Monday was the deadline for all ballot initiatives to be submitted with the required number of signatures to the Colorado Secretary of State's Office to be added to the Nov. 6 ballot.
One of them, Ballot Initiative 93, would increase taxes by $1.5 billion annually to fund public school education if approved by a 55 percent supermajority.
Called "The Variable Income Tax Rate Increase for Dedicated Education Fund and Property Tax Decrease Initiative," Initiative 93 may appear as a combined constitutional amendment and state statute. It received 170,000 signatures, far more than the 98,492 required, and was submitted to the Secretary of State for certification on July 11.
The initiative proposes "an amendment to the Colorado constitution and a change to the Colorado revised statutes concerning funding relating to preschool through high school public education."
If approved, state income taxes would increase by a variable tax rate structure incrementally for individuals, trusts, and estates using four tax brackets starting at .37 percent for incomes over $150,000. Incomes over $500,000 would increase to 3.62 percent. The corporate income tax rate would increase by 1.37 percent from 4.63 to 6 percent.
The measure creates a "Quality Public Education Fund" into which the tax increase revenue would be deposited, and stipulates changes to state statutes regarding how tax increases are implemented. It also seeks to amend the constitution, requiring the state to provide and fully fund early-childhood, primary and secondary education through age 21.
The Denver-based Independence Institute notes that the income tax increase would impact 8.2 percent of individual taxpayers, including small business owners, estates, trusts, and businesses that file individually. By increasing taxes on eight percent of the population, the education fund would receive an estimated $1.4 billion in the next budget cycle and $229.4 million in budget year 2019-20. This means that about 15,000 corporate income taxpayers would pay an additional $14,139 per year.
The initiative proposes reducing the current residential assessment rates from 7.2 to 7 percent and nonresidential assessment from 29 to 24 percent.
Proponents of "Great Schools, Thriving Communities" spearheaded the initiative, which is supported by a plethora of organizations including numerous education associations, the Colorado AFL-CIO, education foundations, League of Women Voters, Colorado Council of Churches, among others. They argue since the state cut funding during the Great Recession for public school education, funding levels have never recovered.
The Independence Institute, the Taxpayer Bill of Rights (TABOR) Foundation, and other organizations argue that raising taxes would hurt the economy and taxpayers who already are paying increased taxes. The initiative would disproportionately and negatively impact Colorado businesses that are sole proprietorships, S corporations, and partnerships because they report their profits as individual income tax filers. This would negatively impact the economy, reducing the ability for companies to invest and hire employees, critics argue.
Penn Pfiffner, chairman of the Board of the TABOR Foundation, told Watchdog.org that the measure is unreasonable and beyond greedy.
"Even people who support increased taxes for education should vote against this concept," Pfiffner said. "I have learned that a graduated income tax is the worst possible scheme to raise taxes. No longer would Colorado have a fair provision in which your taxes go up proportionally with higher incomes, but the burden gets greater and greater under this proposal. Corporate income taxes are jacked up too. If successful, proponents should just post a sign that says, ‘we don’t want success in our state.’ Haven’t proponents read the fable against killing the goose that laid the golden eggs?"
The Independent Institute reports that state funds account for 62 percent of Colorado’s total public school funding. Colorado's constitution already requires the state to adjust funding for inflation. The state’s fiscal 2018 base subsidy rate was $6,546.20 per student, the highest amount in state history.
But this number is not entirely accurate, the institute notes. Including the 4-point criteria used to fund schools, district-specific per-pupil spending ranged from $7,236 to $16,247. (Districts receive additional state assistance for specific programs, such as special education, English language learning, gifted and talented, vocational programs, and transportation.)
The institute said in a statement to Watchdog.org that if Initiative 93 passes, "Colorado will no longer have equal state income tax rates for all. Instead, it will have a progressive state income tax with a top marginal rate of 8.25 percent, the ninth highest in the country."
Additionally, it eliminates protections for the taxpayer afforded by TABOR because the estimated $1.6 billion in new tax revenues will not be included as part of the state spending limits it established.
Critics also point out that Initiative 93 imposes a tax increase without any guarantee of increased academic achievement. Instead of raising taxes to throw money at a problem, the underlying problem – reforming the education system – would better improve student outcomes, they argue.
Also troubling, critics note, is that the initiative does not allow the Legislature to adjust the income tax thresholds to account for inflation, and prevents budget flexibility, which will hinder the state’s ability to address other critical budget issues like transportation or health care.
Voters have consistently already approved property tax revenue increases above the amount determined by the school finance formula through mill levy overrides, critics of the initiative point out. As of 2018, voters in 121 out of 178 districts approved mill levy overrides, totaling $1.1 billion in funding.