Post Provides One Piece of Case Against Ritter Tax Hike

Update: ColoradoPols draws the opposite conclusion about the Post article (“Ritter Property Tax Freeze Gets Good News”). Maybe they should have read this post first.
The incomplete school funding analysis in today’s Denver Post, when considered with a few more facts, actually makes the case against the governor’s property tax increase for the “Children.” Yes, the Post identifies a potential problem with the current structure of Colorado school finance – highlighting that state government carries an ever greater share of the school funding burden, and that the tax bills of property owners in rural, low-growth districts have gone up more than their wealthy, high-growth counterparts.

But instead of giving too much significance to this one trend, a fair-minded analysis will look at some other aspects of the story. And added together, it bodes poorly for the Ritter mill levy rate “freeze” plan:

1) Since more of K-12 education in Colorado is being funded through income tax dollars collected by the state, what share of those income taxes is being paid by different classes of wealth and residents of different school districts? Does this even out the perceived imbalance of tax burdens? Inquiring minds want to know the hard data, but logic dictates that a broader tax comparison would narrow the disparity to some extent.

2) The Taxpayer’s Bill of Rights (TABOR) allows school districts to ask voters to raise more money through their program mill levies. While advocates of the Ritter tax increase point out that 174 of 178 Colorado school districts have suspended TABOR revenue limits, many of those districts have not specificially sought voter approval to override mill levy rates. Where there may be real shortages (and even where there’s only an administrator’s wish list), TABOR allows local elections to approve more funding.

3) The problem is not that more state funding has been needed in most districts to compensate for declining property tax revenue. Adjusted for inflation and student enrollment, Colorado school districts raised 8.5 percent more property tax revenue in 2005 than in 2001. Districts with the largest property tax revenue gains tended strongly to be the high-growth areas with small and declining mill levy rates. From 2001 to 2005, Colorado school districts saw 15.6 percent state revenue growth. Funds from all sources contributed to an 11.6 percent climb in total revenue.

4) The governor’s proposal would generate an estimated $65 million a year more in property taxes. But its effect on property owners would be vastly different depending on which school district one lives in. Some would not be affected at all, some would see increases worth pocket change, and some would pay a considerable amount more. If the Ritter plan were designed to fix the alleged inequities brought forward in today’s Post story, it would truly miss the boat. Nonpartisan legislative staff estimates indicate that almost all the districts facing the biggest property tax hikes under Ritter’s “freeze” plan are located in many poorer, rural, and low-growth areas. Many homeowners in Yuma County, Alamosa County, Archuleta County, and Fremont County will be hit harder than those in Steamboat Springs, Aspen, and Eagle County.

Those who want more local dollars for education need to ask the voters, those who believe that school funding has declined need to look more closely, and those who want to stick it to the rich – or even spread the burden evenly – need to look for another plan. Thanks to the Post for helping to point out that Governor Ritter’s proposed tax increase is not the school finance solution some Democrats at the State Capitol want it to be.

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