Ref. C: Setting the Record Straight

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The Colorado Freedom

Ref. C: Setting the Record Straight

Editor's Note: Following are three letters sent to newspapers that were not, to my knowledge, published by the newspapers. So I am publishing them here. The first letter is by Paul Prentice, who speaks only for himself here. Prentice's predictions about the long-term costs of Referendum C have been quoted by organizations such as FreedomWorks. Of course, the Blue Book states, "Beginning in 2011, Referendum C is estimated to increase state spending by $995 million, plus annual increases for inflation and population growth" (page 7). -- Ari Armstrong, October 28, 2005

To the Editor,

Several days ago [in late September] I released my research showing the long-term impact on Colorado taxpayers of Referendum C&D. Rather than engaging in a rational debate on the issue, the governor's office chose to make the following defamatory comments (Rocky Mountain News 09/28/05; Denver Post 09/28/05; Associated Press 09/27/05):

1) Henry Sobanet (budget analyst for Gov. Owens), "...a stunningly simplistic view of the budget and the economy... the analysis doesn't even approach being responsible ... it sounds like an economist for hire... Respectable economists simply do not forecast out 30 years."

Mr. Sobanet might wonder where the GAO, OMB, and CBO get their forecasts of, for example, Social Security solvency in 50 years? Or where mining, timber, petroleum, and other long-term extractive industries get their cost and revenue forecasts over 20, 30, or even 50 years? When I was chief macroeconomist for the U.S. Department of Agriculture under Presidents Carter and Reagan, we routinely made long-term forecasts. These were developed in conjuntion with Wharton Econometric Forecasting Associates, headed by Nobel economist Lawrence Klein.

2) Dan Hopkins (spokesman for Gov. Owens), "He's an agricultural economist. He's probably qualified to counsel Jon Caldera on manure production..."

That's quite an indictment of an honorable profession that has arguably done more good for mankind than any politician's spokesman. What was the Bank of Sweden thinking when it awarded the Nobel Prize in Economics to agricultural economist Theodore Schultz of the University of Chicago? What was The Wall Street Journal thinking when it quoted me many times during the past twenty years? What was Business Week magazine thinking when it called my company, "A respected consulting firm?" What was the U.S. Department of Treasury thinking when it contracted with me as a Visiting Scholar under President Clinton? A simple Lexis-Nexis search would have verified my credentials. The personal and professional attack is unseemly and unnecessary.

Mr. Hopkins is correct about one thing: as an agricultural economist I am qualified to detect bull manure when I see it. Citizens should be able to disagree about important policy issues without being subjected to bullying attacks from their government. I challenge Mr. Hopkins and Mr. Sobanet to a public debate on the long-term impact on Colorado taxpayers of Referendum C&D, two-against-one. The public can then decide for itself.


Paul T. Prentice, Ph.D.
Farm Sector Economics, Inc.

Dear Editor of the Rocky Mountain News,

While it's great that the News is running detailed articles about some aspects of Colorado's budget, the News is consistently misstating some of the basic facts. For example, Laura Frank's Oct. 18 article, "The ABCs of K-12," contains two errors.

The News twice claims that the "average" TABOR refund is around $100 a year. But if you care to check page 4 of the Blue Book, you'll note that that figure pertains only to the sales-tax refund, which is "about 42 percent of all TABOR refunds." And so the average refund is substantially higher. Of course, some of us want the legislature to revisit the way it pays out TABOR refunds, assuming there are any to pay out.

The News also states, "Economists for Gov. Bill Owens estimate $365 million would have to be trimmed from next year's state budget if the referendums fail." That's highly misleading at best.

Please see the following document: [linked]

If you check page 6 of that document, you will find that "General Fund Appropriations" shows a decline of $165 million. Referendum C asks for over 20 times that amount. You will also find that reserve spending shows an increase of around $110 million.

Also note that "General Fund Appropriations" is already expected to grow by around a billion dollars by 2009-10, without Referendum C or D.

Where does the rest of the alleged one-year "trim" come from? See the following memorandum: [linked]

Among the spin, you will find that $200 million of the "trim" is actually a desired increase in spending for Medicaid and K-12.

Ari Armstrong

Dear Editor of The Denver Post,

The Post's Oct. 19 editorial cites Henry Sobanet, the governor's economist, to raise dire warnings of "draconian cuts" to state services. However, the editorial fails to point out that, according to the predictions of Sobanet's office, "General Fund Appropriations" are already expected to increase from $6.2 billion this year to $7.1 billion by 2009-10 (following a slight dip next year caused mostly by expected increases in reserve spending).

For details, please see page 6 of the following document: [linked]

While the Post is welcome to argue that a spending increase of nearly a billion dollars is not sufficient high, it's hard to believe that such a hefty increase constitutes "draconian cuts."

And of course the popular programs the Post mentions are not the only programs on which the state spends money. Legislators could cut wasteful and low-priority spending in order to redirect funds to higher-priority projects.

Finally, while the Post mentions where the additional tax money might go, the Post fails to consider the costs. If net taxes go up an estimated $3.743 billion during the first five years alone, people who earn that money will be unable to spend it on local businesses, private charities, their families' health expenses, etc.

Ari Armstrong

The Colorado Freedom