CU narrowly escaped a $200 million cut to its funding last week as the Colorado State Legislature debated cuts to its state budget.
Despite this narrow getaway, CU still lacks adequate funding from the state.
Why is this?
CU, a public university, receives roughly 8 percent of its funding from the state.
This historically low amount can be traced back to Colorado’s controversial Taxpayer’s Bill of Rights, or TABOR. According to Article 10, Section 20 of the Colorado Constitution, TABOR states that state and local governments can only grow from the revenue they collect as a combination of inflation and population. TABOR also mandates all tax increases be approved by voters.
“Starting Nov. 4, 1992, districts must have voter approval in advance for: … any new tax, tax rate increase, mill levy above for that prior year,” according to the Colorado Constitution.
Brian Burnett, vice chancellor of CU-Colorado Springs and former analyst for the 1988 Joint Budget Staff Commission, helped implement TABOR in 1993.
“Essentially TABOR means if you take a base year under TABOR, if a state government brought in $100 this year, if next year inflation was 3 percent, and the population grew by 2 percent, then you could grow by 5 percent so the next year you could bring in $105,” Burnett said. “So if there was $106 you’d have to refund $1 because you’d only be able to grow by inflation and population.”
When the economy was strong in 1998 and 1999, former Gov. Bill Owens decided to cut tax rates completely under TABOR. This meant the state legislature could not raise taxes on Coloradoans without approval through a popular vote, which is currently hindering Colorado’s ability to fund the state, according to Burnett.
In 2001 when the economy hit its first recessed levels, Colorado suffered because of the government’s inability to raise tax rates due to the provision in the constitutional amendment, according to Burnett.
“Some permanent tax cuts, the economy tanked, revenues went down by like a billion,” Burnett said. “It’s the ratchet effect. So let’s go back to our scenario, $105, see next year instead of $106, you brought in $90, lost 15 percent of the tax base, now the next year you start the calculations of $90 off the next base. So you don’t get to go back to the $105, it’s now $90, now you may have to refund even if you’re down below: the TABOR ratchet.”
In 2005, voters passed Referendum C, which takes a time-out from revenue limits for five years, allowing the state to recover. Currently Colorado is in that five-year time-out, so TABOR technically isn’t constraining the ability of the state to give to higher education, according to Burnett.
“Referendum C is like a band-aid for the problem, not a solution to the problem or a remedy,” said Ryan Biehle, UCSU tri-executive and senior political science major.
Referendum C expires next year, which is posing a problem for the current recession and the state’s inability to return to 2008 levels, according to Biehle.
“Well, I personally think the major damage to higher education was not done by TABOR, but by Amendment 23,” said John Suthers, current attorney general of Colorado.
Amendment 23 protects K-12 education from cuts by the state government. While sounding legitimate and even honorable on the part of the Colorado government, the amendment has heavily hindered higher education, Biehle said.
“Amendment 23 in principle is a good thing, it guarantees funding for K-12 education, but when you can’t cut funding for k-12 education and you can’t cut funding for other areas you’re pretty much stuck with higher education,” Biehle said. “So it pits K-12 education against higher education and that’s not a good thing.”
Suthers said higher education fell victim to many budget cuts because of the amendment.
“They took all the hits the last time around,” Suthers said. “So we get a little bit of a flush period, and we bypass TABOR limits by Referendum C for several years, and the legislature does a fairly good job on getting a little more revenue into higher education slowly but surely and then comes the next wave of economic downturn, and it looks more serious than 2001-2002. You can’t cut half the budget, it’s K-12 that’s Amendment 23 protected, you aren’t going to cut Medicaid and federal programs, so what are you going to cut? Higher education is going to take the brunt.”
The only exceptions to TABOR’s strict funding limitations are “enterprises.”
CU is currently considered an “enterprise” under TABOR, meaning the university cannot accept over 10 percent of its annual funding from the state without counting against the state’s revenue limit. If CU were to accept more than 10 percent of its funding from the state, the university would be subject to the restrictions in place by TABOR.
“If CU didn’t have enterprise status, then they’d have to be worried about the total amount of money they take from outside sources and not give refunds,” Suthers said.
Suthers also notes a statutory spending limit on the General Fund called Arveschoug-Bird that was passed into the Colorado government in 1991 before TABOR was approved.
The Arveschoug-Bird spending limit differs from TABOR in that it sets a statutory limit on the growth of the general fund. It says the General Fund, which supports state services like higher education, can’t go up by more than 6 percent and that any excess must be used for highway construction, or capital construction, according to Suthers.
Currently, CU students pay approximately $75 to $150 a year in student fees to fund capital construction.
“Now it’s kind of a sad situation in my mind that students are building buildings,” Suthers said.
The TABOR effect has created a catch-22 when it comes to finding solutions to the amendment’s restraints.
Suthers says he thinks the best solution is to find an independent source of funding for higher education, such as a severance tax, or to have a convention for comprehensive constitutional reform. He acknowledges the difficulty of a ballot reform because of the single subject reform, so TABOR and Amendment 23 couldn’t be reformed simultaneously, meaning single subject reform must be waved through a popular vote before anything can be done.
“I think that (removing TABOR) would be the ultimate solution, and that would be the cleanest solution, but you know there are other things as well,” Biehle said. “Getting rid of the 6 percent limit, calling a constitutional convention is a potential solution, but would also create a lot of potential problems.”
He says that putting up a constitutional amendment similar to Amendment 23 in that it dedicates a stream of funding to higher education would be a solution, but that the main problem remains.
“It still doesn’t fix the problem of TABOR which is that the state government can’t do its job, so it still takes even more money and even more discretion away from our state legislature, so I don’t think that’s the best solution,” Biehle said.
He says though that he would “absolutely support” a dedicated funding stream that protects higher education in Colorado if higher education continues to be cut.
Contact CU Independent Staff Writer Sara Kassabian at Sara.kassabian@colorado.edu.
