A chronic shortage of revenue

Bianca McKerihan on February 18, 2011 in Education News

OK.  So, while the Joint Budget Committee and the legislature still need to work on the budget a lot – they don’t have loads of options – and based upon Gov. John Hickenlooper’s proposed budget yesterday, we are now looking at the likely magnitude of cuts for Colorado in fiscal 2011-12.  And it ain’t a pretty picture.

I am usually the one commenting on resource issues on this blog, and I guess I’ll be happy to maintain that role for awhile.  But I suspect that we will be hearing a lot from districts, schools, teachers, and parents about what these cuts mean, and what $497 less per K-12 pupil means in the classroom, and what $877 less per higher ed student means.  At a minimum, lots of cuts in jobs, programs like breakfasts and counselors eliminated, larger class sizes, etc., all at a time when we were already near the bottom of the nation in spending and programs.

Some on this blog think we have enough money for K-12, and just need to spend it smarter (like a game of limbo and “how low can you go,” I’m curious if those folks believe that there ever comes a threshold point where, yes, “money matters” (?)).

But, I’ve never seen a post or a comment that suggests we have enough money for higher ed.  And, somehow, so far, I don’t see the nascent development of more for-profit private institutions of higher education (you know, the ones that have been in the news, of late) as an encouraging sign of the private sector’s ability to deliver higher quality at lower cost in higher ed.

If we are going to have a discussion about cuts and education budgets in Colorado, let’s get a sense of where we are right now.

I think the answer is pretty simple – we have a shortage of revenue.  Our general fund budget in 2012 is almost the same as it was a decade ago, despite 700,000 new Coloradans getting services. Cuts don’t have to be the entire solution to budget-balance, over time.

The Associated Press reported last week that federal taxes are the lowest, as a percentage of personal incomes, since 1950, during the Truman administration.

In 1950, of course, we were fighting a pretty consequential and costly Cold War.

So the current, widespread notion that we are historically “overtaxed” by Washington, D.C. is simply not supported by facts. (I know there are other elements to federal spending, such as Social Security, but those involve direct and specific benefits in return for payroll taxes withheld).  And income/wealth inequality has not been at the levels we see in the U.S. today since before we had a federal income tax, and with the extension of the tax cuts for higher income Americans late last year, their deal got even better.

In Colorado, taxpayers are fortunate to have very low taxes at the state and local level – 44th lowest in the US, in fact (and 49th as a percent of personal incomes).

So in historical and comparative terms, a Colorado resident in 2011 has some of the lowest combined federal, state and local taxes in the country and in the past half century.  What we don’t have are very impressive K-12, higher ed, transportation infrastructure, health or other public services.  Such lack of public infrastructure investment may partly explain the fact that our per capita personal income rankings have actually dropped over the past decade, from seventh in the US to 15th among the 50 states.

If we want an infrastructure that supports growth and economic development, in a state economy of $250 billion per year, we probably need to talk about raising taxes to pay for it.  And, despite so much of the rhetoric on this issue and the slowly-recovering economy, now is a reasonable time, when our tax rates are historically and comparatively low. (And lots of other states are raising taxes to balance their budgets – in Oregon and Arizona by votes of the people, and in Illinois by the legislature, with lots more yet to come).

For a discussion of all this, and more, Dr. Mark Fermanich of the Buechner Institute for Governance has recently authored a report that assesses Colorado’s fiscal situation, and presents some options to consider.

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