Denver Braces for Potential Tax Hike

September 14, 2012

Denver voters will decide on the tax hike plan in November (Capital City Blog Image)

DENVER– If voters don’t approve a ballot initiative to suspend the Taxpayers’ Bill of Rights that demands Denver refund excess tax revenues to property owners, the city will be forced to cut $94 million in the 2013 budget.  Roads won’t be repaired, libraries might be open just 24 hours a week and services will diminish because of forced employee furloughs.

“This is not the Denver I want,” declared Mayor Michael Hancock at a press conference to launch the “Moving Denver Forward – Vote Yes on 2A” campaign.

If it passes, Hancock said the city will revamp its budget. Libraries will be open 48 hours a week, 100 new police and firefighters will be hired, 300 lane miles will be repaved, low-income families will get free daycare, and school-age children will have free access to swimming pools and recreation centers.

Since statewide voters approved TABOR in 1992, Denver officials estimated a loss of $800 million in property tax revenues. City officials said the cost of services has increased while sales and property tax revenue has fallen.

In 2005, Denver voters approved a measure to suspend TABOR and allow the city to keep excess sales tax revenue for a period of 10 years. The city will likely ask voters to extend that TABOR exemption in 2015.

The “Vote Yes on 2A” campaign is managed by Rick Reiter, a political consultant well versed in TABOR and its founder, former state Rep. Douglas Bruce of Colorado Springs. In 2010, Reiter steered the Coloradans for Responsible Reform, which defeated Bruce’s proposed measures, Amendments 60 and 61 and Proposition 101.

The Downtown Denver Partnership, the Denver Area Labor Federation and more than 400 individuals have endorsed the “Vote Yes on 2A” campaign.

Supporters include well known Democrats such as former Governors Bill Ritter and Roy Romer, former Denver Mayors Wellington Webb and Federico Pena, state Reps. Mark Ferrandino, Pat Steadman, Crisanta Duran and former House Speaker Andrew Romanoff.

“Over the past four years, we’ve closed shortfalls of nearly $450 million and cut back essential city services. Like so many of you, the city has aggressively cut costs and found new ways to do more with less,” said Hancock at the Denver Metro Chamber of Commerce luncheon in the Marriott City Center.

“Through this work, we are going to save an estimated $10 million every year moving forward. But we face another $94 million deficit in 2013,” said Hancock, who then pitched suspending TABOR as “a smart and sustainable solution to our structural budget problem.”

But, some folks aren’t on board.

The Denver Metro Chamber of Commerce has remained neutral on the initiative, and some rank-and-file voters are voicing their objections to the measure on The Denver Post and other website blogs.

“Denver’s structural budget deficit is a spending problem, not a revenue problem. The city has to adapt to a new reality, just like us taxpayers,” said Mike Krause.

Several folks questioned how realistic it was for Hancock and city council members to vote for salary increases in March 2011.  Salaries will increase 3.3 percent in July 2013, and grow to 6.6 percent in July 2014.  The mayor’s salary will climb from $145,601 to $155,211; the city auditor and clerk and recorder salaries increase from $125,924 to $134,235, and city council members’ pay will boost from $78,173 to $83,332, plus an additional 30 percent for benefits.  Yet, the council knew the city faced a $10 million budget deficit in 2012, and that would escalate to $500 million by 2030.

According to the U.S. Bureau of Labor Statistics, the average salary in Denverwas $60,424, a 4.8 percent decline in wages from 2010.

The city had an 8.7 percent unemployment as recently as July 2012.

“Brought to you by the same government that will be requesting more than half a BILLION in additional taxes for schools. This is what you get when you elect Democrats. No responsibility to treat taxpayer dollars responsibly and a never ending bleat of demanding more,” complained “Libertarian Bill.”

That hasn’t escaped Denver Councilwoman Jeanne Faatz, the lone Republican who unsuccessful fought the pay raises.

“The people are outraged,” said Faatz, and warned that pay raises sends “an extremely bad message” to voters.

Now, Faatz is educating the public about the double whammy – the city wants to keep the 6.2 mills in property tax revenue and the Denver Public Schools want to add 7.835 mills to the existing levy. The school district is proposing two measures, $466 million for improvements and $49 million to cover higher operation costs.

If voters approve the entire wish list, the cost the owner of an average $225,000 home will ultimately be $251 a year, and the owner of $1.1 million commercial property will pay $4,476. The city plans to phase in TABOR rebate revenue over a period of four years.

“Many households’ finances are just beginning to stabilize after years of uncertain employment,” noted Joshua Sharf in an article for the Independence Institute. “People have savings to rebuild, retirements to plan for, and children to feed, clothe and put through school.”

“The government has an obligation to exhaust all reasonable efforts at cost savings before asking taxpayers for more,” declared Sharf.

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