Jeff and I are not tax or budget experts. We have a hard time just saying numbers sometimes, but we do our best to bring you the most accurate information and some amateur analysis on the state of our little city. After airing the latest two episodes – City Budget One-oh-Fun and What the F*** is TABOR? – and sitting down with Councilwoman Jill Gaebler (airing October 27th) it has come to our attention that there are two important things we missed, mostly relating to TABOR.
The Ratchet Down Effect
The Tax Payer Bill of Rights, TABOR, has a feature called the “ratchet-down effect”, which is important to understand. I’m going to try to illustrate it using a home budget.
Let’s say that this month you have your home budget all set and you are going along smoothly. Then you get really sick. There isn’t any sick time left to draw from and you end up with some lower-than-normal paychecks, so you adapt. You cut some spending, you defer some purchases, you prioritize and leave some things until you can catch up. Only, your boss finds out that you lived off of less and adjusts your income to the lesser amount. You were capable of living on less, so now less is your new normal. Unless you have a child, then you will get a tiny bit more, and he will adjust for inflation, but that’s it, you are stuck in your new, lesser, income.
TABOR does something similar when it comes to ratcheting down. When the city started cutting services because of the recession they were making the necessary changes and prioritizing based on lesser revenue – as they should have and needed to. Only, now that we are rebounding, TABOR doesn’t allow us to go back up to original budget amounts. TABOR “ratchets” the budget down to the recession amount. Some of the services we enjoyed prior to the recession are still incredibly underfunded, but, in part because of TABOR, they remain underfunded and the city, and its citizens, are expected to adapt to a new normal.
Here is a document from Dr. Tom Brown and the Center for Colorado Policy Studies that explains just how TABOR works and what the effects have been through different fluctuations in revenue.
Privatizing Public Services
This is a big topic and I can’t get into all of it here, but for those who are interested, some claim that TABOR can lead to the privatizing of the things that the city used to be able to fund. (If you are like me you just thought “Who benefits?” and have a sinking feeling that the benefactors of privatization are the same people who rally around the idea of putting a straight-jacket on the city budget – primarily so they can benefit. Like a fake superhero swooping in to save people from a problem that the fake superhero created. But, I digress.)
Here are a couple of articles so you can follow this rabbit trail, if you want.
Here is a report about privatization across the US, written by a pro-privatization organization. In the opening letter they state that, “All eyes have been on Colorado for years – the first to fully enact a modern TABOR – as the poster child for successful implementation.” (Their words, not mine.) The Tax and Spending Limitations chapter starts on page 15 of the report. Posting this link does not mean I support this view.
Now you Know
With the last two episodes and the upcoming episode with Jill Gaebler we hope you are well-equipped and well-versed in our local budget, restrictions, rules, and comparisons. (We also hope you have had a little fun along the way) Whether you agree with our take or not, we hope you get out and vote and make your voice known. If we missed anything else, feel free to comment here and we will enter you into the Ballot Bingo drawing for your thoughts.