HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/21/2010 - RESOLUTION 2010-064 OPPOSING THE 2010 STATEWIDE BA DATE: September 21, 2010 AGENDA ITEM SUMMARY
STAFF: Darin Atteberry _
T COLLINS CITY COUNCIL
John Voss
Resolution 2010-064 Opposing the 2010 Statewide Ballot Measures Designated as Proposition 101 and Amendments
60 and 61.
EXECUTIVE SUMMARY
The November 2, 2010 ballot will include three measures that, if passed, would collectively severely reduce City
revenues and restrict financing options. Proposition 101 would eliminate $11 million in City revenue by 2014.
Amendment 60 would reduce the City General Fund by$2.5 million in 2011 and likely result in rate increases for City
utility customers. Amendment 61 would severely limit the City's ability to finance operations and capital projects and
refinance existing debt.
The City of Fort Collins has already eliminated $24 million from its 2005 to 2010 budgets and has proposed an
additional $5.5 million reduction for the 2011-2012 Budget. If passed, Proposition 101, Amendment 60 and
Amendment 61 will reduce revenues further, hamper the City's ability to provide critical services, and harm the state
and local economy. Resolution 2010-064 expresses Council's strong opposition to these three measures.
BACKGROUND/DISCUSSION
The November 2, 2010 ballot will include three measures that, if passed, would collectively severely reduce City
revenues and restrict financing options. A detailed description of Proposition 101, Amendment 60 and Amendment
61 is included in Attachment 1. This information comes from the"Blue Book"written by the state Legislative Council.
The following is a summary of each measure and its impact on the City.
Proposition 101• Income Vehicle and Telecommunication Taxes and Fees
Amends the Colorado statutes to:
• Reduce the state income tax rate from 4.63 percent to 4.5 percent in 2011, and to 3.5 percent gradually
over time.
• Reduce or eliminate taxes and fees on vehicle purchases, registrations, leases, and rentals over the next
four years.
• Eliminate all state and local taxes and fees on telecommunications services, except 911 fees.
• Require voter approval to create or increase fees on vehicles and telecommunications services.
One estimate suggests that as a result of these combined reductions the State general fund will lose,25% of its
revenue, or more than$1 billion. The estimated impact of Proposition 101 on the City of Fort Collins is a loss of$11
million annually by 2014 and includes the following reductions:
• Vehicles rental and leases $ 600,000
• Vehicles sales $3,590,000
• Vehicle ownership $1,242,000
• Funding Advancement for Surface Transportation and Economic Recovery revenues
(FASTER) $ 850,000
• Telecommunications $3,000,000
• Franchise fees phone/cable $1,700,000
Amendment 60: Property Taxes
Amends the Colorado Constitution to:
• Repeal the current voter-approved authority of local governments to keep property taxes above their
constitutional limits.
• Establish expiration dates for future voter-approved property tax increases.
t
September 21, 2010 -2- ITEM 15
• Cut local property tax rates for public schools' operating expense in half over ten years and replace this
money with state funding each year.
• Require publicly owned enterprises to pay property taxes and reduce local property tax rates to offset the
new revenue.
• Provide new voting rights to certain property owners in Colorado and permit citizens to petition all local
governments to reduce property taxes.
If passed,Amendment60 would require the City to refund$2.5 million peryear in property taxes unless voters approve
retention of those funds. Enterprises would be required to pay property taxes, resulting in the City Utilities paying
property taxes of$18 million annually.
The cost to the state to offset school district property tax reductions is estimated to be more than$600 million annually.
Amendment 61: Limits on State and Local Government Borrowing
Amends the Colorado Constitution to:
• Prohibit all new state government borrowing after 2010.
• Prohibit new local government borrowing after 2010, unless approved by voters.
• Limit the amount and length of time of local government borrowing.
• Require that tax rates be reduced after borrowing is fully repaid.
Amendment 61 would strictly limit the City's ability to finance operations and capital projects and refinance existing
debt. Borrowing rates would increase and voter-approved bonded debt would have to be repaid in 10 years, resulting
in higher annual payment obligations. Smaller communities may not have the capacity to borrow at all under these
restrictions. Amendment 61 also would prohibit the City from using lease-purchase agreements and raises questions
about City credit cards, employment agreements and accrued leave obligations.
Response by other entities
Many other cities and governmental organizations across Colorado have expressed opposition to these measures via
formal resolutions or other means. State organizations opposing the measures include Colorado Municipal League
(CIVIL), Colorado Counties Inc. (CCI), Colorado State Fire Chiefs Association, Special Districts Association and
Colorado Association of School Boards (CASB).
Local organizations in opposition include, but are not limited to:
• Downtown Development Authority Board of Directors (Attachment 2)
• Poudre School District Board of Education (Attachment 3)
• Colorado State University Board of Governors (Attachment 4)
• Platte River Power Authority—Board members will consider a resolution in opposition later in September
• Poudre River Public Library District—will consider a resolution in opposition on September 13, 2010
• Larimer County—Commissioners will consider a resolution in opposition in the coming weeks
Conclusion
The City of Fort Collins has already eliminated $24 million from its 2005 to 2010 budgets and has proposed an
additional $5.5 million reduction for the 2011-2012 Budget. If passed, Proposition 101, Amendment 60 and
Amendment 61 will reduce revenues further, restrict the City's ability to provide critical services, and harm the state
and local economy.
FINANCIAL/ ECONOMIC IMPACTS
The total City revenue loss of Proposition 101 and Amendment 60 combined is estimated to be:
• 2011 -$9.9 million
• 2014-$13.5 million
September 21, 2010 -3- ITEM 15
Losses to individual funds by 2014 are as follows:
• General Fund -$9.6 million per year
• Natural Areas Fund -$600,000 per year
• Transportation Fund -$2.7 million per year
• Building on Basics (BOB) -cumulative loss of$2.6 million before expiring December 31, 2015
• Utility rate increases or budget cuts to cover property taxes
The exact impact of state revenue losses on the City is unknown. However, because state services would be cut
significantly, it is likely that local governments would be urged or, in some cases, required to backfill lost services.
ENVIRONMENTAL IMPACTS
Passage of these ballot measures would severely impact City funding and include losses to both the Natural Areas
Fund and General Fund. As a result, a range of environmental quality programs and services would be at risk, e.g.,
those related to solid waste, air quality, conservation, ClimateWise and natural areas operations and maintenance.
Additionally, fewer resources would be available to comply with federal and state environmental regulations.
STAFF RECOMMENDATION
Staff recommends adoption of the Resolution.
BOARD / COMMISSION RECOMMENDATION
The Economic Advisory Commission recommends the City oppose all three measures. (Attachment 5)
ATTACHMENTS
1. Legislative Council "Blue Book" Summaries of Proposition 101 and Amendments 60 and 61
2. Letter from Downtown Development Authority Board of Directors to Mayor and City Council
3. Poudre School District Board of Education resolutions (three) in opposition
4. Colorado State University Board of Governors resolution in opposition
5. Memorandum from Economic Advisory Commission to Mayor and City Council
6. Powerpoint presentation
ATTACHMENT 1
Final Draft
Proposition 101
Income , Vehicle , and Telecommunication Taxes and Fees
1 Proposition 101 proposes amending the Colorado statutes to :
2 ♦ reduce the state income tax rate from 4 . 63 percent to 4 . 5 percent in
3 2011 , and to 3 . 5 percent gradually over time ;
4 ♦ reduce or eliminate taxes and fees on vehicle purchases , registrations ,
5 leases , and rentals over the next four years ;
6 ♦ eliminate all state and local taxes and fees on telecommunication
7 services , except 911 fees ; and
8 ♦ require voter approval to create or increase fees on vehicles and
9 telecommunication services .
10 Summary and Analysis
11 Proposition 101 reduces or eliminates various taxes and fees on income , vehicles ,
12 and telecommunication services . Table 1 shows the annual impact of Proposition 101
13 on three different households , and Table 2 shows the impact on government budgets .
14 Some of the reductions in Proposition 101 are phased in overtime . The impact
15 will be smaller in the first year and will grow in size over the next 15 to 20 years .
16 Estimates of the impact in the first year, as well as the impact once the reductions are
17 fully implemented , are based on today's dollars . The fully implemented impacts
18 provide the best estimates of the measure' s final effects . Although the actual dollar
19 amounts will differ in the future as inflation and growth increase the size of the
20 economy , the comparable budget impacts on taxpayers and governments are
21 expected to remain consistent over time .
22 In the first year, the tax and fee reductions are expected to be $ 1 .4 billion — $ 744
23 million in state reductions and $629 million in local government reductions . Once fully
24 implemented , the impact is expected to be $ 2 . 9 billion in today's dollars — $ 1 .9 billion
25 in state reductions and $ 1 . 0 billion in local government reductions .
26 Impact on households and businesses. Table 1 shows the estimated change in
27 tax and fee bills for three different households as a result of Proposition 101 , in both
28 the first full year the measure is in effect and when the measure is fully implemented ,
29 in today's dollars . Businesses will also experience reductions in taxes and fees .
30 Households and businesses will be impacted differently depending on annual income ,
31 vehicles owned , vehicles purchased , and the amount paid for phone and cable
32 service . Households and businesses will experience additional reductions during
33 years in which vehicles are rented , leased , or purchased .
— 1 —
Final Draft
1 Table 1 . Annual Change in Representative Households` Tax and Fee Bills Due to
2 Proposition 101 , First-Year Impact and When Fully Implemented /a
3 (In Today's Dollars)
ar i � .'.i im 4 'tr• 4 '9^ r "2 l 1
4 t w A •< a is e ; �Te el
y i t A y i �"V cr�4bl 'i �av rl a �� r[• �� IF
5 Jnpome >I'axes °` " Feer axe , 3� & Taxes z ' r ' To#al
VVi°.:'u ,Y,1, .. _ .F. ^` ..a',
6 Household A Household Description: Annual Income: $35,000;
7 owns a 10-year-old car that had an original retail price of $ 13,000 ;
8 $60 monthly phone bill.
9 First Year -$20 -$72 -$43 -$ 135
10 Fully
11 Implemented -$185 -$73 -$43 -$301
r, .n � �� > - . ty , '
12 Household H l tous6hb1d 'Dest:nptrota Annu ncor a $55,OOa0,, ,
13 owns a .5 year-old car that had an ongma ,retail pace of $17,000 'and a
14 =5 year old carthat had an anginal %tall once of $23,500
15 $730 monthly combined phone bills
3
16 Firs# Year $40 % $780 $93 $31.3
} :c. riP.{3"ri; NYi j_ rn irr', a:y.
17 FUII ` 3iJ 4 yY
r,. y - OFE - ;
18 :Implemented ' -$320 , , 2$5 „ " _ `„ y=$93 4708
19 Household C Household Description: Annual Income: $ 110 , 000;
20 owns a 2-year-old car that had an original retail price of $37 ,500 and a
21 3-year-old car that had an original retail price of $26 , 000;
22 $ 180 monthly combined phone bills .
23 First Year -$ 90 -$327 -$ 128 -$545
24 Fully
25 Implemented -$780 -$883 -$ 128 -$ 11791
26 ' Totals may not sum due to rounding.
27 la This analysis assumes a 7. 0 percent combined state and local sales tax rate. Telecommunication tax and fee
28 reductions are fully implemented in 2011 . Some vehicle tax and fee reductions are fully implemented in 2011 and
29 some are phased in between 2011 and 2014. It will take an estimated 15 to 20 years for the income tax rate
30 reductions to be fully implemented.
31 Impact on government budgets. Table 2 shows the estimated impact of
32 Proposition 101 on tax and fee collections used for local government budgets , the
33 state' s general operating budget , and transportation budgets in the first year and once
34 it is fully implemented . All of these impacts are shown in today's dollars . More
35 information on the impact on each type of budget follows . As a result of the decrease
36 in tax and fee collections , state and local governments will have to decrease spending
37 and services , increase fees to pay for services , or some combination of both .
_ 2 --
Final Draft
1 Table 2. Annual Change in Government Tax and Fee Collections
2 Due to Proposition 101 , First-Year Impact and When Fully Implemented
3 (In Today's Dollars)
Grollegjcns under Gotlectrons :
4 Governm,ent Gollectton's Gr'rent Law under Prop 904 Change*
rJ Vehicle Specific Ownership Taxes and $3.9 billion $3.4 billion -$530 million
6 Sales Taxes Collected by Local First Year First Year
7 Governments
8 $3.0 billion -$900 million
9 Fully Implemented Fully Implemented
10
11 Sales Taxes, Income Taxes, and $7.2 billion $6.7 billion -$450 million
12 Telecommunication Fees Collected by First Year First Year
13 the State Government
14 $5 .5 billion -$1 .6 billion
15 Fully Implemented Fully Implemented
16 Vehicle Registration Fees and State $440 million $50 million -$390 million
17 Rental Fees Collected for State and Fully Implemented Fully Implemented
18 Local Transportation Budgets During First Year During First Year
19 Totals may not sum due to rounding.
20 Impact on local government budgets. Local governments will collect less
21 money from vehicle specific ownership taxes and sales taxes . Local governments
22 affected by the measure include school districts , cities , counties , and special districts .
23 Some examples of special districts include recreation , fire , water, sewer, and public
24 transportation districts . The money collected in taxes and fees pays for different
25 services depending on the local government. Most of the money is used for
26 education , public safety, roads , trash service , and parks and recreation . State law
27 requires that school districts be reimbursed by the state for most of their loss in tax
28 collections .
29 Impact on the state government operating budget. The state government will
30 collect less money from sales taxes , income taxes , and telecommunication fees . The
31 state spends 96 percent of its general operating budget on : preschool through higher
32 education ; health care ; prisons ; the courts ; and programs that help low-income ,
33 elderly, and disabled people . Proposition 101 will reduce the amount of money
34 available to pay for the state's general operating budget by an estimated 6 percent in
35 the first year and by an estimated 23 percent once fully implemented .
36 Current law requires the state to reimburse school districts for most of their loss of
37 vehicle specific ownership taxes . This obligation increases the total impact on the
38 state general operating budget during the first year from the $450 million shown in
39 Table 2 to $497 million , and when fully implemented , from $ 1 . 6 billion to $ 1 . 8 billion .
40 Impact on state and local government transportation budgets. Proposition
41 101 reduces funding dedicated to transportation budgets . The state constitution
42 requires that vehicle-related fees collected by the state be spent on road safety ,
43 construction , and maintenance . This money is shared between the state , cities , and
— 3 —
Final Draft
1 counties . The states transportation budget will decrease by an estimated 28 percent
2 from these fee reductions . The impact on city and county government transportation
3 budgets will vary by government . Because cuts affecting transportation budgets are
4 immediate , the full impact shown in Table 2 will occur in 2011 .
5 State Income Tax
6 Households and businesses pay taxes on their income to both the state and
7 federal governments . The state ' s income tax rate is a flat 4 . 63 percent and is the
8 same for all income levels and for both households and businesses . The state income
9 tax is the largest source of money the state receives to pay for its main programs .
10 Proposition 101 gradually lowers the state income tax rate from 4 . 63 percent to
11 3 . 5 percent over time . The rate is first lowered to 4 . 5 percent starting in 2011 . This
12 will reduce income tax collections to the state by an estimated $ 145 million , or
13 3 percent . The tax bill for a household with an annual income of $ 55 , 000 will be
14 reduced by $40 in 2011 . In the future , the rate is reduced by 0 . 1 percentage point
15 each year in which state income tax collections grow by more than 6 percent. For
16 example , if tax collections increase fast enough , the income tax rate will decrease
17 from 4 . 5 percent to 4 .4 percent in 2012 . This will occur until the income tax rate
18 decreases to 3 . 5 percent.
19 When the tax rate is fully reduced , income tax collections to the state will be an
20 estimated 26 percent less , or $ 1 . 3 billion in today's dollars lower than what they would
21 have been without Proposition 101 . The tax bill for a household with an annual
22 income of $ 55 ,000 will be reduced by $ 320 when the cut is fully phased in. Because
23 income tax collections historically have not grown by more than 6 percent every year,
24 it will likely take 15 to 20 years for the tax rate to decline to 3 . 5 percent.
25 Vehicle Fees and Taxes
26 Proposition 101 reduces several types of vehicle fees and taxes as shown in
27 Table 3 . The amounts in the table show the impact when the reductions are fully
28 implemented — sales tax reductions on vehicle purchases and specific ownership tax
29 reductions are phased in over a four-year period , while all other vehicle fee and tax
30 changes occur in 2011 . The total amount of the reduction in vehicle fees and taxes ,
31 when fully implemented , is estimated at $ 1 . 3 billion in today's dollars .
— 4 —
Final Draft
1 Table 3. Vehicle Fees and Taxes Under Current Law
2 and Proposition 101 , When Fully Implemented
3 (in Today's Dollars)
f
4 1 , d .,i r - , .' ♦ 4 ! ( 5 .4 ('
� , Average Pyment� ` State &`focalGovt
5 1Chahge rrt %Ye" rly
6 Current Prop 10? Collecfrons
} r
ar'r'vf } } 2 F r>R '�f Y "Y` Y. .:. m .—r- -• , .vrY`"r fi
P �i au r t t d A"r Gar aMik " "'.N" d"�' ,, ti+':5ATIZVNR tz V-2
i s . . tl t L#.
7 Vhrc/ewnFrSyYA,iY ' j� .� FkHt[ 4 } hq , (�i71
4 'S 9 fur . � , � N ' t�•l !k'�Z ti'ti <r ,T.ryS r±s4uv� tg. . h � Z'3 `:a° r • Y^ia X``'r'sae .1 , t ., :tirtit s�E'ek�. . �Y_. rr ✓; ;+. ^s ,i ryy S� ay. S- t . "..4.R[lt
8 Sales Tax la $2 , 100 $ 12400 -$335 million
9 Four-year Phase in one-time payment one-time payment total for state and local
10 (2011 to 2014)
11 Registration and $81 $10 -$300 million
12 Licensing Fees /b paid once per year paid once per year total for state and local
13 Fully Implemented in 2011
14 Specific Ownership Tax $87 $2 (new cars) or -$345 million
15 Four-year Phase in paid once per year $ 1 (used cars ) total for all school districts /c
16 (2011 to 2014) paid once per year and local governments
Z' }3,'yr n`.a.; -,X. .:I . �a s.h1- YL✓i' .- h_N7 rry° r�'r' n� K si ,k]i!� K ' /. tY ✓ _:. „F �' r� 7, Ir',`-.a
b R t i , ,� b 3 " 2 a c
17 1/e'iYlclt � ' esr �fi4y > .s ;
Y.. � , n `s- , b L,'Jf
„v In a a:! L -. eJ-. ._ t. ilk � .n .•f, -: � ! E r � .ti r ,. y _ . ':'y . th. �, � _f. } ..' _ S" .SI.`;'_ ^:`k� - 1...vl_i_r
18 Sales Tax la $ 1 ,080 total $0 -$65 million
19 Fully Implemented in 2011 ($30 paid monthly total for state and local
during lease term)
20 Registration and $81 $10 -$75 million
21 Licensing Fees lb paid once per year paid once per year total for state and local
22 Fully Implemented in 2011
23 Specific Ownership Tax $87 $0 -$86 million
24 Fully Implemented in 2011 paid once per year paid once per year total for all school districts /c
and local governments
4 "�� A. R;�iL-.�` ''J$.y!' C •r i t � -f Fi.�"� r~r � u , 4z bi r. l ✓'! - , tY�•t i r{.i f � .� , x L� '�ty� �1Sy..+a, R . Yr:.-
25 VerileRenesr>,#3r �t��rN � - , r� f =w € ��F �s� 2
F tk $r c } r T
Jt.�Xi...4 '3�y'��., i �"' �'S�h{.; ._ .. wSfSi :�'71'�-♦ Eyj I�•r E r- . Y', l Jr �' �lL ,
26 Sales Tax la $2 .45 $0 -$80 million
27 Fully Implemented in 2011 per rental day total for state and local
28 State Car Rental Fee $2 $0 -$ 19 million
29 1 Fully Implemented in 2011 per rental day total for state and local
30 /a This analysis assumes a TO percent sates tax rate. For vehicle owners and lessees, it assumes a $30,000 car is
31 purchased or leased for 36 months. For vehicle renters, the analysis assumes a vehicle is rented for $35 a day.
32 /b Currently, the average registration and license fees are lower than the average payment shown in the table, but are
33 estimated to increase to the amounts shown over the next year. The collections numbers represent registration and
34 license fee impacts assuming what the fees will be when they are increased.
35 /c Current law requires the state to reimburse school districts for most of their loss of specific ownership taxes.
36 Vehicle owners. Upon purchase , vehicle buyers are required to pay sales tax . In
37 addition , each year vehicle owners must register their vehicle (s ) with the state and pay
38 registration fees and a specific ownership tax. Proposition 101 reduces all three
39 taxes and fees.
- 5 -
Final Draft
1 Vehicle sales fax. Sales taxes are paid on the purchase of a new or used vehicle .
2 The tax is applied to the price of the vehicle , including any manufacturer' s rebate . The
3 total tax rate is a 2 . 9 percent state rate plus any applicable local government sales tax
4 rates . Because different local governments have different tax rates , the sales tax a
5 buyer pays differs depending on where the buyer lives . The average combined sales
6 tax rate is close to 7 percent.
7 Proposition 101 reduces the sales taxes due on vehicle purchases by exempting
8 the first $ 10 ,000 of the vehicle' s price and any manufacturer's rebate from the sales
9 tax . The $ 10 , 000 exemption is phased in over a four-year period beginning in 2011 .
10 When fully implemented , vehicles worth $ 10 , 000 or less will not have a sales tax bill .
11 Vehicles with greater values will receive a $ 10 , 000 exemption . For example, a vehicle
12 purchased for $ 18 , 000 will be taxed only on $ 8 , 000 of the value . This sales tax cut will
13 reduce local government tax collections by an estimated $ 195 million , or 6 percent,
14 and state government tax collections by an estimated $ 140 million , or 7 percent.
15 Vehicle registration and licensing fees. Vehicle owners pay registration fees each
16 year . Most fees vary according to vehicle weight, age , and value . While most of the
17 money pays for roads and bridges , some pays for services like emergency medical
18 services , vehicle emissions reduction programs , the Colorado State Patrol , and snow
19 plowing .
20 Beginning in 2011 , Proposition 101 combines all registration , licensing , and titling
21 fees into a single $ 10 annual fee , with the exception of vehicle inspection and new
22 license plate fees . As shown in Table 3 , the average registration and licensing fee for
23 vehicle owners would fall from $81 to $ 10 and the amount collected by state and local
24 governments would decrease by about $ 300 million , or 88 percent.
25 Vehicle specific ownership tax. Vehicle owners also pay a specific ownership tax
26 each year when registering a vehicle . The specific ownership tax is a property tax on
27 a vehicle . The tax ranges from 0 . 45 percent to 2 . 10 percent of the vehicle's taxable
28 value , based on the vehicle's original recommended retail price . As a vehicle ages ,
29 the tax rate is reduced . The minimum specific ownership tax is either $ 3 or $5 per
30 vehicle , depending on the type of vehicle . Counties collect specific ownership taxes
31 and distribute them to schools , cities , counties , and special districts within their
32 boundaries .
33 Proposition 101 phases in a cut to specific ownership taxes over four years ,
34 beginning in 2011 . It also requires permission from voters to create or increase future
35 registration and licensing fees . Table 3 shows the change in vehicle owners' bills and
36 state and local government collections .
37 Vehicle lessees. Like vehicle owners , persons who lease vehicles must pay sales
38 taxes , registration fees , and specific ownership taxes each year. Proposition 101
39 reduces or ends all three taxes and fees for vehicle leases .
40 Vehicle sales fax and specific ownership fax. Proposition 101 eliminates sales
41 taxes and annual specific ownership taxes on leased vehicles beginning in 2011 . This
— 6 —
Final Draft
1 will reduce state and local sales tax collections by an estimated $65 million per year,
2 or 1 percent. It will also eliminate all specific ownership taxes collected by local
3 governments on leased vehicles .
4 Vehicle registration and !!tensing fees. Leased vehicles are also required to be
5 registered with the state and lessees must pay annual registration fees . Beginning in
6 2011 , Proposition 101 eliminates all registration fees and imposes a single $ 10 fee per
7 vehicle , resulting in a reduction of $71 for vehicle lessees . The measure reduces
8 state and local collections by approximately $75 million per year.
9 Vehicle renters . The state charges a fee of $2 per day for car rentals . The
10 money is shared by the state , cities , and counties to build , repair, and maintain roads
11 and bridges . Sales tax is also applied , with revenue going to the state and local
12 governments . Proposition 101 eliminates the fee and all sales taxes beginning in
13 2011 . As a result , state and local transportation budgets will have an estimated
14 $ 19 million less per year in fee collections and $ 80 million less in sales tax collections.
15 Other vehicle fees. The state also charges use and permitting fees for large and
16 overweight vehicles that use Colorado roads . A passenger mile tax is also charged
17 for passenger bus or shuttle businesses . Proposition 101 eliminates these fees
18 beginning in 2011 , resulting in $56 million less in state funds , reducing charges to
19 trucking and carrier companies by a like amount.
20 Telecommunication Fees and Taxes
21 Proposition 101 eliminates state and local sales tax and other fees on customer bills
22 for any kind of telecommunications service , except for existing 911 fees . The measure
23 lists the following as telecommunication services , even though some of them are not
24 currently taxed : phone , pager, cable, television , radio, Internet, computer, and satellite
25 services . Currently, the state and some local governments charge sales tax on a
26 portion of the cost of phone and pager services , and some local governments charge
27 sales tax on cable services . State fees that are eliminated include fees that help
28 telephone companies provide access to phone service in rural areas of the state , to the
29 blind , deaf, or speech impaired , and to low-income people . How the elimination of these
30 telephone fees will affect these services is unclear and would likely be determined by
31 the state legislature . However, telephone services for the deaf or speech impaired are
32 required by federal law . Thus , its likely that another funding source will have to be found
33 to continue to provide these services . Local governments may have other fees , such as
34 television franchise fees , that may be eliminated .
35 Proposition 101 freezes 911 fees at their 2009 level . These fees differ from county
36 to county and ranged from 43 cents to $ 1 . 25 per month in 2009 . The 911 fees are
37 charged by local governments to help pay for 911 emergency services .
38 The reduction in a household or business' s telecommunications bill depends on how
39 much it spends on taxable phone and cable . Tax and fee collections by local
40 governments would be reduced by at least $ 194 million each year. Tax and fee
41 collections to the state government would be reduced by an estimated $ 183 million each
42 year.
— 7 —
Final Draft
1 New voter approval requirements. Proposition 101 redefines all
2 telecommunication fees and most vehicle fees as taxes . Because the state constitution
3 requires a vote to increase taxes but not to increase fees , governments will need to ask
4 voters for permission to create new or increase existing vehicle or telecommunication
5 charges in the future . Proposition 101 excludes vehicle- related fines , parking fees , tolls ,
6 vehicle impound fees , vehicle identification and emission inspection fees , and new
7 license plate fees from this requirement.
8 How does Proposition 101 interact with two other measures on the ballot?
9 Proposition 101 along with Amendment 60 (see page x) and Amendment 61 (see
10 page x ) contain provisions that affect state and local government finances by decreasing
11 taxes paid by households and businesses and restricting government borrowing . How
12 these measures work together may require clarification from the state legislature or the
13 courts .
14 Proposition 101 reduces state and local government taxes and fees . Amendment 60
15 reduces local property taxes , while requiring state expenditures for K- 12 education to
16 increase by an amount that offsets the property tax loss for school districts .
17 Amendment 61 requires state and local governments to decrease tax rates when debt is
18 repaid , which is assumed in this analysis to apply to the existing debt of state and local
19 governments , and it prohibits any borrowing by state government.
20 Since portions of these measures are phased in over time , the actual impacts to
21 taxpayers and governments will be less in the initial years of implementation and grow
22 over time . Assuming that all three measures are approved by voters, the first-year
23 impact will be to reduce state taxes and fees by $ 744 million and increase state
24 spending for K- 12 education by $ 385 million . Once fully implemented , the measures are
25 estimated to reduce state taxes and fees by $2 . 1 billion and increase state spending for
26 K- 12 education by $ 1 . 6 billion in today's dollars . This would commit almost all of the
27 state's general operating budget to paying for the constitutional and statutory
28 requirements of K-12 education , leaving little for other government services . In addition ,
29 the prohibition on borrowing will increase budget pressures for the state if it chooses to
30 pay for capital projects from its general operating budget. This would further reduce the
31 amount of money available for other government services .
32 Tax and fee collections for local governments are expected to fall by at least
33 $966 million in the first year of implementation and by $4 . 7 billion when the measures
34 are fully implemented . However, the net impact on local government budgets would be
35 at least $581 million in the first year and $3 . 1 billion when fully implemented after the
36 state reimburses school districts .
37 Total taxes and fees paid by households and businesses are estimated to decrease
38 by $ 1 . 7 billion in the first year and $6 . 8 billion per year in today's dollars when the
39 measures are fully implemented . The measures reduce the taxes and fees owed by an
40 average household making $55 , 000 per year that owns a $ 295 , 000 house by an
41 estimated $400 in the first year and $ 1 , 660 per year when fully implemented .
— 8 —
Final Draft
1 Arguments For
2 1 ) Allowing citizens and businesses to keep more of their own money helps the
3 economy. A family with a yearly income of $ 55 ,000 could have their taxes and fees cut
4 by $313 in the first year of Proposition 101 and $708 per year when it is fully
5 implemented . Businesses will also benefit from the cut in taxes and fees , allowing them
6 to invest in their companies and create new jobs . In addition , people who buy or lease
7 cars will save even more from lower sales taxes . Reducing taxes and fees helps
8 businesses and lower- and middle-income families who are struggling in this difficult
9 economy. Consumer spending and business investment tend to increase when the tax
10 burden is lower.
11 2 ) Proposition 101 will require state and local governments to eliminate
12 unnecessary spending . Governments will look more closely at how they spend money,
13 ensuring that taxpayer dollars are used in the best and most efficient way. State and
14 local governments already spend about $40 billion a year, which amounts to an average
15 of $20 , 000 per household in the state . The amount of spending by governments in the
16 state has increased by about 14 percent since 1990 , even after accounting for inflation
17 and population growth . Even with Proposition 101 's reductions in tax and fee
18 collections , revenue to governments will continue to grow, although at a slower rate .
19 Governments can prioritize and fund the most important services with less money by
20 making better choices about how they spend taxpayer money .
21 3 ) Proposition 101 gives people a voice in decisions about fees on phones and
22 vehicles . Rather than asking voters for more money for transportation projects , the
23 state recently increased vehicle registration fees by about $ 220 million , an average of
24 approximately $44 per car. The state did this even though registration fees exceed what
25 it costs the government to process vehicle registrations . Proposition 101 will require
26 governments to seek voter approval for more money rather than adding more fees.
27 Further, some telecommunication fees raise the cost of basic services for everyone but
28 help only a small part of the state's population . Proposition 101 simplifies and
29 eliminates these fees — lowering all vehicle registration fees to a flat $ 10 per year and
30 ending state and local taxes and fees , except 911 fees, on phone and cable bills .
31 Arguments Against
32 1 ) Colorado' s economic success depends on services that governments provide ,
33 such as education and a safe transportation system . Proposition 101 will force cuts to
34 these services that people rely on for a high quality of life and that businesses need to
35 succeed . Services that have already been reduced because of the economic downturn ,
36 such as schools, colleges , prisons , firefighters and police , and water and sewer
37 systems , will be cut further. These cuts could further weaken the already slow
38 economy, reduce jobs , and , over time , hurt the quality of the state 's workforce. Rural
39 economies may also be affected because fees that help provide phone and Internet
40 service for rural areas will be eliminated . The state's operating budget is estimated to
41 be cut by $ 1 .6 billion , or about 23 percent, when the measure is fully implemented , an
42 amount greater than what the state currently spends on prisons , courts, and the
43 Colorado State Patrol combined . Further , local governments will have about $ 1 billion
44 less. State government spending as a percentage of the economy is already third
— 9 —
Final Draft
1 lowest among all states and combined state and local government spending is eighth
2 lowest .
3 2) Proposition 101 will hurt the ability of the state and local communities to maintain
4 already inadequate roads and bridges and provide public transportation , Studies show
5 that Colorado needs more than twice as much money each year than it currently spends
6 just to maintain existing roads and bridges . Proposition 101 would cut state
7 transportation funding by an estimated 28 percent. In 2009 alone , the state and local
8 governments maintained more than 193 , 000 lane miles of roadway and 8 , 000 bridges .
9 The state also snow- plowed and sanded 5 . 6 million miles of highway , repaired 77 , 000
10 street signs , and monitored 278 avalanche paths . Public health and safety may also be
11 affected due to fewer resources for emergency medical services , vehicle emission
12 programs , and road maintenance .
13 3 ) Cuts to government services may result in hardship for families who have to pay
14 for services that governments will no longer be able to afford . For example , tuition will
15 likely increase, putting college out of reach for many households . Higher-income
16 people , who are better able to absorb these cost increases , will benefit the most from
17 the reduced taxes and fees in Proposition 101 , Low- and middle-income people will be
18 less able to absorb the costs . Proposition 101 also eliminates fees that pay for services
19 to help those with lower incomes and people who are deaf, speech impaired , or blind
20 communicate within society.
21 Estimate of Fiscal Impact
22 State revenue. Proposition 101 contains several provisions that decrease revenue
23 to the state government. Because some of the reductions are phased in over time , the
24 reduction in revenue will be lower at first. The first year reduction is estimated to be
25 $744 million , which includes $295 million less in vehicle fees that are
26 constitutionally-required to be used for transportation-related spending . When fully
27 implemented , state tax and fee collections would decrease by an estimated $ 1 . 9 billion
28 in today's dollars .
29 State spending. The state will have less money available for spending on its
30 operating programs and transportation budget. Though the reductions to the
31 transportation budget will be immediate , the reductions to operating programs will occur
32 over time as the cuts to the income and sales tax are phased in . The state will have
33 $450 million , or 6 percent, less in the first year to spend on operating programs .
34 Further, the state will have about $ 295 million , or 28 percent, less to spend on
35 transportation . When fully implemented , the state would have $ 1 . 6 billion , or 23
36 percent, less in today's dollars to spend on operating programs . The impact on the
37 state's operating programs depend on the future budgeting decisions of the state
38 legislature .
39 Proposition 101 will also create some additional costs for the state . Current law
40 requires the state to replace most of the loss of vehicle specific ownership taxes for
41 school districts . This will cause the state to spend an additional $48 million in the first
42 year and $ 121 million annually when the measure is fully implemented .
— 10 —
Final Draft
1 Also , Proposition 101 increases state administrative costs by about $ 185 ,000 in
2 budget year 2010- 11 and $34 , 000 in the following few years to implement the reductions
3 in taxes , fees, and charges, and to audit compliance with the measure 's provisions . The
4 state's administrative costs will decrease in subsequent years as the tax and fee
5 reductions are fully implemented . It is estimated that the measure will require the
6 addition of 0 . 5 new staff in budget year 2010- 11 and 0 . 25 new staff in the following few
7 years to administer the auditing of governments ' tax and fee reductions .
8 Local revenue and spending. Because reductions in the local sales tax on
9 vehicles are phased in over four years , revenue decreases in the first few years will be
10 lower than when the measure is fully implemented . Local government revenue is
11 estimated to be reduced by $ 629 million in the first year, with $99 million of this amount
12 for transportation projects . When fully implemented , local government revenue would
13 decrease by an estimated $ 1 . 0 billion in today's dollars. However, since current law
14 requires the state to replace most of the loss of vehicle specific ownership taxes for
15 school districts , the net impact on local government budgets would be $580 million in the
16 first year and $880 million when fully implemented .
17 The extent to which each local government program will be affected will vary
18 depending on what services the government provides and its budget decisions . Local
19 governments may also have increased administrative costs to comply with the auditing
20 requirements of Proposition 101 .
21 Impact on taxpayers. Proposition 101 will reduce households' and businesses' tax
22 and fee bills by different amounts depending on their income , the number and type of
23 vehicles they have , the costs of their phone and cable bills , and whether they purchase ,
24 rent , or lease vehicles in a given year. In the first year, before all the tax and fee
25 reductions are fully implemented , an average household with an annual income of
26 $55 , 000 would experience a reduction in their tax and fee bill of about $313 . When fully
27 implemented , the total tax and fee bill for this household would be reduced by about
28 $708 annually in today's dollars . There would be additional reductions if the household
29 purchases , rents , or leases a vehicle . Businesses will also experience reductions in
30 taxes and fees .
.4ugust 23,MIUCSIPROJECTSIBALLOT120101Proposition 101 - Motor Vehicle Income, and Telecommunication Taxes and FeeslLegislative Council Notebook
Materialsll Final Draft.wpd — 11 -
Final Draft
Amendment 60
Property Taxes
1 Amendment 60 proposes amending the Colorado Constitution to .
2 ♦ repeal the current voter-approved authority of local governments to
3 keep property taxes above their constitutional limits ;
4 ♦ establish expiration dates for future voter-approved property tax
5 increases ;
6 ♦ cut local property tax rates for public schools' operating expenses in half
7 over ten years and replace this money with state funding each year;
8 ♦ require publicly owned enterprises to pay property taxes and reduce
9 local property tax rates to offset the new revenue; and
10 ♦ provide new voting rights to certain property owners in Colorado and
11 permit citizens to petition all local governments to reduce property
12 taxes .
13 Summary and Analysis
14 Amendment 60 changes several aspects of Colorado's property tax system to
15 reduce the amount of property taxes paid by individuals and businesses to school
16 districts , counties , special districts, cities , and towns . The measure phases in a
17 reduction in school district property taxes over ten years and requires that the reduced
18 property taxes be replaced with state funding . Table 1 shows the projected impact of
19 the amendment in today's dollars on an average homeowner and commercial
20 business , school districts , and state government , in both the first year and when the
21 measure is fully implemented . The fully implemented impacts provide the best
22 projections of the measure's final effects .
23 In the first year, property taxes for school districts are expected to fall by
24 $337 million , which the measure requires the state to replace . This represents a
25 property tax reduction of the same amount for individuals and businesses . An
26 average homeowner' s property tax bill is projected to fall by $87 and the property
27 taxes for an average commercial business are estimated to fall by $ 1 , 181 .
28 When the measure is fully implemented , the property tax reduction for school
29 districts is estimated to increase the state's obligation for kindergarten through twelfth
30 grade education (K- 12) by $ 1 . 5 billion , which represents a property tax decrease of the
31 same amount for individuals and businesses . An average homeowner will pay
32 $376 less and an average commercial business will pay $5 , 106 less in property taxes
33 annually. In future years , the actual amounts will differ as inflation and growth
34 increase the size of the economy, but the comparable budget impacts on taxpayers
35 and governments are expected to remain consistent over time . Cities , towns ,
— 1 —
Final Draft
1 counties , and special districts will also lose property taxes , but the amount will vary by
2 locality .
3 Table 1 . Selected Impacts of Amendment 60
Milli
4� 'i. ' �, r{ 4� �.'ks ?�YV ,,11��,, ' i4 s
,, a, 1�., G' lS 1tkPC +kakg'it(, r 2st P +
�<( S 6 � �' n Y . ,(' St ?1 - V # 1 . Lil`Y ,F t ♦, � ut r S
4 ti M 4 ti ncf e� G0� � i#fgre�ce
( i k Sp♦ e , r a i r i z'-y . r i ;��
, /c�Tl!� < { t ] A yy'f.' x k'.Yk n > 4 4 t '.-. A' .� 5 ] '.
5 Impacted Cur ent : { lF y � s: �{y t t t � R s a'
IF 1
6 iG�ou � # i . { tY ��ti 'S � eilx'T9Tta-� x r 3 ' i {fF l Y tly
f . t Year l�mplertren>)ed k _ s
Ye r irrl7plemsnted
;:x. � =�. �4 a._6�,. . . a S 4TcYak:k ]�tBG'.L'..SE'et;4` F.
art
7 F Impacts on Average Taxpayers ,
8 Property Tax Payment for
9 Average Homeowner $ 11638 $ 1 , 551 $ 1 , 262 -$ 87 -$376
10 ($295, 000 home)
11 Property Tax Payment for
12 Average Commercial $22 ,254 $21 ,073 $17, 148 411181 -$51106
13 Business Owner with a
14 Value of $ 1 . 1 million
15 K-12 Educatiio .n Funding Shift
16 Property Tax Collections $3 .3 billion $3.0 billion $ 1 . 8 billion -$0.3 billion -$ 1 . 5 billion
17 for School Districts
18 State Expenditures for $3 . 7 billion $4 ,0 billion $5 .2 billion $0 . 3 billion $ 1 .5 billion
19 K-12 Education
20 Background and current law. Property taxes are based primarily on the value of
21 land , houses , other buildings , and business equipment, individuals and businesses
22 pay property taxes to various local governments , such as cities , counties , school
23 districts , and special districts , each of which imposes its own tax rate on property .
24 School districts and counties receive approximately 77 percent of all property taxes
25 collected . Publicly owned enterprises , such as city water and sewer systems ,
26 municipal airports , and most state universities , are exempt from paying property tax .
27 Property taxes are spent on a variety of local government services , including public
28 education , police and fire services , roads and bridges , public water and sewer
29 systems , parks and recreation facilities , hospitals , and libraries . The degree to which
30 local governments rely on property taxes to pay for services varies . Some special
31 districts , such as fire protection districts , get almost all of their revenue from property
32 taxes , while many city governments get less than 5 percent of their funding from
33 property taxes .
34 Constitutional limits on property taxes . The state constitution currently restricts
35 both the amount of total revenue and property tax revenue that a local government
36 can collect each year . Annual increases for each are capped at the rate of inflation
37 plus a measure of local growth , such as student enrollment in the case of a school
38 district . The constitution also requires voter approval for a local government to
— 2 —
Final Draft
1 increase property tax rates or to keep and spend total revenue or property tax revenue
2 above the government's constitutional limit.
3 How does Amendment 60 change how public schools are funded? Public
4 schools in Colorado are funded from a combination of federal , state , and local
5 sources . Voters in some school districts have approved additional property taxes to
6 repay loans used to build schools or other buildings . In these districts , there is a
7 property tax for operating schools and a separate property tax to repay loans .
8 Amendment 60 requires all districts to cut their 2011 property tax rates for operating
9 schools in half by 2020 . Property tax rates for repaying loans are unchanged . The
10 required reduction in tax rates must be done in equal yearly amounts over ten years .
11 Amendment 60 requires the local school district funding eliminated by this rate
12 reduction to be replaced each year with state funding .
13 How does Amendment 60 affect the state budget? Currently, the state spends
14 most of its general operating budget on : preschool through higher education ; health
15 care ; prisons; the courts; and programs that help low- income , elderly, and disabled
16 people . K- 12 education funding accounts for 46 percent of this budget, which is
17 primarily funded by sales and income taxes. Because Amendment 60 requires that
18 the reduction in local property tax revenue be replaced with state funding , the
19 obligation for public schools will increase to an estimated 67 percent of the state's
20 general operating budget, once the measure is fully implemented . To meet this
21 increased obligation to schools, the state will have to decrease spending and services
22 in other areas, increase fees for services , or some combination of both .
23 How does Amendment 60 affect property taxes for all local governments ?
24 Like school districts , cities , counties , and special districts are also funded from a
25 combination of federal , state , and local sources . Under current law, taxpayers in many
26 communities have voted to broadly exempt their local governments from the
27 constitutional limit related to total revenue and spending . Currently, voters in
28 76 percent of municipalities , 81 percent of counties , and 98 percent of school districts
29 have voted to allow government to keep and spend revenue above the constitutional
30 limit , either temporarily or permanently. This measure would reimpose a property tax
31 limit for those governments , leaving the broader revenue exemption unchanged .
32 Beginning in 2011 , Amendment 60 repeals the current voter-approved authority of
33 local governments to permanently keep property taxes above their constitutional limits .
34 Local governments are not required to refund the property taxes that were retained in
35 the past . However, local governments that collect property taxes above their property
36 tax limit in the future will have to refund money . A new election must be held to allow
37 a local government to keep future property taxes above its constitutional limit for up to
38 four years at a time . The measure will also reduce the property tax collections of most
39 local governments by reducing property tax rates , and limiting the duration of future
40 property tax increases .
41 How does Amendment 60 affect publicly owned enterprises ? Amendment 60
42 requires publicly owned enterprises to pay property taxes . Under current law, state
43 enterprises , such as most public universities , do not pay property taxes on campus
— 3 —
Final Draft
1 buildings or equipment. Similarly, local enterprises , such as Denver International
2 Airport, pay no property taxes . The new property taxes collected from these publicly
3 owned enterprises must be offset by lower property tax rates for homeowners ,
4 businesses , and other property taxpayers . For example , if the University of Colorado
5 had to pay property taxes in Boulder County, its property tax bill is estimated to range
6 from $ 11 million to $20 million per year, depending on how the property is valued .
7 This new revenue would be offset by lower tax rates in Boulder County , providing
8 property owners in the county with tax reductions in the same amount. The
9 amendment prohibits publicly owned enterprises from charging either a mandatory fee
10 or a tax on property .
11 How does Amendment 60 change property tax elections ? Amendment 60
12 proposes changing several aspects of the way property tax issues are addressed in
13 local elections . Under current law, a property owner who is a registered Colorado
14 voter may vote on ballot questions in his or her primary place of residence and in
15 special district elections wherever he or she owns property in Colorado .
16 Amendment 60 allows Colorado property owners to vote on city, county, and school
17 district property tax issues in any Colorado location where they own property,
18 regardless of their primary place of residence in the state .
19 Under current law, citizens may petition cities to increase or decrease property
20 taxes, but may not petition counties , schools , or special districts. Under this measure ,
21 all local governments must permit petitions to lower property taxes .
22 Typically , when a local community has voted to permanently exempt its local
23 government from the constitutional limit on property tax collections , that
24 voter-approved decision is not automatically repealed at a future date . Under
25 Amendment 60 , any future vote to allow a local government to retain revenue above
26 its constitutional limit is repealed within four years after passage . Any future vote to
27 increase property tax rates is repealed within ten years . Any extension of an expiring
28 property tax is considered to be a tax increase under the measure , and as such , must
29 be presented as a tax increase on the ballot.
30 Currently , a single ballot question may ask voters if a local government may
31 borrow money, and if property tax rates may be increased to repay that loan . Under
32 this measure , ballot questions that allow a government to borrow money must be
33 separate from ballot questions that raise property taxes .
34 How is Amendment 60 enforced? The amendment requires the state to
35 annually audit all cities , counties , school districts , and other types of local
36 governments to ensure compliance with all requirements of the amendment. Citizens
37 are also allowed to file lawsuits to enforce compliance .
38 How does Amendment 60 interact with two other measures on the ballot?
39 Amendment 60 along with Amendment 61 (see page x) and Proposition 101
40 (see page x) contain provisions that affect state and local government finances by
41 decreasing taxes paid by households and businesses and restricting government
— 4 —
Final Draft
1 borrowing . How these measures work together may require clarification from the state
2 legislature or the courts .
3 Amendment 60 reduces local property taxes , while requiring state expenditures for
4 K- 12 education to increase by an amount that offsets the property tax loss for school
5 districts . Amendment 61 requires state and local governments to decrease tax rates
6 when debt is repaid , which is assumed in this analysis to apply to the existing debt of
7 state and local governments , and it prohibits any borrowing by state government .
8 Proposition 101 reduces state and local government taxes and fees .
9 Since portions of these measures are phased in over time , the actual impacts to
10 taxpayers and governments will be less in the initial years of implementation and grow
11 overtime . Assuming that all three measures are approved by voters , the first-year
12 impact will be to reduce state taxes and fees by $744 million and increase state
13 spending for K- 12 education by $385 million . Once fully implemented , the measures
14 are estimated to reduce state taxes and fees by $2 . 1 billion and increase state
15 spending for K- 12 education by $ 1 . 6 billion in today's dollars . This would commit
16 almost all of the state's general operating budget to paying for the constitutional and
17 statutory requirements of K- 12 education , leaving little for other government services .
18 In addition , the prohibition on borrowing will increase budget pressures for the state if
19 it chooses to pay for capital projects from its general operating budget . This would
20 further reduce the amount of money available for other government services .
21 Tax and fee collections for local governments are expected to fall by at least
22 $966 million in the first year of implementation and by $4. 7 billion when the measures
23 are fully implemented . However, the net impact on local government budgets would
24 be at least $581 million in the first year and $3 . 1 billion when fully implemented after
25 the state reimburses school districts .
26 Total taxes and fees paid by households and businesses are estimated to
27 decrease by $ 1 . 7 billion in the first year and $6 . 8 billion per year in today's dollars
28 when the measures are fully implemented . The measures reduce the taxes and fees
29 owed by an average household making $55 , 000 per year that owns a $295 , 000 house
30 by an estimated $400 in the first year and $ 1 , 660 per year when fully implemented .
31 Arguments For
32 1 ) Amendment 60 provides property tax relief for Coloradans in a tough economic
33 climate without reducing K- 12 education funding . For example , the measure will
34 provide seniors who recently lost a property tax exemption with additional tax relief.
35 Allowing business owners to keep more of their income may spur investment and help
36 the economy recover more quickly . School funding is unchanged because the state is
37 required to replace the local property taxes phased out by the amendment with state
38 funding .
39 2 ) Amendment 60 strengthens citizen control over local government taxes by
40 setting tax expiration dates and requiring that an extension of an expiring tax be
— 5 —
Final Draft
1 presented to the voters as a tax increase . The amendment also allows citizens to
2 petition local governments to lower taxes , and it prevents unelected boards , such as
3 the Denver Water Board , from imposing mandatory fees or taxes on property . In
4 addition , limiting votes on property taxes to November elections , when voter turnout is
5 typically higher, may lead to greater citizen awareness and participation .
6 3) Amendment 60 removes a competitive advantage that publicly owned
7 enterprises have over private businesses . Unlike private facilities , publicly owned
8 enterprises , such as parking lots and golf courses , do not currently pay property taxes .
9 The additional revenue will lower the local property tax rate , providing further relief for
10 property owners in the district.
11 Arguments Against
12 1 ) Amendment 60 overturns nearly two decades of voter-approved tax decisions
13 that fund important services provided by counties , cities , school districts , and special
14 districts . The amendment enables voters statewide , in this election , to reverse
15 hundreds of decisions of local voters to fund services like fire and police protection ,
16 roads , parks and recreational facilities , water and sewer systems , and libraries . Local
17 voters are best equipped to choose the level and type of services needed in their
18 communities and the means to pay for those services .
19 2 ) Amendment 60 will require the state to cut funding for many important services ,
20 which may result in job losses throughout Colorado . Because the state constitution
21 requires that the state have a balanced budget and limits the ability of the legislature
22 to raise taxes , every new dollar spent on education will be taken away from other
23 services . The $ 1 . 5 billion increase in state K- 12 education spending nearly equals the
24 amount the state currently spends on courts , prisons , and human services . This
25 amendment requires the state to spend so much more on public schools that these or
26 other state functions will have to be cut or eliminated in order to keep the state budget
27 balanced .
28 3 ) Amendment 60 may leave many citizens worse off financially , depending on
29 where they live . People who live in areas with few publicly owned enterprises , such as
30 the eastern plains , will receive some property tax reductions , but may pay more in fees
31 to use the services of public enterprises located elsewhere . For example , if the
32 University of Colorado must pay property taxes , students statewide may pay more in
33 tuition , but property owners in Boulder County will get most of the tax savings .
34 Similarly , if Denver International Airport must pay property taxes , airline customers
35 statewide may pay more in fees , but only property owners in Denver will get the
36 property tax reduction .
37 Estimate of Fiscal Impact
38 Local revenue . Amendment 60 reduces property taxes for individuals and
39 business in several ways . This reduces the amount of tax revenue that cities ,
— 6 —
Final Draft
1 counties , school districts, and special districts will receive . The measure phases in a
2 reduction in school district property taxes over ten years. In the first year, school
3 district property taxes are projected to fall by $337 million , reducing property taxes
4 paid by an average homeowner and an average business owner by $ 87 and $ 1 , 181 ,
5 respectively . Once the measure is fully implemented , property taxes are estimated to
6 fall by $ 1 . 5 billion annually in today's dollars , reducing property taxes paid by an
7 average homeowner and an average business owner by approximately $376 per year
8 and $ 5 , 106 per year , respectively . Additionally, local governments currently
9 authorized to keep property tax revenue in excess of the constitutional limit , will have
10 their property tax revenue reduced by an indeterminate amount.
11 State expenditures. By reducing the amount of local property taxes collected for
12 school districts , statewide expenditures for public schools will increase by an
13 estimated $337 million in the first year of implementation and by $ 1 . 5 billion per year in
14 today's dollars once the measure is fully implemented . To meet this increased
15 obligation to schools , the state will have to decrease spending and services in other
16 areas , increase fees for services , or enact some combination of both .
17 The state must make a yearly audit of compliance with the property tax provisions
18 and strictly enforce all requirements in the amendment. The Office of the State
19 Auditor is responsible for reporting the financial and operational performance of
20 agencies of state government; however, the office does not have a process for
21 auditing local government compliance with property tax laws . Amendment 60 expands
22 the obligations of the State Auditor's Office . It is estimated that this provision will
23 require the addition of 1 . 5 new staff to coordinate year-round auditing of local
24 government and to manage contracting with independent certified public accounting
25 (CPA) firms . The cost for these new staff and CPA contracts is estimated to be
26 $800 ,000 each year .
August23, 2010 S.ILCSIPROJBCTSIBALL07120101.4menn'Znr60 - Property Taxes tLegislative Council NotebookMaterialsU. Fina1Draft.wpd
Final ® raft
Amendment 61
Limits on State and Local Government Borrowing
1 Amendment 61 proposes amending the Colorado Constitution to :
2 ♦ prohibit all new state government borrowing after 2010 ;
3 ♦ prohibit new local government borrowing after 2010 , unless approved by
4 voters ;
5 ♦ limit the amount and length of time of local government borrowing ; and
6 ♦ require that tax rates be reduced after borrowing is fully repaid .
7 Summary and Analysis
8 Amendment 61 places new restrictions on government borrowing . Currently, the
9 state and local governments borrow money to build or improve public facilities like
10 roads , buildings , and airports and repay the money over multiple years. Borrowing is
11 also used for other purposes, such as financing loans for small businesses .
12 Beginning in 2011 , Amendment 61 prohibits all future borrowing by state
13 government and limits future borrowing by local governments , including cities ,
14 counties , school districts, special districts , and enterprises . The measure also
15 requires that governments lower tax rates after borrowed money is fully repaid , even if
16 the borrowing was repaid from a source other than taxes . In certain cases,
17 governments borrow money on behalf of private entities . Because the private entities
18 are solely responsible for repayment, it is unclear if this borrowing is covered by the
19 provisions of Amendment 61 .
20 Impact of Amendment fit on state government. Amendment 61 affects
21 Colorado's state government by prohibiting any future borrowing and requiring a tax
22 cut when certain borrowing is fully repaid . Current borrowing will be unaffected , but
23 future projects , programs , and services that would have otherwise been financed
24 through borrowing will have to be eliminated or paid for by increasing fees or using
25 money currently budgeted for other purposes . Table 1 provides examples of projects
26 funded through state government borrowing and the requirements and restrictions
27 under current law compared to Amendment 61 .
28 The state and all of its enterprises issue an average of $2 . 9 billion in new
29 borrowing annually and spend about $ 2 billion annually to repay borrowing . State
30 agencies , excluding enterprises , make annual payments of about $ 200 million on
31 borrowing . At the end of 2010 , the state and all of its enterprises will owe about
32 $ 17 billion for assets financed through borrowing .
— 1 —
Final Draft
1 Under current law, the state borrows money in the following ways , which will no
2 longer be permitted by Amendment 61 :
3 Long-term borrowing — Long -term borrowing is money borrowed for a
4 period of more than one year that is repaid from a specific source of
5 money like dedicated taxes or fees over a fixed period of time. Voters
6 must approve non-enterprise borrowing . For example, in 1999 voters
7 approved borrowing for state highway projects . The money that was
a borrowed for the projects is repaid with state and federal highway funds .
9 Short-term borrowing — In Colorado , the state sometimes borrows
10 money early in the year to cover costs for its day-to- day operations and
11 repays the money later in the year , as revenues are collected .
12 Lease-to- own agreements — Lease-to-own agreements allow the state
13 to make annual payments for new buildings or equipment over a
14 number of years until the cost is repaid . The state legislature authorizes
15 lease-to- own agreements and approves payments every year during its
16 annual budget process . Once the cost is paid , ownership is typically
17 transferred to the state . The state is currently using lease-to-own
18 agreements to build a prison , a museum , a court building , and several
19 academic buildings at state colleges and universities . The state is also
20 using these types of agreements for K- 12 school construction and
21 renovation .
22 Enterprise borrowing -- Publicly owned enterprises are currently
23 permitted to borrow for projects and programs without voter approval .
24 Generally , enterprises generate their own revenue through fees
25 charged for the services they offer . Enterprises usually borrow with
26 long-term borrowing repaid from grants or fees for services .
27 Enterprises do not have a defined voter base , and do not hold public
28 elections .
29 Most public colleges and universities are enterprises and have recently
30 borrowed money to build classroom buildings and other facilities . This
31 borrowing is repaid from sources such as tuition money, student fees ,
32 donations , and federal grants . Other state-level enterprises , such as the
33 Colorado Housing and Finance authority, act as financing authorities to borrow
34 money that is lent to local governments , private businesses , and individuals .
-- 2 —
Final Draft
1 Table 1 . State Government Borrowing Requirements and Restrictions
2 Under Current Law and Amendment 61
3 Restrictions and Requirements
4 Examples of Existing Projects
5 Funded Through Borrowing Current Law Amendment 61
6 Long-term borrowing — money borrowed for a period of more than one year that is repaid from a
7 specific source of money like -dedicated taxes or fees over a fixed-period of time.
8 State Departments • Voter approval Prohibited
9 Department of Transportation required
10 State highways and roads • No dollar limit on
11 borrowing
12 State Enterprises • No voter approval
13 Public universities and colleges required
14 Classroom buildings , dormitories, and student • No dollar limit on
15 centers borrowing
16 Colorado Housing and Finance Authority • Legislative
17 Loans to home buyers , businesses , authorization
18 ranchers , and farmers required
19 Colorado Water Resources and Power
20 Development Authority
21 Improvements to water and wastewater
22 treatment plants
23 Other borrowing including short-term (repaid within :one year) 'borrowing , and lease-to-own
24 agreements where authorized by state law and the state legislature approves payments annually.
25 State Departments and Enterprises • No voter approval Prohibited
26 Department of Corrections required
27 Prisons • No dollar limit on
borrowing
28 Department of Higher Education
29 Academic facilities Legislative
authorization
30 State Treasurer required
31 Short-term borrowing and K-12 school
32 construction and renovation
33 Impact of Amendment fit on local governments. Amendment 61 applies new
34 borrowing limits to all local governments and requires that all future borrowing be
35 submitted for voter approval . Similar to the impact on state government,
36 Amendment 61 will require local governments to either increase fees , reduce
37 construction , or reduce programs or services . Table 2 provides examples of projects
38 funded through local government borrowing and the requirements and restrictions
39 under current law compared to Amendment 61 .
— 3 —
Final Craft
1 Local governments and their enterprises issue an average of $4 . 9 billion in new
2 borrowing annually, and spend about $4 . 3 billion annually to repay borrowing . Local
3 governments , excluding enterprises , make annual payments of about $2 . 2 billion on
4 borrowing . Currently , local governments and their enterprises owe about $ 36 billion
5 for assets financed through borrowing . Some local government borrowing is repaid
6 from voter approved tax increases . After this borrowing is fully repaid , tax rates will be
7 reduced , regardless of the outcome of Amendment 61 .
s Amendment 61 limits allowable local government borrowing in the following ways:
9 Borrowing is limited to bonded debt. Bonded debt is money that is
10 borrowed through the sale of government bonds for a period of more
11 than one year. Under current law, local governments may borrow
12 money through bonded debt as well as other forms of borrowing , such
13 as short-term borrowing or lease-to-own agreements . Amendment 61
14 prohibits all forms of local government borrowing except bonded debt.
15 Voter approval is required for all borrowing. Under current law , not all
16 borrowing requires voter approval , and elections for bonded debt occur
17 at various times throughout the year depending on the type of local
18 government . Amendment 61 requires that all future borrowing first be
19 submitted for approval by voters at a November election . In addition ,
20 enterprises , which were not previously required to seek voter approval
21 for borrowing , will be required to hold elections .
22 For all local governments, except enterprises , borrowing is limited to
23 10 percent of the assessed real property value within its borders.
24 Generally speaking , this cap is less than what is allowed under current
25 law . A local government that has already borrowed an amount more
26 than the 10 percent cap would be prohibited from additional borrowing
27 until it repays enough of its borrowing or real property values increase
28 enough to drop its total borrowing below the 10 percent cap .
29 Borrowing must be repaid within 10 years and may be repaid early
30 without penalty. The typical term of current borrowing is 20 to 30 years .
31 Borrowing for a shorter length of time requires higher annual payments
32 because the loan is spread over fewer years ; however, total interest
33 costs over the term of the loan are lower.
— 4 —
Final Draft
1 Table 2. Local Government Borrowing Requirements and Restrictions
2 Under Current Law and Amendment 61
3 Restrictions and Requirements
4 Examples of Existing Projects
5 Funded Through Borrowing Current Law Amendment 61
6 Bonded debt — money borrowed for period of more than one year that is repaid from a specific source of
7 money like dedicated taxes or fees over a fixed period of time.
8 School Districts • Voter approval required Voter approval required
9 School construction or improvements . Borrowing capped at 20% of Future borrowing
10 assessed property values for capped at 10% of
11 most districts assessed real property
values
12 Counties • Voter approval required
13 Roads, public buildings, and vehicles Term of future
14 • Borrowing capped at 3% of borrowing is limited to
15 actual (market) property 10 years
values
16 Cities • Voter approval required
17 Public buildings such as jails and recreation
18 centers
19 Special Districts • Voter approval required in
some instances
20 Wafer and sewer districts: improvements
21 to water and wastewater treatment plants
22 Fire protection districts: buildings,
23 vehicles , and equipment
24 Regional Transportation District (RTD) :
25 mass transit facilities and vehicles
26 Enterprises • No voter approval required • Voter approval required
27 • No dollar limit on borrowing • No dollar limit on
28 Denver International Airport: airport
29 facilities and runways borrowing
30 • Term of borrowing is
31 Urban renewal authorities and business limited to 10 years
32 improvement districts: downtown
33 development projects like the 16th Street
34 Mall in Denver
35 Other borrowing - including short-term (repaid within one year) borrowing; and lease-to-bwn agreements
36 where authorized by a local board and the local board , approves payments annually. '
37 Local Governments and Enterprises • No voter approval required Prohibited, unless in the
38 Short-term borrowing , lease-to-own . No dollar limit on borrowing form of bonded debt
39 agreements
40 • Subject to local board
41 approval
- 5 -
Final Draft
1 Impact of Amendment 61 on taxpayers. Amendment 61 requires that after
2 borrowed money is fully repaid by a government, taxes must be reduced in the
3 amount of the average annual payment. Assuming this requirement applies to current
4 borrowing , and once the measure is fully implemented , state taxes will be reduced by
5 about $200 million . Local government taxes are estimated to be reduced by
6 $2 .2 billion . This amount includes some bonded debt for which the tax rate will decline
7 regardless of the outcome of Amendment 61 . Some tax reductions will occur in the
8 first few years after the measure takes effect, but the full reduction will not occur until
9 all borrowed money is repaid , which could take up to 40 years .
10 If the entire state tax reduction is applied to the state income tax, an average
11 household earning $ 55 ,000 annually will pay about $49 less per year in today's dollars
12 once the measure is fully implemented . If the entire local tax reduction is applied to
13 property taxes, the owners of a home valued at $295 , 000 will pay about $529 less per
14 year in today's dollars . The impact of the local tax reduction will vary based on the
15 location of a taxpayer's residence .
16 How does Amendment 69 interact with two other measures on the ballot?
17 Amendment 61 along with Amendment 60 (see page x) and Proposition 101
18 (see page x) contain provisions that affect state and local government finances by
19 decreasing taxes paid by households and businesses and restricting government
20 borrowing . How these measures work together may require clarification from the state
21 legislature or the courts .
22 Amendment 61 requires state and local governments to decrease tax rates when
23 debt is repaid , which is assumed in this analysis to apply to the existing debt of state
24 and local governments , and it prohibits any borrowing by state government.
25 Amendment 60 reduces local property taxes , while requiring state expenditures for
26 K- 12 education to increase by an amount that offsets the property tax loss for school
27 districts . Proposition 101 reduces state and local government taxes and fees .
28 Since portions of these measures are phased in over time , the actual impacts to
29 taxpayers and governments will be less in the initial years of implementation and grow
30 over time . Assuming that all three measures are approved by voters , the first-year
31 impact will be to reduce state taxes and fees by $744 million and increase state
32 spending for K- 12 education by $385 million . Once fully implemented , the measures
33 are estimated to reduce state taxes and fees by $2 . 1 billion and increase state
34 spending for K- 12 education by $ 1 . 6 billion in today's dollars . This would commit
35 almost all of the state' s general operating budget to paying for the constitutional and
36 statutory requirements of K- 12 education , leaving little for other government services .
37 In addition , the prohibition on borrowing will increase budget pressures for the state if
38 it chooses to pay for capital projects from its general operating budget. This would
39 further reduce the amount of money available for other government services .
40 Tax and fee collections for local governments are expected to fall by at least
41 $966 million in the first year of implementation and by $4 . 7 billion when the measures
— 6 —
Final Draft
1 are fully implemented . However, the net impact on local government budgets would
2 be at least $581 million in the first year and $ 3 . 1 billion when fully implemented after
3 the state reimburses school districts .
4 Total taxes and fees paid by households and businesses are estimated to
5 decrease by $ 1 .7 billion in the first year and $ 6 . 8 billion per year in today's dollars
6 when the measures are fully implemented . The measures reduce the taxes and fees
7 owed by an average household making $ 55 , 000 per year that owns a $295 , 000 house
8 by an estimated $400 in the first year and $ 1 ,660 per year when fully implemented .
9 Arguments For
10 1 ) Over the past ten years , borrowing by the state and its enterprises has nearly
11 tripled and interest payments have more than doubled . Borrowing is expensive
12 because it includes interest payments and fees . Limits are needed to help ensure that
13 borrowing costs do not reduce money for public services in the future .
14 2) Amendment 61 encourages fiscal restraint through a pay-as-you -go approach
15 to government spending . This approach limits government from passing on debt to
16 future generations .
17 3) Because the public is responsible for repaying government borrowing through
18 taxes and fees , voters should be asked before money is borrowed . The existing limits
19 on government borrowing are not strict enough because the government can still
20 borrow large amounts without voter approval . Amendment 61 requires any future
21 local government borrowing to be submitted to voters for consideration at a November
22 election .
23 4 ) Amendment 61 reduces taxes when borrowing is fully repaid , giving individuals
24 and businesses more money to spend . Tax rates should go down when borrowing is
25 repaid because the government no longer needs money for the annual payments .
26 Arguments Against
27 1 ) Borrowing is a crucial tool for financing large public investments such as
28 prisons , schools, and water projects . Similar to private citizens using a loan to buy a
29 home or car, borrowing is often the only way governments can afford to build and
30 maintain safe bridges , roads , and other public infrastructure . Amendment 61 makes it
31 harder to manage public finances and to respond in a timely manner to the needs of
32 citizens.
33 2) Amendment 61 limits the ability of communities to meet the demands of a
34 growing economy . Colorado's population has grown almost 20 percent in the last
35 decade , requiring new roads, schools , hospitals, and water treatment plants . These
— 7 —
Final Draft
1 public investments are needed by communities to operate and to attract residents and
2 businesses . In addition , the measure may reduce private sector jobs , for instance
3 businesses may be awarded fewer construction contracts .
4 3 ) Amendment 61 places the full burden of paying for public buildings built to last
5 30 years or more on today's taxpayers . Also , Amendment 61 may force governments
6 to set aside money for several years before construction can begin on a new facility .
7 As a result , current taxpayers may never benefit from a facility they paid to construct .
8 Taxpayers may realize a greater benefit from borrowing than from a tax- rate
9 reduction .
10 4 ) Some governments will face serious financial disruptions as a result of
11 Amendment 61 . For example , the Colorado unemployment fund may be unable to
12 pay unemployment benefits for a period of time if the state is no longer be able to
13 borrow to pay for benefits . Also , starting in 2011 , school districts that rely on
14 short-term borrowing may have cash flow disruptions until spring tax collections are
15 received . These districts will have to consider options such as reducing or suspending
16 teacher pay, selling buildings , or closing schools .
17 Estimate of Fiscal Impact
18 The measure contains provisions that reduce the amount of taxes paid by most
19 taxpayers over time , while reducing future construction of publicly owned facilities and
20 restricting the ability of the state and local governments to provide other programs and
21 services .
22 Impact on the state and local governments. The measure will impact the state
23 and local governments in the following ways .
24 Sorrowing restrictions will require that .the state and local governments
25 either raise fees , reduce construction , or reduce programs and services .
26 Additionally, the measure affects cash flow management for the state
27 and school districts , which in the past have borrowed money to finance
28 current operations in anticipation of taxes collected later in the year .
29 Assuming the tax reduction applies to current borrowing , the measure
30 requires state and local governments to cut spending . The state will
31 gradually cut spending after each borrowing is fully repaid by about
32 $200 million over the course of the next 40 years beginning in 2018 .
33 Local governments will also cut spending after each borrowing is fully
34 repaid by about $2 . 2 billion over the course of the next 20 or 30 years .
35 These amounts reflect the estimated average annual repayment for
36 money currently borrowed by the state and local governments .
37 Like government agencies , publicly owned enterprises will have to
38 either raise fees , reduce construction , or reduce programs or services .
— 8 —
Final Draft
1 Current borrowing by state-level enterprises accounts for an estimated
2 $ 15 billion ; borrowing by local enterprises accounts for about $ 11 billion .
3 The cost of future local government borrowing will likely be affected by
4 the new 10-year maximum term on borrowing , as well as the early
5 repayment provisions . However, the impact will vary by locality .
6 Taxpayer impact. The measure will impact taxpayers in the following ways .
7 Based on the average annual repayment amount and assuming the tax
8 reduction provision applies to current borrowing , Amendment 61 is
9 expected to reduce taxes by about $ 2 . 4 billion per year when fully
10 implemented over the next 40 years . This estimate includes about
11 $2 . 2 billion in local taxes and about $ 200 million in state taxes . The
12 actual reduction for individuals , businesses , and others will depend on
13 which taxes are reduced by the state and local governments and where
14 the taxpayer lives . To illustrate the reduction , if the state reduced
15 income taxes and local governments reduced property taxes ,
16 Amendment 61 is estimated to reduce the total taxes paid by an
17 average household earning $55 , 000 per year and living in a
18 $295, 000 home by over $ 578 per year in today's dollars .
19 Amendment 61 could make it difficult for Colorado to pay
20 unemployment benefits , which could cause the state to be in violation of
21 federal law. Unusually high unemployment has forced the Colorado
22 Unemployment Insurance Fund to borrow money from the federal
23 government to pay unemployment insurance benefits . Amendment 61
24 could prohibit this borrowing . As a result, the federal government could
25 choose to increase federal unemployment insurance taxes on
26 businesses in the state .
27 Table 3 summarizes the impact of the tax reductions required by Amendment 61
28 once all current borrowing is repaid .
29 Table 3. Annual Estimated Tax Impacts Based on Current Borrowing ,
30 Once Amendment 61 is Fully Implemented
Total Outstanding
Borrowing Taxpayer Impact*
(Excluding Enterprises) Total Tax Reduction Tax Reduction
31 state Government $2 .2 billion $0.2 billion $49
32 Local Governments $24.8 billion $2.2 billion $529
33 Total $27 .0 billion $2 .4 billion $578
34 *Based on a household earning $55, 000 per year living in a $295, 000 home.
S.1LCS\PRO]ECTS%BALLOTUD101Amendm=CM 931M and LocalDebl LimlaliuoslLeFislalive Counuil Notebook MalerialAl Final Dmft.wpd
ATTACHMENT 2
DOWNTOWN
dda- DEVELOPMENT
AUTHORITY '��
dg�rs 4
September 1,2010 Oc�
Honorable Doug Hutchinson,Mayor
City of Fort Collins
300 LaPorte Avenue
Fort Collins,CO 80521
Dear Mayor Hutchinson and Council Members:
The Fort Collins Downtown Development Authority("DDA")respectfully submits Resolution
2010-04 opposing three 2010 Colorado ballot measures: Proposition 101 and Amendments 60
and 61. The DDA Board took action to approve the resolution on August 12,2010 after
thoughtful review of the impacts of the ballot measures on the downtown and City of Fort
Collins.
The DDA Board believes that the proposition and amendments could severely diminish the
effectiveness of the DDA and its statutory defined role to revitalize the downtown,and diminish
local and state government's ability to provide critical services to our constituent businesses,
property owners and residents.
On behalf of the Board of Directors and DDA management,thank you for your continued
support of Downtown Fort Collins. Together,we will continue to build the premier urban area
of Northern Colorado.
Sincerely,
Patty Spencer tt obenalt
Board Chair Executive Director
RESOLUTION NO.2010-04
OF THE BOARD OF DIRECTORS OF THE FORT COLLINS,
COLORADO DOWNTOWN DEVELOPMENT AUTHORITY
OPPOSING PROPOSITION 1015 AMENDMENT 60 AND
AMENDMENT 61 ON THE NOVEMBER 29 2010 STATEWIDE
ELECTION BALLOT CONCERNING RESTRICTION
OF STATE AND LOCAL REVENUES
WHEREAS, owNovember 2, 2010, voters of the State of Colorado ("State") will
consider the following ballot items: Proposition 101,Amendment 60 and Amendment 61;
and
WHEREAS, Proposition 101 (which reduces certain motor vehicle fees and
charges) and Amendment 60 (which would require the DDA to pay property taxes on real
property it owns: currently the Old Town Parking Structure, Old Town Square Plaza, the
former Elks Lodge, the Opera Galleria atrium, the 720 E. Vine Drive warehouse and the
parking lot at 136 S. Mason Street)will reduce revenues otherwise available to the DDA
which revenues are needed to accomplish its mission of sustaining and improving the
economic vitality of downtown Fort Collins; and
WHEREAS, Amendment 60 would prevent the DDA from levying the 5 mills
needed to support its operation and maintenance obligations as this Amendment prohibits
appointed boards from levying taxes on property; and
WHEREAS, Amendment 60, requiring that school districts phase out one-half of
their 2011 tax rates less their bond levy over a 10-year period, would have a significant
negative impact on DDA revenues as Poudre School District R-1 contributes
approximately fifty-three percent (53%) of the DDA's tax increment revenues, severely
impacting the programs and improvements the DDA could undertake in the future; and
WHEREAS,a majority of the DDA's programs are funded from borrowings(e.g.
alley improvements, facade enhancement programs, Mason Corridor contributions,
Linden Street improvements, etc.) and Amendment 61 will severely limit debt issued by
the City of Fort Collins ("City") on behalf of the DDA, potentially jeopardizing the
viability of major DDA projects; and
WHEREAS, Proposition 101,Amendment 60 and Amendment 61 will adversely
affect the ability of the DDA,the City,the State and other units of government to provide
essential infrastructure,programs and services; and
WHEREAS, Proposition 101, Amendment 60 and Amendment 61 will have
serious negative economic consequences for the DDA, the City and the State during a
time of already significant economic downturn.
1
NOW, THEREFORE, BE IT RESOLVED BY THE BOARD OF DIRECTORS
OF THE DOWNTOWN DEVELOPMENT AUTHORITY that it opposes the passage of
Proposition 101, Amendment 60 and Amendment 61 for the reasons stated above and
urges voters within the DDA boundaries and the City to vote against these ballot
measures.
Passed and adopted at a regular meeting of the Board of Directors of the Fort
Collins, Colorado Downtown Development Authority this ,J:Zjt�-day of�,
2010.
A44
Patty Spence•, C •irperson
ATTEST: '
Bill Sears, Secretary
I
ATTACHMENT 3
RESOLUTION IN OPPOSITION TO THE
BALLOT INITIATIVE ON MOTOR VEHICLE, INCOME AND
TELECOMMUNICATIONS TAXES AND FEES
WHEREAS, the Poudre School District Board of Education is a public entity that
provides educational services to the children in the Poudre School District; and
WHEREAS, a proposed ballot initiative to amend the Colorado Statutes, which will
appear on the general election ballot this November as Proposition 101, requires the reduction of
public resources and valuable public programs, including public education, by radically reducing
certain specific ownership fees and taxes; and
WHEREAS, Proposition 101 would reduce the state budget by over one billion dollars,
forcing drastic and unsustainable cuts to public education, as well as health care, and dozens of
other critical public services; and
WHEREAS,Proposition 101 would cause school districts to lose specific ownership
taxes, including losses of up to$8.3 million dollars by this district; and
WHEREAS,current economic difficulties and the resulting budget cuts, including cuts to
the State Education Fund, are already in violation of the Article IX, Section 17 of the Colorado
Constitution, as well as the Colorado Constitution's mandate that the State establish and maintain
a"thorough and uniform system of public schools"throughout Colorado; and
WHEREAS, the budget cuts that would result from Proposition 101 would ensure that
the mandates of the Colorado Constitution could never be met;
THEREFORE, BE IT RESOLVED, the Poudre School District Board of Education
officially declares its opposition to Proposition 101 because it would cripple the ability of the
state to meet its obligations to establish and sufficiently fund public education in the State of
Colorado and devastate the ability of local boards of education throughout the state,including
this Board, to adequately serve the educational needs of children in the community.
Dated this 81h day of June, 2010.
ATTEST: POUDRE SCHOOL DISTRICT R-1
Pre ident, oard of Educ�i n i
4ecretary, Board of duration
RESOLUTION IN OPPOSITION TO THE
BALLOT INITIATIVE ON LOCAL PROPERTY TAX
REVENUE
WHEREAS, the Poudre School District Board of Education is a public entity that
provides educational services to the children in the Poudre School District; and
WHEREAS, a ballot initiative to amend Article X, Section 20 ("Taxpayer Bill of
Rights"or"TABOR") of the Colorado Constitution, which will appear on the general
election ballot this November Amendment 60, would cut in half all local property taxes
used for the school district's general fund and provides no credible means to replace these
Iost revenues; and
WHEREAS, the loss of 50% of the school district's local property tax revenues
would devastate the public educations provided to this community; and
WHEREAS, the decisions by voters of this school district to override TABOR
revenue restrictions would be repealed by Amendment 60; and
WHEREAS, any future voter-approved property tax for the school district's
schools would expire within 10 years; and
WHEREAS, Amendment 60 would defeat and reverse the decisions of local
communities on how to raise and allocate local resources, including public education, and
consequently, eliminate local control of local budgets,including those of local boards of
education; and
WHEREAS,Amendment 60 would reduce the local revenues available to local
boards of education and severely impact the ability of school districts to effectively
maintain an infrastructure to respond to the needs of educating Colorado's children;
THEREFORE, BE IT RESOLVED, the Poudre School District Board of
Education officially declares its opposition to Amendment 60.
Dated this g`h day of June, 2010.
ATTEST: POUDRE SCHOOL DISTRICT R-1
�4Si
President oard of Ed Lion
ry,Board of ducation
RESOLUTION IN OPPOSITION TO THE
BALLOT INITIATI-VE ON PUBLIC BORROWING
WHEREAS, the Poudre School District Board of Education is a public entity that provides
educational services to the children in the Poudre School District; and
WHEREAS, a ballot initiative to amend the Colorado Constitution, which will appear on the
general election ballot this November as Amendment 61, would ban the use of any kind of debt by the State
of Colorado and severely restrict the ability of local school districts to issue debt or to utilize appropriate
and prudent business practices in managing the finances of the school district; and
WHEREAS, Amendment 61 would severely limit the ability of local communities to determine the
appropriate use of local funds by this school board, including bonding and other appropriate and prudent
debt obligations, for building and other capital needs; and
WHEREAS, Amendment 61 would disallow state funding programs that provide the means for
some school districts to have sufficient cash flow to meet operating costs during the early parts of the
school year (due to the timing of the collection of property tax revenues), and thus potentially cause school
closures or reductions in education services; and
WHEREAS, Amendment 61 would prohibit or severely and unnecessarily constrain the ability of
local school districts to use appropriate and well-established business practices in their normal day-to-day
operations, such as refinancing bonded debt at a lower interest rate and using lease-purchase agreements to
fund office equipment and furnishings; and
WHEREAS, Amendment 61 would eliminate prudent and cost-effective state programs that assist
local school districts such as BEST (Building Excellent Schools Today) that permits many school districts
to build new schools; and
WHEREAS, Amendment 61 would result in the elimination of the resources available for public
education programs and cause further cuts in public education at a time when public education is already
suffering from cuts in resources that diminish the educatiohal services and opportunities available to
Colorado's children; and
WHEREAS, Amendment 61 could be economically devastating to the Colorado economy by
eliminating jobs and deterring out-of-state companies from doing business in Colorado or with Colorado
public entities, including school districts;
THEREFORE, BE IT RESOLVED, the Poudre School District Board of Education officially
declares its opposition to Amendment 61.
Dated this 81h day of June, 2010.
ATTEST: PPOUDRE SCHOOL DISTRICT R-1
President, Bard of Educadoni j
Secretary, Board of Education
ATTACHMENT 4
Board of Governors of the /
Colorado State University System (�
Meeting Date: June 23,2010 Approved
Action Item
Stretch Goal:N/A Strategic Initiative:N/A
MATTERS FOR ACTION:
The Board of Governors of the Colorado State University System Resolution in opposition to the
passage of proposed Amendments 60 and 61 to the Colorado Constitution,and to Proposition
101 as a proposal to amend the Colorado Revised Statutes.
RFCOMMENDED ACTION:
The Board of Governors of the Colorado State University System(Board)hereby declares its
strong opposition to,and urges a NO vote on proposed Amendments 60 and 61 to the Colorado
Constitution in the statewide ballot scheduled for November,2010 because the Board feels the
proposed amendments are not in the best interests of higher education in the state of Colorado.
Further the Board hereby declares its strong opposition to,and urges a NO vote on Proposition
101 as a proposed amendment to the Colorado Revised Statutes in the statewide ballot scheduled
for November 2010 because the Board feels the proposed amendment is not in the best interest of
higher,education in the state of Colorado.
Copies of the resolution shall be sent to the Governor,Speaker of the House and President of the
Senate,and Majority and Minority leaders of the House and Senate of the State of Colorado.
EXPLANATION:
Presented by Joe Blake, Chancellor and Michael D.Nosler,General Counsel.
A brief summary of these ballot initiatives follows:
Amendment 60
This citizen initiative is a proposed amendment to the TABOR provisions contained in the
Colorado Constitution. It includes several major changes in property tax policy. The full text of
the proposed amendment is attached.
Amendment 61
This is another citizen initiative and proposed amendment to the TABOR provisions of the
Colorado Constitution. It prohibits the state from contracting for any debt by loan in any form.
This would include bonding,lease purchase,certificates of participation etc. It further limits
Opposition to Proposed Amendments 60&61 and Proposition 101
Page 1 of 2
Board of Governors of the
Colorado State University System
Meeting Date: June 22,2010
( Action Item
voter-approved borrowing to a maximum of 10 years. It also includes a provision requiring a tax
cut equivalent to the average annual repayment of any loan obligation that is paid off. The full
text of the proposed amendment is attached.
Pr000sition I01
This is a citizen initiativc and proposed amendment to the Colorado Revised Statutes relating to
taxes and fees. It proposes an eventual reduction in the state income tax rate to 3.5%;a
significant reduction of the specific ownership tax on'vehicles;and a reduction of vehicle
registration fees to$10 per year per vehicle. The full text of the proposed amendment is
attached
Pursuant to Colorado law,the Board may pass a resolution or take a position of advocacy on a
state wide ballot issue. C.R.S. 1-45-117(1)(a)(III)(A).
Approved Denied B nifaci A.Gosyleon;~If6aifsecr6tary
Date f /
Opposition to Proposed Amendments 60&61 and Proposition 101
Page 2 of 2
ATTACHMENT 5
City of Financial Services
`� �' 300 LaPorte Ave
6rt
Collins 97 Box560
Fort Collins,CO 80522
970.227.6505
970.224.6107 fax
fcgov.com
i
Memorandum
To: Mayor Hutchinson and City Council Members
From: Economic Advisory Commission(EAC)
Christophe Febvre, Chair
CC: Darin Atteberry, City Manager
Mike Freeman, Chief Financial Officer
Date: September 1,2010
Subject: Recommendation on Amendments 60,61 and Proposition-101
After a thorough review, the Economic Advisory Commission(EAC)unanimously recommends
to City Council that it come out strongly against Amendments 60, 61, and Proposition 101. The
EAC feels that there will be a severe economic impact to our community if any one, or any
combination,of the initiatives passes. The EAC feels that the economic impacts of these
initiatives include,but are not limited to,the loss of a significant number of jobs and an increase
in utilities fees. Passage of these initiatives would seriously affect our ability to attract and retain
businesses at the State, County, and local levels.
Christophe Febvre, Chair, on behalf of the Economic Advisory Commission
J
ATTACHMENT 6
Proposition 101 and
Amendments 60 and 61
September 21 , 2010
City Council Meeting
Fort Collins
1 (—
Proposition 101
Vehicle Taxes and Fees
• Decreases vehicle ownership tax to $ 1
• Ends ( over 4 years ) all taxes on
— Car rental
— Vehicle leases
— The first $ 10 , 000 of value
• Limits all vehicle registration , license and title
charges , combined , to $ 10
• Specifies that new or added charges on vehicles
require voter approval
Fort Collins
2 l—
1
Proposition 101 - State Income Tax
• Reduces state income tax rate
— From current amount of 4 . 63 % to 4 . 5 % in
2011 , then to 3 . 5 % over time
— Phased in , drops 0 . 1 % per year
Gty of
3 _��s
Proposition 101 -
Telecommunications
• Eliminates all charges and taxes on
telecommunications except 9- 1 - 1 fees
— Limits 9- 1 - 1 fees to 2009 rates
• Specifies that new or added charges on
telecommunications require voter approval
Fort Collins
4 �-
2
Estimated Financial Impacts from 101
• City revenue loss
— Vehicles rental and leases $600 , 000
— Vehicles sales $3 , 590 , 000
— Vehicle ownership $ 1 , 242 , 000
— FASTER revenues $850 , 000
— Telecommunications $31000 , 000
— Franchise fees phone/cable $ 1 , 700 , 000
CRY of
5 � Cxllns
Amendment 60 — Property Taxes
• Effectively cancels prior property tax de- Brucing
elections ( n/a to sales tax)
• Future property tax de- Brucing elections expire
after 4 years
• Non - resident real property owners may vote on
property tax issues
• Requires enterprises and authorities to pay
property taxes
CAY of
cahns
3
Amendment 60 - Property Taxes
• By 2020 , school districts must phase out half of
property taxes not used to pay debt
. State required to replace lost revenue
• Property taxes used to pay debt must be reduced
once debt paid
• Future property tax rate increases to expire in 10
years
• Property tax revenues over dollar amount stated
on tax increase ballot title must be returned
Fort Collins
7 r—
Estimated Financial Impacts from
Amendment 60
• City would be required to refund $2 . 5M per year in
property taxes unless voters approve retention
• City utilities would be required to pay property
taxes of $ 18M
• The State offset of school district tax reductions
could cost more than $ 600M
Fort Collins
8
4
Amendment 61 — Debt
• The State cannot borrow in any form
• Prohibits all local government borrowing except
for bonds
• Redefines " borrowing " by local governments to
include :
— certificates of participation
— lease-purchases
— short term borrowing and obligations
— refunding of bonds if term extended
• Limits future voter-approved bonded debt
`"Yt coffins
9
Estimated Impacts from Amendment 61
• Higher borrowing rates
• 10 year bond repayment term
— annual payment obligations will be higher
— smaller communities may not have capacity
• Inability to level annual costs for equipment by
using lease purchases
• Potential issues re : use of credit cards ,
employment agreement and accrued leave
obligations
C*Y of
10 Forte ns
5
Estimated Direct City Revenue Loss
( Prop 101 and Amendment 60 )
• 2011 - $ 9 . 9 million
• 2012 - $ 11 . 1 million
• 2013 - $ 12 . 3 million
• 2014 - $ 13 . 5 million
Gty of
ollins
Magnitude of Budget Implications
• General Fund $ 9 . 6 million per year
• Natural Areas Fund $ 600 , 000 per year
• Transportation Fund $2 . 7 million per year
• BOB cumulative loss of $ 2 . 6 million before
expiring 12/31 / 15
• Utility rate increases or budget cuts to cover
property taxes
Fort Collins
12
6
Other Implications
• Cuts to State funds and programs may
result in cuts to City revenues or increase
City costs
• Because State services would be cut
significantly local governments may be
pressured to backfill lost services
Fort Collins
13 1
Contingency Plans
• Revise 2011 budget in first quarter
• Base cuts on BFO priorities
— some programs and services eliminated
• Use reserves in 2011
• Evaluate any plans for future " borrowing "
Fort Collins
14 1-
7
RESOLUTION 2010-064
OF THE CITY COUNCIL OF FORT COLLINS
OPPOSING THE 2010 STATEWIDE BALLOT MEASURES
DESIGNATED AS PROPOSITION 101 AND AMENDMENTS 60 AND 61
WHEREAS, on November 2, 2010, voters of the state will consider ballot measures
Proposition 101, Amendment 60, and Amendment 61; and
WHEREAS, by severely reducing revenue and restricting financing options, these ballot
measures individually and collectively will adversely affect the ability of the City, the State, and
other units of government to provide essential infrastructure,including transportation infrastructure
and recreation and park amenities, as well as services such as police and fire protection; and
WHEREAS,since 2005,the City has already eliminated$24 million from its budget and has
reduced services accordingly; and
WHEREAS,Proposition 101,by reducing,and in some instances eliminating taxes,fees and
chargers on telecommunications and motor vehicle sales and leases, will eliminate $11.9 million in
City revenue by 2014, including a $2.9 million reduction in revenue for the Building on Basics
capital project program that provides funding for vital transportation projects approved by Fort
Collins voters in 2005; and
WHEREAS, Amendment 60, which imposes drastic limitations on property taxes, will
reduce the City's general fund services by $2.5 million in 2011 alone, and will likely result in rate
increases for City utility services to offset the Amendment 60 requirement that the City's utility
enterprises pay property taxes; it will reverse the decision of Fort Collins voters on the use of
property taxes; it will reduce revenue for other units of government, including the Downtown
Development Authority and the Urban Renewal Authority; and it will significantly reduce revenue
for the Poudre School District; and
WHEREAS,Amendment 61,which imposes severe limitations on the issuance of debt,will
limit the ability of the state and the City to finance operations and capital projects and to refinance
existing debt; it will raise the cost of future, voter-approved measures to raise funds through the
issuance of bonds; and it will dramatically impair the City's ability to finance long-term capital
improvements like road and bridge projects, police and fire stations, parks, open space and public
facilities, as well as energy efficiency and renewable energy improvements to existing public
facilities; and
WHEREAS,Proposition 101,Amendment 60,and Amendment 61 will negatively affect the
economy in the City and the State while the economy struggles to recover from the continuing
economic downturn.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
FORT COLLINS that, for the reasons stated above, the City Council strongly opposes ballot
measures Proposition 101, Amendment 60, and Amendment 61, asks the voters of Fort Collins to
inform themselves as to the consequences of these measures, and further asks the voters to vote
against all three measures.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 21 st
day of September A.D. 2010.
Mayor
ATTEST:
City Clerk