February 22, 2011 06:27 AM UTC

DU Tax Study Turning Point for State Budget Conversation

• 18 Comments
• by: c rork

( – promoted by Colorado Pols)

TUESDAY addition

1) Pretend for a minute we had no tax code, no existing system of tax assessment and collection. Pretend also that you are preincarnated – you will be a Colorado resident, but you have no idea if you will own half the water in the state, or be a homeless guy under a bridge.  How would you design the tax code?

2) Read this.

http://coloradopols.com/showDi…

3) Tune in  Friday as the 21st century in Colorado begins.

TUESDAY POLS UPDATE: We just got word that this hearing has been moved from LSB-A to the Old Supreme Court Chambers by popular demand, and it is open to the public. Friday at 1:30PM.

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Several recent diaries have ignited conversations around Colorado’s tax system, support of state institutions and Governor Hickenlooper’s assertion that “there isn’t an appetite” for a ballot initiative that overhauls our state’s tax system. The size of the cuts to the state budget- $375 million to K-12 and $36 million to higher education- should spur conversation about our priorities and what kind of future we want for our state.

In 2010, the state legislature commissioned a non-partisan, all-inclusive study of Colorado’s tax system. Among other things, the study must determine,”…the relationship of state and local taxes to the long-term economic growth and prosperity of the state.” EdNews Colorado notes that the study,”…is billed as the first comprehensive look at state and local taxes since 1958 “.

Needless to say, the findings of this report are critically important for a state that is looking for ways to create long-term job growth and esssential for lawmakers weighing the Governor’s proposed cuts. They also mark a pivotal moment for supporters of a possible ballot initiative aimed at raising revenue.

This Friday researchers from DU will be presenting their findings. In an ironic twist, the researchers will be presenting their report to state legislators, none of whom have the ability to levy taxes in Colorado.

Governor Hickenlooper’s statement at the presentation of his budget to the Joint Budget Committee and his interview with Colorado Public Radio were at odds with the preponderance of Democratic lawmakers, many of whom were urging him to look at the “revenue side of the equation”. Most of his remarks to the JBC were directed towards his main message, that Colorado become a more “pro-business” state.

If the researchers have found there is no need for revenue, a possible ballot initiative could be dead in the water. With a tough political and economic climate, the opposition of a credible study and without a nod from the Governor, it would be hard to see how a ballot initiative would be possible. Such a finding could reinvigorate Republican’s efforts to cut from the budget and reinstate tax credits.

This could bode well for a strategy that demonstrates to Colorado’s voters that they can’t receive adequate service from the state government while paying taxes that are among the lowest in the country. On the other hand, this strategy may draw anger from progressives who desire a more principled stand on budget cuts that disproportionately effect education.

However, if the study recommends revenue increases that are deemed imperative to the long-term economic health of the state, it could serve as an opportunity for Democrats to redefine the conversation about taxes and job creation. Though any revenue increase would need to be approved by the voters, a finding similar to that of the Higher Education Strategic Planning committee could signal a growing concensus among business and policy leaders that the state is in need of new revenue and constitutional reform. It also might be hard for Governor Hickenlooper to simultaneously brush off  recommendations by the study and maintain  a “pro-business” image.

I expect much of the study to focus on the gordian knot that ties the hands of state legislators and creates an unsustainable situation for governance of the state. A large range of topics will be covered and I’ll be back to summarize the main points after the hearing. There are no easy solutions to  our current budget crisis, complex constitution or restrictive tax laws . Whatever the findings, there could not be a better time for Colorado to take a long-term approach to tax policy.

Cross Posted @ Squarestate