January 30, 2010
I have never met a person who felt we should create special interest corporate tax loopholes. In fact most have wondered, then why or how did they get into law? Simple. They lobbied successfully to redistribute the taxes away from them and onto you and claimed it was in your best interest to do so.
The Denver Post documents that, "The state faces a shortfall of at least $1.3 billion in the 2010-11 budget year and will have bridged a $2.2 billion budget gap in the current year.
So in a budget climate where the additional $1 billion in cuts we need to make means we are closing schools, deferring repairs on state roads, buildings and bridges, closing DMV offices, closing beds for the mentally ill at Ft. Logan, funding veterans, higher ed, services for developmentally disabled and mentally ill at the lowest levels in the country, making our 4th reduction on provider reimbursement rates in Medicaid, reducing treatment programs in prisons — have we done everything to be fiscally prudent with existing laws and funds?
The answer is no. There are several special interest corporate loopholes that shift taxes away from corporations and onto you. We intend to close those loopholes. These are not enough to balance the budget without making significant other cuts, however, it would be irresponsible in this budget climate to leave them on the books. These groups fought hard for their special treatment and will fight hard to keep them, but don't be fooled. What are we talking about?
Junk Mail Loophole - $1.5 Million
Companies in the U.S. spend tens of billions of dollars producing and sending junk mail every year. In Colorado, they don't pay taxes on those materials.
Industrial Energy Use Loophole
Manufacturing companies currently consume as much energy as they please without paying taxes on it.
Doggie Bags Loophole – $2.1 Million
Currently, restaurants do not have to pay taxes on cartons, bags, plastic-ware and other items not essential to serving food to diners.
Junk Food Loophole - $18 Million
Colorado does not tax food to ensure that people, regardless of how much money they make, can afford nutritious foods that promote health and reduce risks of malnutrition, obesity, and other significant health problems. Candy and soda are high-calorie, low-nutrition foods, not the necessities that must be protected by tax-free status. Additionally, eliminating the tax exemption on candy and soda may deter the consumption of unhealthy foods, which will lead to a healthier population and reduce the burden that poor nutrition imposes on our healthcare system.
Agricultural Compounds, Pesticides, & Bull Semen Loopholes - $4.6 Million
Agriculture is a $16 billion a year industry in Colorado. Right now, farmers and ranchers do not have to pay taxes on the hormones, pesticides, insecticides, fungicides, and other compounds used to treat their livestock and crops. They also don't pay taxes on prized bull semen used to breed genetically-superior cattle.
Software Loophole - $20.4 Million
We all pay sales tax when we buy a new computer program or game, but currently, businesses do not have to pay that same tax, which depletes our budget by tens of millions of dollars.
Online Shopping Loophole - $5 Million
Currently, companies who sell goods online in our state do not collect state sales tax. This creates unfair competition for businesses physically operating in Colorado that must collect sales taxes.
Lower-Standard Alternative Fuel Vehicles Loophole – $2.7 Million
The state offers incentives in the form of tax credits for purchasing certain alternative fuel vehicles. To help balance our budget, this year we are eliminating the credit for the lowest-standard category of these vehicles.
Alternative Minimum Tax and Tax Credit
The alternative minimum tax is widely considered to be unfair, needlessly complex, and antiquated. That is why we plan to eliminate it.
Net Operating Loss - $16.8 Million
By capping net operating loss claims at $250,000 for the next three years, we are asking businesses to take a temporary timeout from accounting methods that allow them to reduce their tax liability in profitable years.
Enterprise Zone Investments - Subsidizing Developers
This proposal asks big corporations to take a temporary timeout on tax credits provided in enterprise zones. Right now, businesses can take a 3% tax credit on equipment investments. This measure would limit the size of the credit to $250,000, which will only affect big businesses.
Our tax policy should be simple, fair and should not give big corporations special breaks that redistribute financial burdens onto families. If they are not paying their fair share, then you are paying more than your fair share.
November 03, 2009
Some of you may know that in order for public institutions to qualify for "enterprise status" under TABOR they need to receive less than 10% of their funding from the state. Historically, a public university or college was essentially publicly-funded. Below is a recap of the % of public funds received from the state (not counting COFF or Tobacco Funds) for each "public" institution of higher education:
- Adams State College 16.8%
- Colorado Community College System 2.8%
- Colorado School of Mines 3.1%
- Colorado State University 3.9%
- Fort Lewis College 13.8%
- Mesa State College 20.3%
- Metro State College 0%
- University of Colorado System 2.4%
- University of Northern Colorado 1.2%
- Western State College of Colorado 7.4%
SOURCE: Office of the State Auditor – Higher Education TABOR Enterprise Status
In order to come into compliance college will rely more and more on tuition as fees to support their services which you will see in the form of tuition increases or by seeking support from corporations, grants or foundations.
Universities, once thought to be the frontier of free thinking and independent thought must spend an inordinate amount of their time fundraising, courting and pleasing corporate sponsors, which in my view, risks detouring from the primary mission of education.
Higher education has no legally protected funding status and the severity of the state's budget crisis means that if we eliminated the remainder of funding to higher ed, we still haven't balanced our budget.
Does there come a point where a "public university" is no longer public? Or where the need to raise money from private donors jeopardizes academic independence and freedom? This is a discussion we need to have in order to decide our priorities and values as a state and a community.
October 23, 2009
Yesterday I had the privilege in participating in an event in Grand Junction hosted by the Independence Institute, Club 20 and the Pew Foundation. We were joined by DOC Director Ari Zavares, Dept Public Safety Director Pete Weir, DA Pete Hautzinger, Mesa County Sheriff Stan Hilkey, and Community Corrections Board Member Steve Reynolds.
Here's a recap of what we have discussed:
- 1 in 100 people nationally are now behind bars and 1 in 28 people in Colorado are under some form of correctional control.
- Colorado is incarcerating people at a rate higher than national average and the U.S. is incarcerating people at a much higher rate than the rest of the world.
- Colorado arbitrarily doubled prison sentences in 1985 and the growth rate is jeopardizing all other public programs in Colorado.
- Public Safety is the number #1 priority and our corrections policies and priorities should be based on what works and gets results.
- We are spending significant sums of money in ways that do not increase public safety.
- Colorado has a 50% recidivism rate. By focusing on data-based policies that work, we can reduce recidivism, reduce crimes, reduce future victims and save money.
- The Department of Corrections is the largest mental health care provider in the State of Colorado. 21% of people in CO prison have been diagnosed with a serious mental illness and nearly half of some kind of mental illness.
- 85% of women sent to CO prison last year were convicted of a non-violent offense and the US imprisons 10 times more women that Western European countries combined. 80% of these women have children.
- We appropriated $708 million in state funds to the Department of Corrections last year, making DOC the largest general-fund agency in Colorado.
- DOC appropriations is twice what it costs to fund the entire Judicial Department (an entire branch of government!) and twenty times what it costs to fund the entire Legislative Department (an entire branch of government!)
- DOC has grown from 2% to almost 10% of the state budget and because it has grown faster than the 6% allocation limit it has forced disproportionate cuts in other areas.
- Colorado is a Balanced Budget state so our state constitution requires that we balance our budget every year. As a result every $1 we spend on corrections is a $1 we cannot spend elsewhere.
- It costs $30,386 per inmate per year in operating expenses in DOC and $150,773 per inmate per year on prison construction costs — making the true cost per incarcerated individual $181,159 per inmate per year.
- Cost of 1 Inmate = Health Insurance for 15 Families of 4 for a Year;
- Cost of 1 Inmate = Medicaid Coverage for 40 People for a Year;
- Cost of 1 Inmate = Cost of Educating 23 K-12 Students per Year;
- Cost of 1 Inmate = Tuition for 50 Students in Higher Education;
- Cost of 1 Inmate = Lost Tourism Revenues of $1,086,954 ($1 invested in tourism = $6 dollars return)
As we have sentenced people in record volumes to Colorado prisons we have generated a prison population faster than we can build them (or afford them). Current estimates project the need for building 1 new prison per year to keep pace with the population.
This has increased Colorado reliance on the private prison industry to house our inmates. Prison for profit has driven perverse incentives that have nearly bankrupted the state. CCAs profits doubled between 2003 – 2008. CCA is also being sued in a national class action for not paying wages owed to build their profits.
All said, we could make an enormous dent in solving this problem by:
- restructuring drug sentences
- differentiating between technical v. substanstive probation / parole violations
- restoring discretion to judges in sentencing
and using the savings to invest reducing waitlists and expanded access in:
- juvenile intervention & diversion programs
- substance abuse and addition programs
- anger management programs
- pre-incarceration mental health treatment
- community corrections
August 10, 2009
A FEW BACKGROUND FACTS:
- Colorado is a Balanced Budget State that requires we balance the budget every year.
- Budgeting begins on forecasts and must "true up" as figures become available.
- The legislature retains control over less than 20% of the budget.
- The cuts we make over the next few years will be permanent.
MORE CUTS ON THE WAY:
The unemployment rate in Colorado has not only been devastating to the families who are experiencing job loss but also for all public services that depend on individual income taxes. Individual income tax collections declined by $735 million. Sales and Use tax declined by $215.2 million. Corporate income tax collections declined by $176.6 million. The 2008-09 budget reductions will be approximately $1.13 Billion. The shortfall for the 2009-10 budget was $1.454 Billion with a remaining shortfall of $438 Million to be cut ($1.855 Billion in Cuts). The 2010-11 budget will include mandated spending increases of $463 Million (federal mandates, CO constitution) and the preliminary base budget is $503 million short (that already assumes $422 million in PERMANENT base reductions from 2009-10 ($900 million projected shortfall). This represents nearly $4 Billion in cuts over a 3 year period. These cuts will mean closing significant public services for the people of Colorado.
ECONOMIC INDICATORS HAVE DECLINED:
- The state is projected to lose 84,600 jobs in 2009 and another 8,600 in 2010.
- Personal income is projected to decrease by 0.3% in 2009 (as opposed to previous 10 yr avg increase of 5.9%.
- Retail trade is projected to decline by 7.8% in 2009.
HIGHER EDUCATION:
- Higher education was helped by ARRA stimulus funding during the last fiscal year
- However we are spending less on higher ed in general fund per student than we were in 2000.
- When cuts are made to higher education, it drives up the cost of tuition.
- Higher education is a critical component to our economic recovery.
MEDICAID:
- TABOR formula does not allow us to adjust for caseload growth.
- Medicaid Caseload has brown every year since 2000.
- For every $1 we cut in Medicaid, we lose another $1 in federal funds.
- Individuals not covered through Medicaid shift costs to the ER.
CORRECTIONS:
- Inmate population has continued to grow.
- We are incarcerating over 23,000 inmates at an average expense of $28,000 per year.
- 1 in 29 adults in Colorado are now under some form of correctional control.
- We spent nearly twice as much on corrections as higher education.
Figures based on projections, forecasts and data from Legislative Council and the Office of State Budget & Planning.
July 20, 2009
The Pew Center on the States has recently released their report "One in 31: The Long Reach of American Corrections." This is an updated report on last years report revealing a staggering social expense to our current corrections system.
Here are some relevant statistics for Colorado:
- 1 in 29 adults is under correctional control (compared with 1 in 102 adults in 1982).
- Colorado spent $625 Million on corrections (nearly twice spending on higher ed)
- By end of 2007, 30% of correctional population was in prison or jail (in 1982 that figure was 26%)
- Colorado has 77,635 people in probation (238 federal)
- Colorado has 11,086 people on parole (954 federal)
- Colorado has 22,666 people in prison (1,736 federal)
- Colorado has 13,871 people in jail
- For every $1 Colorado spent on prisons in 2008, it spent $0.15 on probation and parole.
- 1 day of prison costs ($76.51) = 6 days of parole or 21 days of probation.
- Colorado ranks 15th highest prison / corrections population among the 50 states
You can download the full report by visiting www.pewcenteronthestates.org/publicsafety.
We can not afford to ignore sentencing reform in this era of staggering budget shortfalls. We are spending an extraordinary amount of money incarcerating primarily non-violent offenders.
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