If approved by voters in November, Denver Measure 2A would remove property tax revenue limitations imposed by Colorado’s Taxpayer Bill of Rights (TABOR), resulting in a forever and unlimited tax increase for Denver property owners. As an added poke in the eye, 2A would also make permanent a temporary lifting of TABOR restrictions on city sales taxes that would otherwise expire in 2014.
This all despite the fact that both Denver tax revenues and spending have increased year over year in the last several budget cycles, and are only forecast to grow. From Mayor Hancock’s proposed 2013 Denver budget (page v):
In 2013, overall General Fund revenues are projected to be $945 million, and increase of 3.5 percent from the revised 2012 projections of $913 million. The revised 2012 projections represent a 0.94 percent increase over 2011 actuals. Core sales and use tax, the largest source of General Fund revenue, is projected to grow by 5.8 percent in 2012 and 4.0 percent in 2013.
At the same time, median household incomes in Denver have been declining since 2007, meaning that Denver city government has actually been growing while taxpayer incomes have been shrinking.
It’s more than obvious who wants this forever tax increase passed. Denver Mayor Hancock and his administration have been out making the case for homeowners to balance the city’s budget for them by raising their own taxes. The Denver Post was editorializing in favor of the idea before it was even referred to the ballot. The Denver Business Journal has reported on support for 2A from the Downtown Denver Partnership and the Hispanic Chamber of Commerce of Metro Denver (though oddly they couldn’t seem to find any opposition to report on, but more on that later). According to their September campaign finance report, the issue committee behind the Yes on 2A campaign, Moving Denver Forward, has received over $400,000 in donations to help put the squeeze on Denver property owners.
The list of donors reads like a who’s who of Colorado’s tax and spend political class.
The Denver firefighters union, the Denver Library Friends Foundation and Democratic Party funder Tim Gill threw in $25,000 each. VISIT Denver (the convention lobby) and left wing politcal funder Pat Stryker were good for $10,000 each (Ms. Stryker lives in northern Colorado, so it’s extra odd that she wants to see Denver property taxes raised so urgently). Even the Teamsters Union managed to scrape up $5,000 for the cause.
Contributions from real estate developers and construction firms run six figures.
In contrast, the issue committee opposing Measure 2A, No Blank Check 2012, has raised a little over $2,500.
So a voter looking for information, or a reporter looking for a favorable comment should have little trouble finding the “pro” side of Measure 2A. But who is out there making the case this thing is a dangerously bad idea?
The Independence Institute to begin with. My work for the Institute on why 2A is a bad idea can be found here in the Huffington Post, and my recent “pro/con” series with Mayor Hancock in the Wash Park Profile neighborhood newspaper is here:
Measure 2A would also fall hard on senior citizen homeowners living on fixed incomes. Their property taxes will go up, while their income remains flat. The Hancock administration tacitly acknowledges this in their proposal to spend the new tax money, which includes (the phrase): “Increase the city’s property-tax credit from $186/year to $372 for 4,000 low-income senior citizens and persons with disabilities.”
Since this is new general fund money (discretionary spending), there is absolutely no guarantee that this is what it will actually go towards. Even so, what they leave out is that other low-income and fixed-income senior citizens will pay for the tax credits for those 4,000 people.
Also writing on behalf of the Independence Institute, Joshua Sharf makes the case against Measure 2A in the Denver Post here. Writes Joshua:
The mayor’s proposal assumes that rising home values necessarily mean rising incomes. But the Bureau of Labor Statistics reports Denver’s weekly income fell nearly 5 percent in 2011. The mayor’s mill levy override scheme would mean an immediate property tax increase of 10 percent for households who are still finding it difficult to make ends meet.
Joshua has also written on Measure 2A at the WhoSaidYouSaid blog.
Measure 2A is also opposed by former Denver City Councilwoman Susan Barnes-Gelt. Here’s what Gelt, a liberal Democrat, had to say in her Denver Post column:
Personnel costs comprise 70 percent of Denver’s operating budget and they escalate yearly. The current proposal restores employee furloughs but avoids long-term systemic changes to an arcane personnel system.
Gelt also had this to say recently on her regular appearance on Colorado Public Television 12:
Denver voters have a choice. Approve a blank check that never expires for higher taxes, or send Mayor Hancock back to the drawing board to craft a balanced initiative with a mix of reduced expenses and tax increases. 2A is bad for jobs, small business and homeowners. Vote NO.
Ben Gelt (Susan’s son) runs the No Blank Check 2012 campaign, which opposes Measure 2A and whose website states:
There is no limit to how much the City will collect through this tax increase. When property values go up, so will the tax revenue generated. The City ignored its task force by asking for higher taxes with no ceiling, prior to reducing expenses.
The Glendale/Cherry Creek Chronicle, a Denver neighborhood newspaper, recently editorialized against Measure 2A:
The voters are told Denver has a structural deficit which means even in bountiful times the city’s revenues can never meet its expenses. The obvious conclusion to the existence of a structural deficit is that Denver city government is unable to stop spending money it does not have. Why in the world would anyone want to give such a government $68 million per year more to squander?
In a Denver Business Journal guest opinion piece (hidden behind a subscriber pay wall) Tyler Smith and Scott Peterson from the Denver Metropolitan Commercial Association of Realtors (DMCAR) urge readers to “Defeat ballot measures that raise taxes” including Measure 2A:
In the vast majority of commercial leases the tenant, not the landlord, pays the property taxes. In fact, property taxes are almost always the biggest expense item on any tenant’s annual expense pass-through. In reality, the disproportionate burden of increased property taxes falls on all businesses large and small.
Denver Post columnist Vincent Carroll points out the forever and unchecked nature of 2A’s impact on homeowners’ wallets:
Homeowners have no control over a hot real-estate market, but if their incomes aren’t rising, too, the resulting tax bite could be painful. And yet 2A caps the growth of property tax revenues only until the city reclaims the full 6.2 mills that it intends to de-Bruce. After that, tax collections could spike, with no relief in sight and no sunset provision on the measure.
Possibly even more telling of just how bad 2A is for both property owners and businesses is who has chosen not to take a position on the measure. The Denver Metro Chamber of Commerce, normally a tax hike’s best friend, has stayed neutral on 2A, with CEO Kelly Brough quoted as saying:
We can’t continue to get behind property tax increases that have a disproportionate effect on business.
Earlier in October, the Hancock Administration asked Denver Inter-Neighborhood Cooperation (INC), the umbrella group for Denver’s numerous Registered Neighborhood Organizations (RNOs) to endorse Measure 2A. Denver INC responded, in part:
Confident that the voters of Denver will express their will with or without INC’s involvement in endorsements, there was, therefore, a unanimous Board decision not ask the delegation to take a position on ballot issue 2A.
So 2A has the backing of deep-pocketed special interests, some of which stand to benefit should 2A pass. But the neutrality and outright opposition of such different, and even disparate, groups and individuals should give voters pause, even those normally ideologically inclined towards higher taxes and bigger government.
Mike Krause is a Denver property tax payer and Vice-President of Operations at the Independence Institute, a free market think tank in Denver