise income tax rates from 4.63 to 5 percent and sales tax rates from 2.9 to 3 percent for the next five years.

Although the initiative states that the additional revenue raised with the increase must go to benefit education, skeptics are asking if leaving the allocation of funds to the legislature would have the intended result.

According to Dustin Zvonek of the Common Sense Policy Roundtable:

Appropriation of General Fund revenue is determined by the legislature, and with the composition of the legislature changing every two years nobody can guarantee what Sen. Heath is promising.

During the press conference in May at which Heath introduced the measure (Yep, the same one where he was flanked by a class of fourth graders) an astute reporter asked about the tax increase with respect to the allocation of funds:

Reporter: “Have you figured out a way to ensure that this money actually goes to education when . . . and you avoid the trap Referendum C found itself in?”

Heath: “Well, if you read the language, it was drafted very carefully. It establishes the base of 2011-2012 funding which is basically the budget we just signed, and just approved. All of this money goes above that, and it basically says that this money cannot replace that 2011-12. So for five years, it established 11-12 as the base, all of the money above this . . . and of course as the economy improves, the General Assembly can do more than the base, but it establishes the base. I think it’s very strong language, and I think it pretty much makes certain that this money will all go to education.”

Then the Denver Post’s Tim Hoover took over the same line of questioning:

Hoover: “Is the money just for K-12 or does is also go to…”

Heath: “Higher ed, as well. It’s preschool through higher education.”

Tim Hoover: “Is there a formula?

Heath: No, the General Assembly decides each year how to divvy it up.”

Well, fantastic. I’m sure that the broad definition of “education” will ensure that all the additional tax dollars collected will actually go to what Heath says it will. Just like how we were promised that Referendum C , according to the Colorado Statesman in 2010, was to split the billions of dollars in extra tax revenue “into thirds, with one-third to higher education, one-third to K-12 and one-third to healthcare.”

Oh wait.

Any Democrat running against a popular GOP incumbent like U.S. Rep. Cory Gardner, who represents Colorado’s Fourth Congressional District, better treat it like a full-time job to have any shot of winning.

Which is why I find it so surprising that state Senate President Brandon Shaffer, D-Longmont, has no intention of stepping down as Senate president while taking a run at Gardner.

“I don’t see why this should affect my ability to manage the Senate or vote on important issues,” Shaffer said, reported The Denver Business Journal.

My guess is that Shaffer will feel the heat (from his own party) before the next legislative session in January to step down from his leadership post (and perhaps completely) to run for Congress.

A follower of WhoSaidYouSaid’s Twitter feed requested we circle back on remarks from the last day of Colorado’s 2011 legislative session. Wading through 10 hours of footage was worth it to find this gem.

Because if you think that Colorado’s gas prices are too high, you’re wrong. You’re not hurting. State Rep. Claire Levy, D-Boulder, said so. And just in case you were afraid she misspoke, she said it again to drive the point home.

See my video commentary above, and read Levy’s remarks below during debate on House Resolution 1013, which encouraged more domestic oil and gas production – and which passed the GOP-controlled House.

“A wise person once said that everybody is entitled to their own opinion, but you’re not entitled to your own facts,” said Levy on May 11. “So, let’s look at some of the premises for this resolution. The average price of gasoline in the United States is $3.96 per gallon, etc. [compared to about $3.72 in Colorado at the time.]

“Colorado has among the lowest gas prices in the country, so Colorado consumers are not being hurt. We are benefiting from, in fact, really a glut in the supply because there’s sort of a bottleneck with the gas that’s produced here and in Oklahoma…”

Since Levy spoke, pump prices have ticked down nationally and in Colorado. But by Levy’s logic, if gasoline were to climb past $4 a gallon here but past $5 elsewhere in the country, Colorado consumers wouldn’t be hurt? Right.

A proposal to add two more positions, to be filled by industry experts, to the current nine-member Colorado Oil and Gas Conservation Commission died in the state Senate earlier this month. We interviewed the bill’s sponsor, state Rep. Ray Scott, R-Grand Junction, back in April when it looked like it might get traction. HB-1223, which would have also had the heads of two state departments become non-voting members of the commission, passed the GOP-led House but died in the Democratic-controlled state Senate.

I caught up with Scott recently to ask what went wrong…

“Well, what we think happened was that there was a phone call from the governor’s office that went to the [state] Senate that said, ‘Kill the bill,’” said Scott. ” I mean, I think that’s probably the easiest way I could put it. We worked as hard as we could with the governor’s office. They had no interest in changing the make-up of the commission.”

I’ve emailed Gov. Hickenlooper’s office for comment today and will let you know if I hear back.

I asked Scott what the public can do to support the oil and gas industry.

“They have to understand we’re losing probably $200 million a year in severance tax, which, if you do the math, it’s very simple: from 2007, when we were number one in the world, to today, we’re getting very very close to $1 billion that we’ve lost. Then if you add on top of that probably another $1 billion that people moving to the state would have spent on homes, cars, clothes, all the things that we do…in our daily lives, there’s over $1 billion that we’ve lost and, why is it we have billion dollar shortfall in the budget?”

In the video above, Scott also addressed environmentalists’ objections to his bill. And I asked him what he would say to Gov. Hickenlooper today.

“Let’s sit down and get it worked out,” said Scott. “You said you wanted to do it, we said we wanted to do it; I don’t see what the problem is. It’s very simple: let’s get Colorado working again. This is a huge problem for us and we have to fix it – and it will fix many, many problems. The industry knows what they’re doing, they don’t want to hurt people; where that comes from I have no clue, but that’s a mantra that people use to try to spook people away from the oil and gas industry. But let’s get it worked out. It’d take us 15 minutes and we’d be done.”

Colorado state Sen. Rollie Heath, D-Boulder. announced Monday (in front of fourth-graders whose parents did not give permission that they be used in a press event) that he was moving forward with his initiative to raise taxes for five years.

Over the course of this process, Heath has looked at three tax increase proposals: one for three years, one for five years, and one in perpetuity. Around the same time that the Colorado Fiscal Policy Institute decided to pull their “progressive” tax proposal Heath also pulled his 3-year proposal from the table.

With only the five-year, and non-sunsetting, initiatives remaining, there was some political speculation as to which he would move forward with. Those were laid to rest Monday when Heath announced the 5-year tax increase [purportedly to fund public schools] was what he’d decided to advance. But why five years and not forever?

At a town hall meeting for Sen. Joyce Foster, D-Denver, on Wednesday, Heath [see video above] explained his logic:

“People came to me and said, ‘Rollie, if you make this indefinite, people are going to think we’ve got this fixed permanently. Two years from now, three years from now, they’re going to say, ‘Hey, you know I passed your tax increase, why are you coming back to us now with something else?’ So that’s the logic, whether you like it or not.”

What does this means in non-political speak? My translation: “If we ask for only five years of tax increases, then when we come back for more, we can say that was only a ‘temporary fix.’” Fantastic. It’s always nice to look two or three years ahead and see the looming threat of future tax increases. Apparently the cost of freedom AND lower taxes (arguably the same thing) is eternal vigilance.

[Updated 5/20/11]

We’ve been warning you about the tax hike that Colorado state Sen. Rollie Heath, D-Boulder, wants on the November ballot. On Monday, he rolled out the $3 billion, five-year proposal – and he did it with a class of fourth graders behind him. Check out my video commentary to learn why that was a no-no…

It’s the last day of the legislative session, which means the rubber-band balls have once again been dropped from the rotunda in the Capitol. (Puts me in mind of the Democrats dropping the ball on redistricting…)

Sen. Shawn Mitchell R-Broomfield, didn’t disappoint when during a break in the action on Wednesday, he dropped three rubber-band balls all the way down to the basement level. The big ball, Mitchell said, was made by Sen. Scheffel’s staff. The ball dropping tradition started last year…

“My intern, Cassie Hancock, built a rubber band ball throughout the session last year,” said Mitchell. “On Sine Die, we had the idea to drop it from the dome. I announced it at a break in the Senate and we had a pretty good crowd assemble. The boom and high bounce were amazing. It was pretty funny. When I announced it this year, an even bigger crowd of lawmakers and staff gathered in the hall and at the rails. Now it’s a tradition.”

This video is courtesy of Charles Ashby of the Grand Junction Sentinel. We <3 him.

My favorite part of the hearing on the GOP anti-tax resolution was when state Sen. Rollie Heath, D-Boulder, the committee chairman, implied that businesses considering Colorado – in his experience – don’t care that much about corporate income taxes.

“Sen. Cadman, you know I’ve recruited a lot of companies. I’ve been all over the world trying to bring business to the state. I’ve chaired economic development for the Denver Chamber. I’ve brought divisions here in my Johns Manville days. They don’t ask you about taxes. They ask us about your education, they ask you about your infrastructure. You don’t get asked taxes ’til way down the line. The truth of the matter is that we have very low corporate income tax here. Our corporate rates are very, very, very competetitive. I don’t know anybody that’s ever not come to this state – in my experience, that’s relatively limited, but – that’s said to me, ‘We’re not coming to Colorado because of the taxes.’ And maybe there are some, but certainly not in my experience. We are not a high tax state.”

Of course, what would you expect from someone working so hard on a ballot initiative that could raise Colorado income and sales taxes $536.1 million in its first year?

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[Transcript updated 8/3/11]

See our previous posts on Part 1 and Part 2 of last week’s tax hearing.