LONGMONT, Colo. 03/08/2011— There is political consensus in Colorado that the state’s budget woes won’t go away even when the economy recovers. Authors of a report released by the University of Denver Center for Colorado’s Economic Future assert that even fifteen years of strong job growth is not enough to dig Colorado out of its hole.
Colorado’s problems are caused by a structural mismatch between the state’s obligations to fund K-12 Education, Medicaid, the state’s prison system, and a variety of other public services and the revenues available to pay for these services.
Many Colorado policymakers approach the state’s unprecedented fiscal challenge strictly from the perspective of, “How do we balance the budget?” This is certainly a question legislators and the state’s chief executive are obligated to answer. But, at the end of the day, this is an accounting question not a leadership question.
Leaders cannot be satisfied merely to balance the budget. In 49 states, a balanced budget is a requirement so it is no test of leadership at all, really. Leaders are obligated to explain how actions and investments (or lack there of) today will lead to a more compelling future.
Governor John Hickenlooper, a Democrat, took steps to address the state’s structural mismatch by proposing an austerity budget with deep cuts to K-12 and higher education.
There are good things that can be said about the governor’s budget. It is admirable that he took pains to limit further cuts, for instance, to programs that support those with developmental disabilities. These types of programs have been ravaged in the past.
The governor should also be commended for proposing a budget with intellectual integrity. As I wrote previously, Governor Hickenlooper did not resort to gimmicks or overly optimistic assumptions – tactics that merely kick the proverbial can down the road. He tackled the budget head-on going after education because, “That’s where the money is.”
Still, the Governor’s budget fails in two respects. First, it subverts the intent of voters. Colorado voters approved a constitutional amendment in 2000 to make K-12 funding a priority. The intent of voters was to put more money into education, not less.
Second, and perhaps more important, the governor fails to explain how his budget will lead Colorado to a more compelling future.
Colorado’s Republican leaders fail the leadership test, too. State Senator Greg Brophy, a leading voice in the state’s Republican Party, responded to the Denver University study by saying, “Ultimately we have a spending problem.” Fair enough. But, leaders must do more than simply repeat tired platitudes.
We have reached a point in Colorado that leaders who believe we have a “spending problem” must enumerate, in detail, how they propose to curtail funding and how the spending cuts will improve our quality of life.
The budget cutting ideas proposed publicly by Senator Brophy – e.g. reduce the number of children who receive government subsidized health care – tend to be of the “kick the can down the road” variety, not the type that address the long-term challenges facing Colorado, let alone painting a picture of a more compelling future.
Senator Brophy uses Twitter to regularly mock Democrats who suggest that more revenues – a tax increase – must be part of the package to deal with Colorado’s challenges. His Republican colleagues enthusiastically join in the criticism.
House Majority Leader Representative Amy Stephens responded to a proposal for a three-year tax increase with a worn out Republican talking point, “We’re not going to tax our way into prosperity.” Again, leaders must move beyond platitudes.
Neither Govnernor Hickenlooper nor Republican leaders will consider a tax increase because, they assert, Colorado’s top priority must be to make Colorado more business friendly. This argument might make sense in high-tax New Jersey or Wisconsin but it defies logic in Colorado.
Colorado ranks 15th on the Tax Foundation’s list of states with the best and worst business tax climates. The top three states on the Tax Foundation’s list are South Dakota, Alaska and Wyoming. With all due respect to these states, I like Colorado’s ability to compete even if we are less “tax friendly.”
There appears to be either no correlation or a reverse correlation between states that are tax friendly to business and where Fortune 500 companies choose to locate. The five worst business tax climate states are home to 165 Fortune 500 companies. The five best tax climate states are home to only 19 – 16 in Florida and three in Nevada.
Expand the list to the 10 worst business tax climate states and the number of Fortune 500 companies jumps to 211. The number in the 10 best tax climate states grows by only seven to 26. Colorado is home to eight Fortune 500 companies – more than every state in the top 10 except Florida.
There appears to be no correlation between the “tax friendliness” of a state and the performance of the state’s economy, either. The Atlantic ranked the best- and worst- performing state economies in the fall of 2010. Three of the top 10 economic performers are “friendly” tax states and three are “unfriendly” tax states.
Colorado is more tax friendly than all but four of the top 10 performing states. Yet, our state economy ranks 25th on the Atlantic list. Six of the ten most “unfriendly” tax states have stronger economies than Colorado. New York, the least friendly tax state of all, ranks 26th.
It is time to drop the pretense that ultra-low taxes are a prerequisite to being a business friendly state – a specious argument at best if not downright disingenuous.
Clearly, businesses consider factors beyond the tax code when making decisions about where to locate. Education is one of those factors. It is hard to imagine how dismantling the state’s education system will make Colorado more attractive to business.
Money magazine ranked Ft. Collins as the sixth best small city in America in 2010. The Money evaluators wrote, “This idyllic town would rank even higher but for one thing. Colorado schools are hurting.” This statement was made before the draconian cuts to education proposed for the coming year.
It is time for Colorado’s leaders to set aside the platitudes, specious arguments and the biggest leadership cop-out of all, “People don’t have an appetite for taxes.”
It is time for Colorado’s leaders to begin to answer the really tough questions: What actions and investments do we need to make now to move toward a more compelling future? How should we use public money to move toward this future? What is truly required of Colorado’s taxpayers to accomplish these goals?
Your constituents are waiting.
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John Creighton writes on community life and public leadership at johncr8on.com. He can be found on Twitter @johncr8on and on Facebook. Read more of John’s work in Dispatches From The Heartland at the Communities at the Washington Times. He also is president of the board of education of the St. Vrain Valley School District, a district in Colorado.
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