Thornton's $15 Fib
by Ari Armstrong, October 27, 2005
Susan Thornton correctly writes in her October 27 column for The Denver Post: "Referendum C... would allow the state to keep and spend the taxes it collects for the next five years." According to the Blue Book (page 7), Referendum C would increase state spending by $3.743 billion over that period. Furthermore, "Beginning in 2011, Referendum C is estimated to increase state spending by $995 million, plus annual increases for inflation and population growth."
That billion-dollar a year increase is on top of already-scheduled increases. Legislative Council, the same outfit that prepared the Blue Book, predicted that "Actual Appropriations," a portion of the budget related to the general fund, will already grow by nearly a billion dollars by 2009-10. (See page 2 of the linked document.) This year, "Actual Appropriations" are about $6.2 billion, and they're expected to climb to nearly $7.1 billion by 2009-10. That's under current rules, without Referendum C. And if Referendum C passes (see page 5), "Actual Appropriations" would increase to over $7.9 billion by 2009-10.
So Thornton at least gets one basic fact straight, though she doesn't relate all the relevant details. Unfortunately, her column goes downhill from there.
She writes, "Opponents also falsely claim that the average family of four would forgo $3,200 if C and D pass. They don't tell you that the fictional family would have to qualify for each one of the 16 different tax credits that make up TABOR's complicated rebate mechanism."
But "average" means just that. The most usual meaning of "average" is the mean, or you add up all the refunds and divide by the total number of refunds.
And which body determines how the TABOR refunds are distributed? It is the legislature. As a recent educational flyer from Active Citizens Together (ACT) points out, "'Average' means some get less, some more, thanks to special laws by state legislators. That diversion to special interests of our refunds can be repealed next year, before tax refunds begin."
Thornton writes, "A more accurate estimate, from the nonpartisan Legislative Council, is that if C is rejected by voters, the average TABOR rebate next year will be just $15 per person. (Over the five years, the rebates may rise to be closer to $100 per year, still a small price considering what is at stake.)"
Here Thornton omits two crucial facts. First, the $100 figure is for the sales-tax refund only. As the Blue Book states (page 4), "The sales tax refund accounts for about 42 percent of all TABOR refunds as is distributed based on income levels. Taxpayers are expected to receive a total of between $350 and $1,021 over the next five years, or an average of $491, in sales tax refunds." Second, as the same page of the Blue Book makes clear, the refund is expected to increase every year over the five-year period. Because Referendum C permanently ratchets-up state spending based on the year of highest spending, the long-term reduction of TABOR sales-tax refunds would be much more than $100 per year.
[October 29 update: Douglas Bruce states the $15 "is for last year, which is not covered by C." The same page of the Blue Book that offers the $491 figure gives a yearly breakdown of the sales-tax portion of the TABOR refund: $71 for 2007, $72 for 2008, $83 for 2009, $111 for 2010, and $154 for 2011. Apparently, part of the confusion arises from the fact that the legislature operates on a fiscal year that starts and ends in the middle of the calendar year, whereas TABOR refunds are paid out the year after based on tax returns.]
And, as ACT points out, the legislature could easily change the refund mechanism to make the payout more proportional. Hopefully the legislature will act responsibly and stop playing games with the TABOR refund. But, even if the legislature continues to refuse to take responsible action on the matter of refund mechanisms, the average amount still is relevant, because that represents the amount of money that would be taken out of the voluntary, productive economy.
Even though the $15 figure is completely irrelevant, Thornton proceeds with her column as though Referendum C merely asks voters to give up a $15 refund. Her approach, then, is fundamentally dishonest.
Thornton claims, "If C fails, Colorado faces a $2 billion budget shortfall over the next five years..." But, even without Referendum C, "Actual Appropriations" will increase to record highs, by nearly a billion dollars relative to this year's level. Her claim is completely arbitrary. There is no basis in reality for the $2 billion figure, and the increasing budget faces a "shortfall" relative only to Thornton's desired increases.
General-fund spending is already expected to increase around a billion dollars over the next five years. The legislature can live within its budget by increasing efficiency and by cutting wasteful and low-priority expenses. Meanwhile, the additional $3.743 billion that Referendum C asks from taxpayers (over the first five years alone) would do a lot more good if left with the families that will earn that money.