March 31, 2005 | Read Time: 5 minutes
As voters in Arizona, Kansas, Ohio, Wisconsin, and elsewhere consider ballot measures that would force states
to limit their spending, charities in Colorado are fighting to overturn a similar law that has been in effect for over a decade.
The overhaul effort got a big push when the governor of Colorado announced this month that he would support a move to temporarily relax the limits starting with the 2006 fiscal year.
Colorado’s Taxpayer’s Bill of Rights, which was passed in 1992, requires lawmakers to limit spending increases to an amount equal to the state’s population growth plus inflation. And in years when Colorado’s tax revenue and budget shrink, the lower level of spending becomes the new base to which further adjustments are applied, a feature known as the “ratchet effect” because it does not allow spending to bounce back when times are good.
The goal of the law was to minimize taxes and return revenue surpluses to the state’s taxpayers.
But Colorado charity leaders say the consequences have been devastating. The state’s fiscal downturn at the beginning of the decade, coupled with the ratchet effect of the 1992 law, have forced the legislature to cut $2-billion in spending over the past three years. Those cuts have allowed the state to issue rebates to taxpayers, but they have also led to highways with potholes and reduced spending on higher education and nonprofit organizations.
Squeezing Charities
Among Colorado charities that receive state money, 76 percent reduced their budgets in 2004, according to the Colorado Association of Nonprofit Organizations. Forty-eight percent eliminated some programs in 2004, and 51 percent reduced the size of their staffs.
“I pity any state that wants to model its fiscal policies around Colorado,” says Charles S. Shimanski, president of the Colorado Association of Nonprofit Organizations, which represents 1,100 charities.
In response to concerns raised by charities and others, Gov. Bill Owens, a Republican, this month struck a compromise with the Democrats who control both houses of Colorado’s legislature to take a five-year “timeout” from certain provisions of the spending law.
The proposed changes must be approved by a majority of Colorado’s voters in November.
The deal would allow the state, for the next five years, to keep money that would otherwise be given out as a rebate to taxpayers under the 1992 law.
Advocates for charities had been hoping for a permanent revision of the 1992 law, but Governor Owens insisted on a time limit.
Mr. Shimanski says the compromise is an important one. “Is it perfect? No. But those who wait for perfection when it comes to political initiatives often wait until death,” he says.
‘Spending Binge’
But not everyone supports the proposed change. The governor has came under criticism from anti-tax advocates in Colorado and around the country. In a statement, Grover Norquist, president of Americans for Tax Reform, a Washington coalition that opposes all federal, state, and local tax increases, said Colorado should be revising its programs to make more efficient use of smaller sums rather than asking taxpayers to pay more.
“Bill Owens and the big spenders in the legislature have decided to raid the wallets of taxpayers in order to fund their spending binge,” Mr. Norquist said.
Now it will be up to the voters in November to decide. Mr. Shimanski of the Colorado Association of Nonprofit Organizations says his group, which hired its first full-time public-policy coordinator last fall, will work with others to persuade voters that shoring up state services is more important than receiving a rebate check.
Even with Governor Owens on board, it might be a difficult sell.
“It’s easy for an anti-government type to come in and say ‘Oh, those greedy politicians want to keep your money,’” Mr. Shimanski says. “We’re trying to figure out how to dumb down the various forces causing the state’s fiscal crisis so that the average voter gets it that this is a problem.”
For Colorado charities that have seen state support for some programs disappear altogether under the 1992 law, the need to reverse the law is critical.
YouthZone, a Glenwood Springs organization that helps troubled children, has seen state support cut by more than 60 percent since 2001.
The charity last year lost all state funds for a program that diverts children from the criminal-justice system to a nonprofit program that assesses and monitors their whereabouts while providing services.
So far, YouthZone has been able to maintain the program by seeking out county, rather than state, funds. But young people are now expected to pay $300 apiece toward the program’s costs, up from nothing a few years ago. That cost makes some district attorneys reluctant to suggest the option for youths from low-income families, according to Debra Wilde, YouthZone’s executive director.
“The ingenuity of nonprofits has kept some of the work alive,” Ms. Wilde says. “We went to the counties and asked them to value our work. But you just can’t totally make up for that state piece.”
Ms. Wilde says that between now and the vote in November, she plans to talk about the impact of the state cuts on the program to anyone who will listen. She remains hopeful that, after more than a decade, Colorado residents will decide that the Taxpayer Bill of Rights is not working.
“It’s like what we see in recovery,” Ms. Wilde says. “Sometimes people have to bottom out before they see the problem.”
