Attention CACI: New Mexico Is Not a Role Model

A brief side note from our neighbors to the south, as reported by the AP yesterday:

New Mexico Gov. Susana Martinez is in Colorado to raise money for her re-election campaign and speak to a business group…

Martinez will attend a reception by the Colorado Association of Commerce and Industry at Coors Field. The owner of the Colorado Rockies baseball team will speak at the event and Martinez will talk briefly about an economic development package of tax cuts that was approved by the Legislature and signed into law.

We haven't seen any post-event coverage of New Mexico Gov. Susana Martinez's fundraiser yesterday hosted by the Colorado Association of Commerce and Industry (CACI), where she presumably touted her policies as governor of New Mexico on economic development. To be honest, we don't know exactly what she said. What we do know is that the state of New Mexico is no role model for "economic development." 


Chutzpah: GOP Wants $1 Million To “Dispel” Gun Law “Myths”

Almost lost in the day-long debate Thursday in the Colorado House over the "Long Bill" General Fund budget was one of some two dozen unsuccessful amendments proposed by Republicans. Offered by freshman GOP Rep. Bob Rankin, Amendment 12 sought $1 million additional dollars for the Colorado Tourism Office. The purpose? We'll let Rep. Rankin explain, but once you realize what he's asking for, it's really quite astonishing.

Can't see the audio player? Click here.

KAGAN: Representative Rankin, to the amendment.

RANKIN: Mr. Chairman, this um, this bill moves one million dollars from the so-called ‘accounting fund,’ eight million dollars, to the Colorado Tourism Office. And since the amendment doesn’t clearly explain it, I should probably discuss what I intend to be done with that one million dollars.

First of all, let me say I do not intend this discussion to be a return to the debate over gun control. However, what I would like to point out is that we have a current and evolving problem that I think we can easily solve. And that is that the perception of the hunting community about what’s going in, going on in Colorado is causing a significant problem. I mean, I have a whole stack here of emails,  and press releases that you may have seen. I mean recently, we just had our first two cancelations of shooting clubs who were coming to Colorado, there was one in Montrose for July, had about three hundred people showing up and they just canceled. And this is not, you know this is not a problem based on reality, it’s really a problem based on perception and misunderstanding. [Pols emphasis]


Back To The Ballot For Education Funds

The Grand Junction Sentinel's Charles Ashby reports:

Supporters of increasing state funding for K-12 education have filed more than two dozen proposed ballot measures with the Colorado Legislative Council.

While only one is expected to actually make the ballot this fall, each asks taxpayers to accept an increase in the state’s 4.65 percent income tax rate to raise about $1 billion, all of which would go toward funding public schools.

The proposals are tied to a measure pending before the Colorado Legislature designed to reform the way the state funds education, a bill that guarantees that all 178 of the state’s school districts will see more funding, said Sen. Mike Johnston, D-Denver.

“We know people don’t like property taxes, and sales taxes are quite regressive, so income seems to be the right structure,” Johnston said. “We’re working on getting the policy right in the (Capitol) building, and outside the building all of those coalition groups will spend the next month or two fighting over which one of those (ballot measures) they can get a coalition behind.”

Since the failure of Proposition 103 in 2011, which would have raised a relatively small amount of money for education with a short-term reversion to the tax rates in place before they were cut by GOP Gov. Bill Owens in 1999 and 2000, supporters of education funding have realized that a small-scale proposal like Proposition 103 won't attract enough support from Democrats to pass. In retrospect, it's understood that this was a major factor in the drubbing Proposition 103 received at the polls. While conservatives argued against any increase in taxes, liberals were peeled off from support of the measure by arguments that it wasn't enough–and that passing it would make the more comprehensive measures actually needed harder to pass down the road.

This time, however, it's expected that a more comprehensive proposal, one that can really generate the revenue needed to recover from years of cuts to an already unequal and inadequate school finance system in Colorado, is going to fare much better. Most importantly, this campaign will, or at least should, have the support of major players like Gov. John Hickenlooper, whose unwillingness to support Proposition 103 helped doom it.

As for which one of these two dozen different proposals will have the winning formula that heads for the ballot this fall? With apologies to Gov. Hickenlooper's marketing geniuses, that's "TBD."

Screwing Public Employees, Paying Private Prisons: Long Bill Time!

The Colorado economy continues on a path to recovery, with a larger-than-expected revenue projection of an additional $256 million for FY 2013-2014. But the question remains, as Colorado WINS Executive Director Scott Wasserman asked Eli Stokols of FOX 31 today:

“Can’t we have just one budget year in which public services and those who provide them are not used as a straw man for a partisan agenda?”

Judging by statements made during the recent figure setting for the 2013-2014 budget at the Joint Budget Committee, it appears the answer is "no." Republicans on the JBC say they are prepared to vote against the "Long Bill" General Fund budget–to oppose badly needed raises for state employees, and to protect for-profit prisons over state jobs. As FOX 31 continues, they are determined to plant the flag on this issue even though the fiscal picture is looking much better:

This year Democrats control both the state House and Senate, along with the governor’s mansion, and will be able to pass the budget it wants. In addition, they’ve got a lot more money in the bank, with next year’s general fund anticipated to be roughly $1 billion higher than the current fiscal year’s thanks to an increasingly optimistic revenue forecast. 

With that improved revenue forecast for 2012 and beyond, state employees are counting on a 2 percent across-the-board raise plus additional incentives for high-performing workers.

And as the state’s prison population declines, they are also asking the state to prioritize public facilities and close for-profit prison beds.

With regard to keeping private prison beds open, On March 14, after the discussion of the closure of 318 for-profit prison beds, Rep. Cheri Gerou told the JBC, “I know that I have at least two members of my caucus that will probably vote against the budget just on this basis, because it will directly impact their communities, and I think Sen. Lambert has a colleague in his caucus who will probably vote against the budget based on this.”

And after four years without a raise for all state workers, everyone from corrections officers to staff at state veterans’ homes, both Rep. Gerou and Sen. Kent Lambert stated on March 20 that applying a 2% across the board baseline pay increase would be the thing that makes Republicans vote against the budget. “That may have cost all the votes on my side of the aisle,” Gerou said.

Neither of these stands make Republicans look particularly good.


Sen. Owen Hill Commendably Kiboshes Fact-Free Twitter Tantrum

An "incident" in the Senate Education Committee last week involving Democratic Sen. Evie Hudak and Republican freshman Sen. Owen Hill turned into a major, albeit short-lived kerfluffle Friday after being clipped and circulated nationally by conservative media sites and social media personalities. Sen. Hudak, as you know, has been under intense fire from conservatives after a gaffe in testimony about a gun bill that later died. It appears that Friday's "Twitter bomb" of this audio clip was meant to further trash Sen. Hudak's character–an odd level of attention given to a term-limited lawmaker, but far be it from us to tell GOP operatives how to spend their time.

At issue was the debate in the Senate Education Committee Wednesday of the new School Finance Act proposal from Sen. Michael Johnston. It's a major piece of legislation, and Republicans are not favorably predisposed due to its linkage with a significant revenue measure that would appear on the statewide ballot. To make a long story short, Sen. Hudak is chair of the Education Committee. Due to scheduling, it was necessary to release committee members to their other committee obligations by 1:30PM. This put the Education Committee in the position of having a lot to cover, and not a lot of time to cover it. Sen. Hudak tried to get the committee through a long series of amendments, and probably was a bit short with Republicans who, true to form, wanted to "slow down" and debate the amendments in greater detail.

Near the very end of this hours-long proceeding, Sen. Hudak told Sen. Hill to "flip a coin" to decide how to vote on a Republican-introduced amendment to the bill. What she really wanted Sen. Hill to do, of course, was vote–and the outcome was not in question. But she was a bit rude about it, and from the audio it's clear that Sen. Hill wasn't real pleased.

The incident is what it is–probably not Sen. Hudak's most statesmanlike moment, but hardly a front-page story. Until, that is, out-of-state conservative pundits and their massive social media entourages–which have been lurking in Colorado social media channels since the gun debate–got ahold of an out-of-context recording of the incident made by a local right-wing blog


Why is Corrections Corporation of America still sucking down Colorado taxpayer money?

(Corporate welfare of the worst kind? – promoted by Colorado Pols)

prisonmoneyRight now, the prison population in Colorado, as it is nationally, is declining. The inmate population growth in the 1990s that resulted in for-profit prisons popping up like mushrooms to absorb the overflow is receding.
Which begs the question: why are we still sending taxpayer money to Corrections Corporation of America and subsidizing their economic race to the bottom for jobs? If you work at a state facility in Colorado, you make a decent living, staring in the $40,000 range, with health insurance and PERA.
CCA pays entry-level guards $12.66 an hour, about $25,000 a year – low enough wages to qualify for public assistance. And that doesn’t include even lower-paying administrative jobs. It’s the Walmartization of the public safety sector and it comes will all the short-cuts we’ve come to expect from that trend. 


Lobato vs. Colorado at the Colorado Supreme Court

9NEWS reports, a portentous set of oral arguments just finished before the Colorado Supreme Court:

It will be months before the Supreme Court issues a ruling, which could have a major affect [sic] on the state budget…

"We're a wealthy state," said Kathleen Gebhardt, founder of Children's Voices, a non-profit law firm which advocates for education. "We're in the top 10 for wealth and in the bottom for funding our students."

Gebhardt is an attorney representing the plaintiffs in the lawsuit of Lobato vs. the State of Colorado. The lawsuit, which has been initially upheld in district court, states that school funding is not equal across the state of Colorado and that is a violation of the state constitution. The case is currently under appeal.

According to the Colorado Department of Education and Gebhardt, schools receive an average of $6,474 per pupil in tax dollars.

"And, that puts us well into the bottom quadrant of all other states," Gebhardt said. "That worries me greatly about Colorado."

The district court ruling, which we discussed when it was issued back in 2011, was a thorough 180+ page indictment of the present state of Colorado's education system. District Judge Sheila Rappaport found that Colorado's public education funding system is not "rationally related" to the increasing requirements imposed on it–and that the state is unconstitutionally violating the Education Clause in the Colorado Constitution, which requires a "thorough and uniform" public education system.

If plaintiffs prevail, what could follow is a massive and court-mandated shakeup of not just education funding, but just about every other publicly-funded program in the state of Colorado as priorities obligatively shift to comply. The potential major upheaval this could create is a big reason why Gov. John Hickenlooper and others, even many who would support a large systemic change in support of public education, to oppose plaintiffs and argue that creating a "thorough and uniform" education system is a responsibility of the elected legislature–not the courts.

Recognizing the difficulty in striking a balance between these competing rational arguments, but mindful of the stories of severe hardship in many chronically underfunded school districts around the state, we've been anticipating this showdown for some time.

Another Shot At The Apple?

Not to be lost among the splashier debates underway at the Capitol, the Durango Herald's Joe Hanel reports today on an ambitious new School Finance Act proposal from Sen. Michael Johnston:

A state senator is proposing a $1 billion tax increase to fund the first major change in 20 years to the way Colorado pays for its schools.

Sen. Mike Johnston, D-Denver, has previously sponsored controversial school-reform legislation, including an end to seniority-based job protection for teachers.

On Monday, he unveiled what he called the capstone of those efforts – a new school-finance system to pay for the reforms passed by the Legislature. But if his bill passes, it would not take effect unless voters approve a historic tax increase for schools.

“We see this as a once-in-a-generation chance to get this right,” Johnston said…

The Legislature currently spends a little more than $5 billion on public education. Johnston estimated his new system would require an additional $750 million to $1.1 billion a year.

Read more about Sen. Johnston's proposal here. In addition to increased funding generally, badly needed after years of cuts, what we're looking at here is the first real proposal to address the historic ruling in the case of Lobato v. Colorado–which ruled that education funding in the state is fundamentally unequal, and not "rationally related" to the constitutional requirement to provide a thorough and uniform education for all students.

The last such attempt to boost education funding, 2011's Proposition 103, bombed with voters, but in the wake of its defeat, it's become clear that many voted against it because they didn't consider it to be a sufficient remedy for the problem. That fact would seem to be acknowledged in Sen. Johnston's call for an additional billion dollars per year, a number much closer to what experts say public schools in Colorado need to recover from years of austerity and cuts than Proposition 103's modest and temporary tax increases could have provided.

It's increasingly likely that this proposal, or something like it, will be a big part of our politics very soon.

#Obamaquester? Too Clever By Half

jedimindtrickOur friends at the Washington Post report:

Congressional Republicans now have a hashtag for their efforts to pin the blame for the looming sequester on President Obama: #Obamaquester.

President Obama this week ramped up public calls for the GOP’s cooperation on averting the deep automatic spending cuts set to go into effect on March 1. 

The National Republican Campaign Committee and House leadership on Friday began pushing the hashtag #Obamaquester, surfacing an excerpt from Bob Woodward’s book “The Price of Politics,” wherein Obama aide Jack Lew first proposes the deep cuts as a trigger for future action on debt…

But as Natalie Jennings at the Post quickly reminds her readers, the plan for "sequester" cuts in the Budget Control Act of 2011 were approved by a large majority of Republicans–a much greater percentage of Republicans than Democrats in fact–at the end of a long episode where those very same Republicans held the nation hostage in demand of…bigger budget cuts! You remember all of this, don't you? It wasn't that long ago. 


Boehner: Obama Seeks GOP’s “Annihilation”

Politico–tough to consider this a constructive attitude:

President Barack Obama is aiming to “annihilate” the GOP during the president’s second term, House Speaker John Boehner says.

“And given what we heard yesterday about the President’s vision for his second term, it’s pretty clear to me that he knows he can’t do any of that as long as the House is controlled by Republicans,” Boehner (R-Ohio) said at a gathering of the Republican-oriented Ripon Society on Tuesday, a day after President Barack Obama’s second Inaugural address. “So we’re expecting over the next 22 months to be the focus of this Administration as they attempt to annihilate the Republican Party. And let me just tell you, I do believe that is their goal — to just shove us into the dustbin of history.”

Boehner’s comments came in the wake of what critics called an unusually partisan inaugural speech from Obama, who pledged commitment to liberal priorities including climate change, protecting entitlements and gay marriage.

President Barack Obama’s second inaugural address received high marks from base Democrats, many of whom had felt frustrated by Obama’s long and usually fruitless negotiations with Speaker John Boehner and congressional Republicans–negotiations in which Obama was seen making concession after concession to Republicans, and still failing to attract their support. And it needs to be said every time–the things Obama wants enjoy popular support.

Bottom line: Boehner’s charge that Obama wants to shove the GOP “into the dustbin of history” is laden with irony after GOP Senate Leader Mitch McConnell’s promise in 2010 to render Obama a “one-term President”–his “top priority” as you recall. Arguably, Obama’s first four years in office amounted to one massive campaign by Republicans to shove Obama “into the dustbin of history.” And as opinion polling shows the public understands today, this was done without heed to the collateral damage: to the economy, or to the public’s confidence in any of our leaders.

And now that they have failed, totally failed, it’s Obama who wants to “annihilate” the Republican Party?

No, folks. If that’s what happens, history will record they did it to themselves.

Mesa Valley District 51 had a SURPLUS in 2010-2011 of $2.124 Million!

Contrary to popular news flashes and propaganda released by the Mesa Valley School District 51 and their Union TABOR buster handouts, they actually show a Surplus in the recent 2010-2011 Colorado Department of Education (CDE) Total Expenditures and Revenues.  This is after the hotly contested Mill Levy Override requested last year by the District Administration for 3B in which Mesa County homeowners and businesses rejected!  The businesses and homeowners were asked to give up a Starbucks coffee and a movie in return for an increased property TAX and the District pleaded that if the Levy override wasn’t passed schools would close immediately.  To date NO Mesa Valley Schools have been closed and at the January 8th, 2013 school board business round table discussion it was mentioned by a Board member that the District had extra funds available this year as well.

BUT what is interesting as you dig into the PAST you discover A SPENDING Problem during some of our best financial years!!!  Also notice the per pupil funding as it differs often from the low $6,100 you always hear.

Here are the 2010-2011 Totals based on 21,025.2

Total Revenues (Incoming Taxes) $212,037,042.00 or $10,085 per pupil

Total Expenditures (Outgoing Cost) $209,912,512.00 or $9984 per pupil

Surplus (What’s left over after all Cost) $2,124,530.00 or $101 per pupil

Just to completely verify the above numbers as accurate, VetTheGov contacted CDE finance office staff via email. Here is the Exchange:

Hello Theresa,

Questions on Total Revenues vs Expenditures at the District Level.

Do the totals in Table IIB rows J & K for 2010-2011 represent every dime from that District??? Is there any other Expenditures or Revenues not shown here and if not where else would they be???

Do reimbursements for transportation or special needs appear in these calculations???

Mr./Mrs. _____,

It reflects all reported expenditures reported by the districts. If you asking about state categorical funding for transportation and special education? If so, yes the revenue and associated expenditures are reported.

Theresa Christensen | Sr. Consultant Public School Finance | Colorado Department of Education

Since we have been hearing about the dire straight budget constraints over the past few years of recession lets look back a couple of budget cycles.

Here are the 2009-2010 Totals based on 20,996.2 pupils

Total Revenues (Incoming Taxes) $202,371,247.00 or $9638 per pupil

Total Expenditures (Outgoing Cost) $201,300,376.00 or $9587 per pupil

Surplus (What’s left over after all Cost) $1,070,871.00 or $51 per pupil

Here are the 2008-2009 Totals based on 21,041.8 pupils

Total Revenues (Incoming Taxes) $195,144,726.00 or $9274 per pupil

Total Expenditures (Outgoing Cost) $199,263,059.00 or $9470 per pupil

Deficit (Overspent Revenues) $-4,118,333.00 or $-196 per pupil

Here are the 2007-2008 Totals based on 20,241 pupils

Total Revenues (Incoming Taxes) $188,562,683.00 or $9316 per pupil

Total Expenditures (Outgoing Cost) $194,187,598.00 or $9594 per pupil

Deficit (Overspent Revenues) $-5,624,915.00 or $-278 per pupil

Here are the 2006-2007 Totals based on 20,206 pupils

Total Revenues (Incoming Taxes) $179,871,623.00 or $8902 per pupil

Total Expenditures (Outgoing Cost) $194,976,795.00 or $9649 per pupil

Deficit (Overspent Revenues) $-15,105,142.00 or $-747 per pupil

Interesting to Note that in 2010-2011 the CDE administration’s budget was $38.5 Million for 110 Full Time Equivalents (FTE) and has been raised during this recession to just over $80 Million for 150 FTE’s!  So CDE how can you justify 40 new administrators during a recession for twice the previous allocations???  Taxpayers these are the questions you need to ask your elected officials, otherwise the Smoke & mirrors campaign pushes forward!

After following the PAST money trail it appears during the Boom cycles Mesa Valley District 51 Overspent by a large amount and after being over $24 Million in the RED  they finally have their hands around how to budget!  Kudos to the current administration especially Melissa Devita for stopping the bleeding but it leaves many questions as to why the HUGE deficits when times were best and now when times are poor you are actually in Surplus. Mesa County residents these are the questions to begin asking the school board and school administration!  Where have the TARP monies been spent???  Why are you not discussing all Revenues when discussing the budget only State and local funds???  Why do you state that Federal funds are directed to be spent in certain areas when you know that is an untrue statement???  Why did you overspend back in the BOOM cycle???  How much monies from Referendum C did you receive???  Why the ATTACK on TABOR???

Here is the Districts Smoke & Mirror campaign of trying to cover up the past OVERSPENDING issues when State Tax Revenue times were at their pinnacle!!!  Enjoy the Video!

Colorado Senate Leads Off With Working Class Tax Credit

Colorado Senate Bill 13-001, as announced yesterday by the Democratic Majority Office:

When the Colorado General Assembly reconvenes on January 9, President Morse will introduce Senate Bill 1, the Colorado Working Families Economic Opportunity Act of 2013. The Act would create a tax credit for working families, a child and dependent care credit, and a child tax credit against state income taxes.

Many Colorado families are still struggling from the impact of our slow economic recovery, which has made it hard for wages to keep up with the increasing costs of basic necessities like childcare and transportation. This bill could provide a financial boost for more than 370,000 working families.

The Colorado Working Families Economic Opportunity Act is a refund mechanism funded by a state revenue surplus, in accordance with the Taxpayers Bill of Rights (TABOR). Additionally, this proposed legislation would not create more government or bureaucracy because it is based upon already established federal guidelines and qualifications for earned income tax credits.

As further explained by KRDO-TV Colorado Springs:

Senate Bill One, the Colorado Working Families Economic Opportunity Act of 2013 proposes three tax credits. One would be for families who earn up to $60,000, the second would be for families with children and the third would be for families who provide for someone like children or an elderly parent.

“If you’ve got a single mom with two kids, making $32,000 a year, she’d get about $720 worth of credit that she would then be able to use to pay for childcare, pay for medical expenses, pay for transportation expenses, those kinds of things” Senator Morse said.

He said families receiving the tax credits wouldn’t be the only ones affected. He said the small businesses that employ them would also benefit, as workers would be able to attend work more consistently. And he said by spending that money they keep, those individuals would stimulate the economy.

The effect of passage of these refundable tax credits would be similar to the help to working families provided by the Democratic-favored federal Earned Income Tax Credit, and paid for with improving revenues now coming in as the economy recovers. Particularly with the recent end of the federal payroll tax “holiday” benefiting many of the same working class taxpayers, it’s tough to argue against this credit despite its expected fiscal note. As was the case with the EITC, we expect to see some impact studies showing this plan having a greater positive economic impact than, say, funding the Republican-favored Senior Homestead Exemption.

A clever initiative for Senate Democrats; we’ll be curious to see the arguments against this.

Denver’s Donnell-Kay Foundation Hears Pension Reform Ideas From Pew Center.

On October 17, 2012, the Donnell-Kay Foundation held a “Hot Lunch” meeting in Denver with representatives of the Pew Center and the John Arnold Foundation.

My take is that Donnell-Kay is an organization that works for the betterment of Colorado’s education system, but is also an advocate for elimination of public sector defined benefit plans in favor of cash balance or defined contribution plans. I believe that Donnell-Kay finds a kindred spirit in the Pew Center/Arnold Foundation partnership.

Here’s a description of the “Hot Lunch” presentation:

“Josh B. McGee, Vice President for Public Accountability Initiatives at the Laura and John Arnold Foundation, presented ‘Affordable, Sustainable and Secure: Fixing retirement savings systems for future generations.” Also presenting at the “Hot Lunch” was David Draine, lead researcher on public sector retirement systems at the Pew Center on the States.

A Podcast of the presentation is available at a link provided by EdNewsColorado here:…

And, slides from the talk are here:…

I listened to the podcast and looked at the slides. I appreciated Josh McGee’s third slide titled “Colorado Pension Plans – Recommended and Actual Contributions.” This slide addresses the shortfall in the Colorado General Assembly’s annual required public pension contributions over the last decade. (Later in the presentation, David Draine of the Pew Center states that the Colorado General Assembly has underfunded Colorado PERA by $3.5 billion from 2000 to 2011.)

On Josh McGee’s seventh slide he suggests that: “The unfunded (pension) liability should be viewed as government debt.” (Agreed . . . in fact, I’ve noticed that Colorado’s TABOR amendment implicitly recognizes public pension obligations as state “debt,” not to mention Colorado case law, AG opinions, etc.)

On later slides Josh McGee presents the John Arnold Foundation’s advocacy of cash balance and defined contribution plans.

An article covering the “Hot Lunch” presentation quotes David Draine on the reasons for Colorado PERA’s financial downturn: “Contributions weren’t made, benefit increases weren’t paid for and investment returns didn’t materialize, he (Draine) said.”

A person named “Marilyn Sweet” has the following comment (in the comment section) under the article covering the Hot Lunch presentation:

“This article fails to mention that in 2000 the Republican governor and legislators made PERA refund money to employees in the form of Matchmaker which gave us each $40 a month in refunds from the pension system. The fund was 102% funded and apparently this was unbearable to the Repubs. The problem stems from the lawmakers messing with a good system and not ‘banking’ during the good years. Poor business practice at best. Don’t blame the retirees for this shortsightedness.”

(My understanding is that EdNewsColorado is funded by Donnell-Kay.)

In my opinion, the Pew Center appears to be ready to save public resources through the breach of public pension contracts where possible (see comments below in support of pension reforms adopted in Rhode Island and San Jose that seized contracted pension COLA benefits.)

Now for a few quotations from the podcast. David Draine of the Pew Center on the States:

“From 2000 to 2011 contributions from state and local governments in Colorado fell short of what they should have been by $3.5 billion.”

“Ultimately these benefit promises will need to get paid.”

“It is also clear that the longer states delay the more painful the fiscal impact will be.”

(This statement calls to mind an observation from the Illinois pension reform debate:

” . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”

Gino L. DiVito, Tabet DiVito & Rothstein LLC, Chicago, ILL)

In his talk, David Draine also sang the praises of the San Jose and Rhode Island pension reform efforts (which, by the way, included COLA theft.) Finally, he noted that PERA’s new leader, Greg Smith, was also present at the hearing. As a newly anointed Executive Director, where does Greg Smith intend to take Colorado PERA next?

Josh McGee, of the John Arnold Foundation then spoke. Here are a few quotations:

“We’ve promised one thing and funded something completely different.”

“There is an incentive to underfund these systems.”

(I found it interesting that Josh McGee commented on the loss in pension wealth that his wife [who is teacher] incurred when the couple chose to move from Arkansas to Texas.)

Josh McGee then pointed out the benefits of cash balance and defined contribution plans, and said that the costs of transitioning to a new public pension system is a “red herring.”

“There are no costs to transitioning” to a new plan system.

So, in my opinion, it appears that the Pew Center and the John Arnold Foundation are not attempting to provide objective public policy research . . . they are advocates for specific policy solutions to the public pension underfunding problem, and are apparently apologists for the breach of public pension contracts. (Nothing wrong with being an advocate as long as you let people know!)

Here’s a link to a Josh Mcgee paper recommending DC plans, Cash Balance plans, and Hybrid pension plans:…

Here’s the Donnell-Kay’s position on Colorado PERA:

“The current pension system (PERA) provides none of these assurances; it ensures that salaries are held low, that once a person enters the teaching profession, for example, that they should stay for their entire lifetime, that there is only one way to save for retirement and that wildly optimistic earnings projections will mask a system that is and never will be fully funded.”





The Colorado General Assembly has been the primary contributor to the creation of Colorado PERA’s unfunded pension liabilities in recent decades.  For this body, the author of the PERA pension underfunding “problem,” to argue that the existence of this “problem” should somehow justify its breach of contractual public pension obligations is simply . . . outrageous.

Colorado is a relatively wealthy state.  There are sixty-four counties in Colorado.  Ten of these counties are among the 100 richest counties in the nation.  According to the U.S. Department of Commerce, Colorado now has the 15th highest per capita income in the nation.  I consider any attempt to breach contracts by a state that ranks 15th in the nation in per capita income to be outrageous.

As we have chronicled at, the Colorado General Assembly has traditionally and intentionally slashed its available revenues . . . revenues that would otherwise have been available to the General Assembly to meet its contractual pension obligations.  The General Assembly has ignored its PERA pension contractual obligations.  It has directed one-half BILLION dollars to fund public pensions that are not its responsibility. It has repeatedly and inexplicably made $100 million discretionary grants from its purportedly “tight” revenues.  

Further, over a 17-year period, the Colorado General Assembly has artificially reduced its available financial resources through its own faulty legal reasoning.  The Colorado General Assembly’s own ineptitude (a 1992 OLLS legal opinion’s misinterpretation of the Arveschough-Bird fiscal limitations) artificially diminished revenues available to the State of Colorado for a 17-year period.  How much damage has this legal blunder done to state coffers over this 17-year period?  How much revenue did the state lose as a result of this faulty legal analysis?  Tell me why a relatively small group of Coloradans, PERA pensioners, should have their contracts with the state discarded due to the General Assembly’s claims of insufficient revenues.  Particularly, when the General Assembly’s actions have significantly reduced these available resources.  Why should PERA pensioners bear the burden of the Colorado General Assembly’s past legal mistakes?

As we have seen, the Colorado General Assembly: has ignored $4.3 billion of its annual required contributions to the PERA pension in just the last decade, has ignored legal pension funding options adopted by other states, and has succeeded in transforming the State of Colorado into a “tax haven.”  Over the decades, the General Assembly has given Coloradans one of the lowest tax burdens in the country, and in doing so, has intentionally cut available revenues that might have shored up the PERA pension plan.  The General Assembly has voluntarily made grants from its General Funds for purposes of discretionary property tax relief, while simultaneously claiming that it faces fiscal strife.  Who cannot see that this claim defies logic?

Many members of the Colorado General Assembly have supported the severe restriction of public resources available to the state.  Many supported the adoption of the TABOR constitutional amendment in 1992, and continue to support TABOR’s extreme restriction of public financial resources.  Indeed, the author of 1992 TABOR constitutional amendment has served as a member of the Colorado General Assembly.

In 1999 and 2000, the Colorado General Assembly, at the prompting of Governor Bill Owens, enacted tax cutting measures that significantly reduced the state’s future revenue stream.  This constituted a nearly criminal disregard for the ability of the state to meet its contractual obligations over time.  A Colorado General Assembly that has, by design, decimated its tax base, now beseeches the courts to license the abandonment of its contractual obligations.

The General Assembly has slashed the pension contributions of PERA-affiliated employers over the years.  A quotation from the Colorado Statesman:

“PERA’s troubles date back to 1999-2000, when the pension plan peaked at 104.7 percent on its ratio of assets to obligations (liabilities).  The Legislature was feeling flush, and passed bills reducing the employer contribution.”



The group “Friends of PERA” tells us on their website:

“Rate cuts to PERA (affiliated employers) between 2000 and 2005 equaled some $325 million.”

Ten years ago, the Governor of Colorado allowed his own political preferences to harm the fiscal soundness of the PERA trust funds.  From the Silver and Gold Record archives:

“PERA reacted promptly to the market downturn in 2001.  In 2002, it developed a proposal that would have saved PERA millions of dollars in payments and brought in millions of dollars in additional revenue.  This plan was passed unanimously by the General Assembly in 2003 but was vetoed by Governor Bill Owens.”

How much damage to the PERA trust funds was caused by Governor Owens veto of this bill?  PERA retirees will not relinquish their vested pension rights in order to compensate for past pension mismanagement by politicians.

In 2009, the Colorado General Assembly could not be bothered to appoint a commission to study pension funding options prior to breaching pension contracts.  So it abdicated this policy-making responsibility to pension administrators and lobbyists.  Colorado PERA is one of the public pension plans in the United States that actively lobby its sponsoring governments, spending $400,000 for that purpose each year.  PERA pension administrators have used the trust funds of pension beneficiaries in a long-running and continuing program to influence members of the Legislature.  This fact alone should give pause to elected officials.  

One should also remember that the Colorado PERA Board determines the asset allocation for the PERA trust funds.  The PERA Board determined the portion of PERA’s portfolio that was exposed to equities prior to the most recent equities market downturn.  In lieu of increasing equity exposure in the PERA trust funds, the PERA Board had the option of requesting that the State of Colorado and other PERA-affiliated employers provide additional resources to invest in less volatile securities.  Has this ever occurred to the PERA Board?  Have they ever made this request?

Why should PERA pensioners, who bear no market risk, be forced to relinquish their property to compensate for asset allocation decisions made by the PERA Board?  The PERA Board intentionally places a significant portion of PERA trust funds into volatile common stocks and then is surprised that common stocks are volatile.  Then, the PERA Board argues that this volatility should permit their breach of contracts?

At the core of a defined benefit public pension plan is the assumption of market risk by the public pension plan sponsor.  This fact draws workers to the public employer members of the pension plan as part of the employment exchange transaction.  Will PERA’s administrators deny the very nature of public pension plans?

Further, administrators of public pension plans cannot reasonably claim ignorance of market volatility, even extreme market volatility.  They have experienced extreme market volatility on a number of occasions in just the last decade.  Public pension plan administrators are paid to manage this volatility, not to shift the consequences of their unsuccessful investment strategies onto others through the breach of contracts.  To paraphrase the author of a recent law review article: “The unanticipated severity of an anticipated event does not justify unilateral modification of a contract.”

Instead of adopting legal, prospective pension reforms (as have been adopted by numerous states) the Colorado PERA Board insisted that PERA pensioner contracts be breached.  This decision could ultimately delay true PERA pension reform in Colorado by 4-5 years.  These are years during which the PERA trust funds might have been on the road to financial strength through legal reform.

Make no mistake: Colorado taxpayers will eventually be forced pay billions of dollars in additional costs resulting from the Colorado PERA Board of Trustees’ decision to delay true, legal pension reform and instead pursue fruitless litigation.

A commentator in another state that is addressing public pension liabilities put it well:

” . . . a short-lived pension reform that is invalidated by court order after protracted litigation . . . would be a disservice to the taxpayers.”

Gino L. DiVito, Tabet DiVito & Rothstein LLC, Chicago, ILL

Colorado law allows the Governor to submit questions to the Colorado Supreme Court regarding the constitutionality of proposed legislation.  This option was available to Governor Ritter and (through him) it was available to the General Assembly.  The Denver Post editorial board encouraged the General Assembly to make this request prior to enacting SB 10-001.  In addition to the Denver Post editorial board, Colorado PERA itself encouraged the General Assembly to send an interrogatory to the Colorado Supreme Court regarding the constitutionality of its proposed pension reforms.  The General Assembly failed to do so.  From the Colorado Statesman:

“PERA also is hoping the Legislature will ask the Colorado Supreme Court to review the matter through interrogatories before the end of the session.”



Question: If the Colorado PERA Board of Trustees possessed such confidence in its SB 10-001 pension reform proposal, why did the PERA Board of Trustees encourage the General Assembly to check the constitutionality of the proposal with the Colorado Supreme Court?  Obviously, the Colorado PERA Board of Trustees lacked confidence in the constitutionality of the proposal (contained in SB 10-001.)  If the PERA Board had complete confidence in the proposal . . . if the PERA Board had complete confidence in their 2009 outside legal opinion supporting the proposal . . . if the PERA Board had complete confidence in the legal advice they received from internal and external attorneys, then the PERA Board would not have desired that the Colorado Supreme Court check their work before they plunged headlong into litigation.

Question for the PERA Board and administrators: How did the leadership of the Colorado General Assembly explain their decision to forego a Colorado Supreme Court interrogatory on the constitutionality of SB 10-001’s provisions?  Who communicated this decision to you?  Senate President Brandon Shaffer?  What was the rationale?

Colorado is a Wealthy State, and . . . Colorado is a “Tax Haven.”

Should one of the wealthiest states in the nation (and a state that also enjoys one of the lowest tax burdens among the states) be permitted to breach its contractual pension obligations in order to further reduce that tax burden?

The Colorado Fiscal Policy Institute publishes a “Colorado Tax Fact Sheet.”  The source of much if the data in this fact sheet is the staff of the Colorado General Assembly.  The fact sheet is available at this link:

What does a “tax haven” look like?  The Colorado Tax Fact Sheet shows us:

–  Colorado’s state tax collections are the second lowest in the nation.

–  Colorado’s combined state and local taxes are the seventh lowest in the nation.

–  Total Colorado taxation per $1000 of income has decreased over the past ten years.

–  Colorado’s corporate income tax rate is 4.63%, the same as the individual income tax rate.

–  Colorado ranks 42nd of 46 states in corporate income tax collections.

–  Twenty-nine states have a flat corporate income tax rate.  The lowest is Utah.  Colorado’s is the second lowest.

–  In 2001, Colorado’s sales tax rate was lowered from 3.0% to the current rate of 2.9%.

–  Colorado taxes the fewest number of services of any state.

–  There are a total of 71 exemptions from state sales and use taxes in Colorado law.  In 2009, Colorado’s exemptions accounted for $1.8 BILLION in lost revenue.

–  Colorado ranks 44th of 45 states in sales and use tax collections.

–  All other states include more services in their sales tax mix than does Colorado.

–  Colorado ranks 32nd out of the 50 states in fuel tax collections.

–  When the combined state severance tax and the local property tax is considered, Colorado ranks 4th of 5 western states (Wyoming, New Mexico, Oklahoma, and Utah).

–  Colorado has no statewide property tax.  It was repealed by the legislature in 1964.  (My comment: In the decade following the repeal of the statewide property tax Colorado PERA’s actuarial funded ratio hit a low of 54.5 percent, yet there was no call to breach the state’s pension contracts.)

Colorado’s Public Expenditures Per Capita are 62 Percent Below the National Average.

The Colorado Fiscal Policy Institute also publishes a “Colorado Tax Primer.”  A PDF of the Colorado Tax Primer published on January, 2011 is available at the following link:…

Below I provide a few relevant excerpts from the Colorado Tax Primer:

“Adequacy Compared to Other States:”

” . . . adequacy is measured by whether the system generates sufficient revenue to fund legislatively-enacted priorities.”

“Certain states (such as Colorado with the implementation of the Taxpayer Bill of Rights) have ignored the fundamental principle that the need for public services should drive the collection of tax revenue.  Instead, these states have flipped the principle on its head by capping tax revenue based on a formula that attempts to define the need for public services based on allowable revenue.”

(My comment: Recall that the constitutional TABOR amendment recognizes Colorado public pension obligations as “debt.”)

“There are multiple ways of measuring the adequacy of revenue as it translates into services. One such measure is state rankings.  Colorado consistently ranks low on expenditures when compared to other states.  Overall, in 2009 Colorado ranked 47th in spending per $1,000 of income.  A recent analysis shows that in order for Colorado to reach the national average in total spending per $1000 in income, the state’s General Fund spending would need to grow by $4.9 billion or 62 percent.”

“The amount of taxes paid by Colorado taxpayers is low compared to other states.  Colorado’s state taxes, per $1,000 of income, rank second from the bottom (49th) in the nation.  Alaska has the highest and New Hampshire the lowest.”

“The income tax rate was subsequently reduced to 4.75 percent for calendar year 1999 and 4.63 percent beginning on Jan. 1, 2000.  This is the current tax rate.  Referendum C, adopted by the voters in 2005, allows the income tax rate to decline to 4.5 percent under specified circumstances after 2010.”

“Colorado ranks 42nd out of 46 states for corporate income taxes per $1,000 of income. The national average for all 46 states is $3.29.  Colorado businesses pay $1.55 per $1,000 of income.”

“In addition, many more income tax exemptions and special deductions are not reported at the state-level since they are applied to the calculation of federal taxable income.”

“There were a total of 71 exemptions from state sales and use taxes in Colorado in 2008.  In 2009, Colorado’s exemptions accounted for $1.8 billion in revenue.”

“Colorado’s sales tax ranks 44th of 45 states per $1,000 of personal income.  Five states have no state sales tax.  The average amount of sales tax paid by all states is $19.68 per $1,000 of income.  Colorado taxpayers pay $10.86.”

“Colorado is one of only four states in which the state government generates less tax revenue than the local governments.  Revenue collections by Colorado state government rank 47th per $1000 of income.  However, revenue collections by state and local governments combined move Colorado to 44th per $1000 of personal income.”

Observations From the Colorado Legislative Staff Regarding Colorado’s Level of Taxation:

“Since 1935, Colorado has enacted 71 sales tax exemptions. For FY 2009-10, estimates show that the total revenue impact of these exemptions was over $1.86 billion.”

Source: Colorado Legislative Council Staff:  


“Colorado’s combined state and local taxes were the seventh lowest in the nation – $95.53 per $1,000 of income, which was 14.7 percent below the national average of $111.99 in FY 2007-08.”

“Colorado had the second lowest state tax collections ($40.89) per $1,000 of personal income in FY 2008-09 in the country.  The state tax burden was nearly the same (the state ranked 47th ) ten years ago in FY 1997-98, although collections were higher at $54.68 per $1,000 of income.”


Clearly, over the decades, the Colorado General Assembly has obliterated its tax base . . . it now seeks to obliterate its contractual pension obligations.  Nevertheless, the Colorado General Assembly is the creator of the Colorado Public Employees’ Retirement Association.  The Colorado General Assembly freely entered into contractual relationships with all PERA members.  Having created these contracts, the General Assembly must now honor them.

“No State shall . . . pass any . . . Law impairing the Obligation of Contracts.”

Will TBD Up The Ante? It All Depends on Hickenlooper

As the Durango Herald’s Jordyn Dahl reports:

Leaders of TBD Colorado say the key finding of the initiative is that Colorado’s economy is “unsustainable without major fiscal and constitutional reforms.”

The eight-member board of directors of To Be Determined Colorado released its recommendations Wednesday to Democratic Gov. John Hickenlooper, who established the initiative to determine a grand plan for the state.

The board based its recommendations on 70 public meetings with 1,200 Coloradans across the state during the last year. The initiative, which had a budget of $1.2 million and was funded by donations, focused on five issues: education, health, transportation, state budget and state workforce.

Opponents of TBD Colorado said the initiative was a way for Hickenlooper to lay the groundwork for a tax increase. While the recommendations do not directly call for tax increases, it does say revenue options have to be weighed against public services Coloradans want. [Pols emphasis]

Here’s what the summary report from TBD Colorado itself says:

In recent years, the state’s revenues have not kept pace with the underlying growth in the Colorado economy because many of the fastest-growing sectors are either exempt from tax or are taxed at a lower rate than other sectors. Even though Colorado’s revenues are now increasing as the economy begins to recover, the state will be unable to grow its way out of the coming fiscal gridlock unless structural changes are made. Projected demographic shifts, such as an aging population and the increased medical costs that flow from that, will only accelerate the stresses on the state’s budget.

Respecting the role of Colorado voters, who have ultimate authority on increasing taxes, revenue options must be weighed against public services Coloradans wish to receive.

We haven’t had much to say about Gov. John Hickenlooper’s TBD Colorado initiative, because there hasn’t been much to say. Hickenlooper’s administration convened these facilitated meetings all over the state as their way of taking the citizenry’s pulse on a wide variety of fiscal issues, as well as asking what essential services citizens expect the government to provide.

The TBD Colorado initiative takes place against a backdrop of a known and very bleak fiscal reality for the state of Colorado. As a recent study by the University of Denver determined, revenues in Colorado are structurally insufficient to provide even the present level of services to the state’s growing population. By 2025, that study indicated the state will be billions short of basic needs. In addition, the Lobato education funding lawsuit has exposed a lack of “rational relationship” between the state’s funding mechanism for public education and the constitutional requirement to provide a “thorough and uniform” education to all students.

Bottom line: Republicans are increasingly wary of the TBD Colorado initiative, because it is just the latest in a series of findings that the state’s fiscal situation is not sustainable–and the only solution, once all efficiencies and waste have been squeezed out of the system, is to increase revenue. We’ve said it a hundred times, and we’ll say it again: Colorado’s tax burden is significantly below the national average, and that low tax burden has a direct relationship to the state’s chronic inability to fund essential services. Something has to give.

It will be up to Hickenlooper turn his focus groups into a tangible plan of action. After the humiliating defeat of Proposition 103 in 2011, a defeat largely attributed to the failure of Democrats like Hickenlooper to invest their political capital in investing in education, it’s clearer than ever what the key ingredient in any real solution is going to be.

And that ingredient is leadership.