SPEAKER_09 0:00

BVHC, the frequency.

SPEAKER_06 0:04

I feel like I'm very anti-tax this year. And normally I'm all in favor of considering a well-formed tax for good trade-offs, because I obviously that's the way government runs. And I have not only been in favor of tax measures, I've actually put together some tax measures in the past and advocated for them. So I'm not a fundamentally anti-tax person, but I think we've kind of missed the mark in a few of these. It'll be interesting to see what the voters do with them.

SPEAKER_09 0:29

Happy Friday, frequency listeners. I'm Shay Castle, and today we're talking taxes and Tabor. I'm covering not only Boulder County's child care tax and the City of Boulder's vacancy tax, but also the larger issues of government spending limits through deep dives into three state ballot measures. At the root of it all is one question: who should pay for the communities we live in? The streets, the police, the parks, the safety net to catch the increasing number of people being forced into poverty and homelessness as the cost of everything goes up. One cost increasingly drawing attention is child care. And that's where we're starting today.

SPEAKER_08 1:07

We have families that would be paying 60% of their take-home pay to cover child care. And that's if they can get into a child care center because it's so precarious to run these, because the margins are thin. Our family was very fortunate where we felt like we had options. We are able to afford childcare. And it was still challenging. We were on 10 different wait lists to get into a school. And we need to find a better, deeper solution to this, what I would consider a childcare crisis, an access crisis for sure. It can't be this precarious.

SPEAKER_09 1:45

Boulder County Ballot Issue 1A would raise property taxes by $30 million annually to fund child care, or as it's known in the business, early childhood education. The majority of the money would go toward helping lower and middle income families afford childcare. $20 million would be spent on direct tuition assistance or vouchers through CCAP, Colorado's child care assistance program, to address the 900 to 1200 estimated children on the wait list for help. $5 million would help childcare providers add more spots and teachers or otherwise grow their businesses. $2.5 million will be focused on the teachers themselves, helping train and retain them, paying for substitute care, and shared workforce expenses between organizations. The hope is to reduce the industry's unusually high rate of turnover among teachers.

SPEAKER_03 2:34

The turnover is a huge factor in this industry. People who are rational human beings and need to pay for their own cost of living, there's a motivation to kind of hop around trying to find the best paying job. And so without acknowledging the compensation issue and the importance of ensuring and valuing a living wage, you know, you're always going to have turnover, right? The less turnover that means that the better quality care because the teachers have skin in the game in terms of seeing themselves as part of a school community. I mean, yes, we are a business, we are an employer, but like our staff, they are invested in the lives of these children and they take the time to build relationships. And relationships are the core of like everything we do in early childhood education.

SPEAKER_09 3:19

A 23-page document guides how the tax will be spent and administered. Find a link in our show notes. So how much will this cost you? $80 per year for a home worth $500,000, and nearly $160 for a $1 million home. There's a calculator on the campaign website, Brighter Start Boulder County, where you can find estimated increases for specific properties. Because of Colorado's tax laws, commercial properties will pay a higher rate, roughly three to four times more. And because landlords include property taxes in commercial leases, that means high cost for businesses. Still, the Boulder Chamber has endorsed 1A because the lack of care greatly impacts the workforce and therefore businesses.

SPEAKER_10 4:02

The pandemic really just blew the lid off of the conversation when it comes to caregiving and childcare needs for the workforce, period. When issues like childcare start to impact the bottom line very clearly, business leaders also start to think about it differently. So post-pandemic, after business leaders saw, oh wow, like we can't run two out of three of our assembly lines because people don't have childcare or schools are closed or our grocery stores or doctor's offices or whatever it is can't operate or function fully because of this issue. Like it is a bottom line issue. This is something that does have really significant and clear benefits to an employer if they proactively address it. And bottom line, impacts to an employer if they don't address it. And I think the question now is not whether employers should address child care or caregiving needs, it's whether they can afford not to.

SPEAKER_09 5:00

Find the pros, cons, and links to more information in our show notes or at boulderfrequency.com. The interview clips we used were from Karen Manahan, president of the board at Boulder Day Nursery, Amy May, president and co-founder of Learning Tree in Louisville, and Nicole Real, CEO of Epic, executives partnering to invest in child care. Next up, Boulder's tax on empty homes.

SPEAKER_00 5:29

It's about bringing back vitality and people to our downtown areas and our neighborhoods, having Boulder be a place that is participatory and that everyone is participating in the economic vitality of the city. The idea was that it offsets the fact that those people aren't living here or spending here.

SPEAKER_09 5:53

That's Doug Hamilton talking about City of Boulder ballot issue 2J. 2J would place a tax on homes that are empty for more than six months per year. The tax will be between $4,000 and $7,000 per property. The city expects the tax to bring in up to $6 million annually. The money will be added to Boulder's budget to pay for general operations. It's a slimmed-down version of a citizen petition effort that used to include vacant commercial properties as well. We covered that on the show back in April. That component was stripped out by council when they agreed to put the measure on the ballot themselves. Support and opposition for the measure has largely split along Boulder's party lines. Older, wealthier, and more conservative groups and individuals tend to oppose it. In other words, those most likely to own second homes. While groups like the Boulder Progressives and Boulder County DSA, that's the Democratic Socialist, are endorsing a yes vote. Just to clarify, this would not tax all second homes. Houses that are used as rentals or otherwise occupied for at least half the year would not be subject. The pitch from advocates is simple. Somebody has to pay for the city's upkeep and maintenance. It should be people who aren't already contributing to sales tax by living and shopping in the city full time.

SPEAKER_02 7:07

The purpose of the tax too is to really shift the burden of who pays for vacancy. There's a real cost to vacancy to our community. In a community that relies on sales tax to fund its basic needs, empty commercial buildings and empty residential buildings mean people aren't shopping here. They're not eating here. And we see that reflected in the city budget, but we also feel it as community members. If you've lived here a long time, you feel the way Boulder has been gutted by vacancy. You walk around and you see empty buildings and for lease signs. You walk in Boulder's nicest neighborhoods and the windows are dark at night. It's to ask that question: should property in Boulder work for the people who live here or just the people who own it?

SPEAKER_00 7:54

Our goal is that no one pays this tax. Like we want all the buildings full, and we want to be in a freaking kick-ass place to live that isn't dying on the vine.

SPEAKER_09 8:06

That was Jill Grano and Doug Hamilton again. We interviewed her back in April before she announced her run for Boulder City Council. And her inclusion here is not an endorsement. Find the link to that episode, plus the pros, cons, and more information in our show notes or at boulderfrequency.com. Since 2008, 35 county or city of Boulder taxes and extensions have been approved by voters. There are three more at the county or city level this year, not including separate taxes and extensions in Erie, Longmont, Louisville, Lafayette, and Naiwat. It's been 15 years since Boulderites turned down a tax. 2009, according to my analysis of election results. If you ask local Dems why local governments pass so many taxes, chances are they'll point to one piece of Colorado legislation as the key culprit: Tabor, or the Taxpayer Bill of Rights. Today, as we discuss taxes and who should pay for all the things that make a society run, we're also taking a hard look at two state ballot measures that would radically change this 30-year-old limit on government spending. In case you're unfamiliar, here's two brief descriptions of Tabor from Zach Martinez, Director of Policy and Advocacy at Gary Ventures in Denver, followed by Paul Teske, a professor at the School of Public Affairs at CU Denver.

SPEAKER_04 9:28

So back in 1992, Colorado created a thing called the Taxpayer Bill of Rights, which created a cap on the amount of money the state could spend each year. It puts a requirement that we can't spend more than the year before, other than an adjustment for population growth in Colorado and inflation.

SPEAKER_05 9:47

If population grew 1% last year and inflation was 2%, the most that the state could keep in revenue compared to last year would be a 3% growth, combining those two things. And if the economy was really good, you might have a 5% increase or 10% because taxes would be coming in and lots of people were working and making money. That's where the Tabor cap would be relevant if the amount that came into the government entity like the state was more than the cap that was allowed. And then that money has to be refunded per tabor to the taxpayers.

SPEAKER_09 10:21

We'll hear more from Zach and Paul later. Governments can exempt taxes from the Tabor cap by asking voters, a process often known as debruising, in reference to one of Tabor's biggest proponents, Douglas Bruce. That means that instead of returning any surpluses to taxpayers, the taxing entity can keep extra revenue. Most of Colorado's counties, cities, and school districts have debruced. And Gilpin County voters are weighing a measure to do the same this election. Here's Professor Teske again.

SPEAKER_05 10:49

We have 64 counties. I think 53 have debruced. We have 278-ish municipalities, and like 230 of them have voted to debruce. And we have 178 school districts, and I think 176 have voted to debruce. So it's been an overwhelmingly positive response about debrucing at the local level.

SPEAKER_09 11:10

To critics of the 1992 policy, debruising is a way to make funding match the evolving reality of what is asked of governments today. To defenders of Tabor, spending limits are the last check on government overreach and power. Attempts to lift the caps are an end-around to the will of the people, they say.

SPEAKER_01 11:35

That is in the private sector, and what the community needs. Everything from education and roads to police and so on. Over the last 34 years, uh the taxpayers' bill of rights has become ever more important. I'm Penn Pficker, and I'm here today in two capacities. One is the with the Tabor Committee, which is a 501c4 advocacy group that tries to protect the taxpayers' bill of rights. And I'm also here as the chairman of Your Family's Future Alliance, which is fighting both Proposition or Amendment 87.

SPEAKER_09 12:14

This year's ballot has two state measures that would significantly and permanently alter two key pieces of Tabor, Proposition NN, which would do away with taxpayer refunds permanently, and Amendment 87, which would switch Colorado's state income tax away from a flat rate and to a system where the wealthy pay more. Let's start with Amendment 87, because it's fairly straightforward. It would implement what's called a graduated state income tax. The more you make, the more you pay. It would actually cut taxes for everyone earning under half a million annually, about 97% of taxpayers. How much your taxes will go down is clearly spelled out on your ballot.

SPEAKER_05 12:49

The majority of states that have an income tax have a graduated income tax. There's only 11, I think, of which were one that have a flat tax. So and 27, I think, have a graduated one. So it's not crazy. It's not unusual looking across other states. With the kind of rise in democratic socialism and concerns about economic inequality and the incredible wealth of the Elon Musks and Jeff Bezos of the world, it does seem like a graduated income tax or what people might call a millionaire's tax is more viable than it used to be.

SPEAKER_09 13:21

By shifting the tax burden to wealthier individuals and corporations, the state could generate an extra $2.7 billion in revenue. It specifically calls out health care and education to be funded by that extra tax money. We should probably also mention the competing ballot measure, Proposition 136, that would keep Colorado's 4.4 tax rate for everyone, including corporations. That means a multi-billion dollar business would pay the same rate as you. Critics of graduated taxes say they push wealthy individuals and companies to states with more favorable tax laws. That's not been borne out by the data, Professor Teske says.

SPEAKER_05 14:07

People say, well, you know, the people that are making a million dollars are either making a lot more than a million and they're so rich, like they live in Aspen for a reason. They're not moving to Kansas or Florida to have no income tax. And then a lot of people, I think, making a million dollars are small businesses or lawyers or doctors, or and obviously they're very successful and very fortunate, but their clients are also here. Like again, they're probably not moving to Kansas.

SPEAKER_09 14:31

Let's turn to Proposition NN, which is actually the bigger change to Tabor, at least for the 97% of Coloradans whose taxes will go down if Amendment 87 passes. Prop NN is, on its face, also an education funding measure. It would lift the Tabor cap and devote all the revenue to K-12 education and childcare. Though funding has increased in recent years, Colorado is still the bottom of the pack on many metrics, including per pupil funding and teacher pay.

SPEAKER_04 14:58

This is not a tax increase. It's just saying the state can retain the money that it collects. So what we're saying is we should allow the state to retain the revenue that it is already collecting in order to make sure that we're fairly investing in Colorado's kids. We're 43rd in spending for Colorado kids. We're 50th in teacher pay when adjusted for cost of living and jobs with equal education requirements as teaching. Colorado has chronically underinvested in our kids and our educational environment. I think we need all the help we can get. And there's no one thing that will like make us the best in the world. And so we need all we need it all. And so I hope that voters will see that need and they'll vote as such.

SPEAKER_07 15:39

We underfund our kids by about $4,600 per year per child, and that our kids deserve better than that. And so we want our teachers to be able to be more comfortable for our kids to be able to have smaller class sizes and teacher pay to increase and investments in career and vocational education as well. And that's why we feel very strongly that we need to invest those resources in our education system.

SPEAKER_09 16:09

That's Zach again and his colleague Suzy Bates, initiative director for Move Colorado Forward, a policy group backing Prop N. The campaign is funded by Gary Ventures. I should also disclose that Gary paid for my child care reporting project this year, although the two efforts are distinct. I feel very free reporting critically on Proposition NN, probably more critically than the folks at Gary would want. Prop NN could deliver $4 billion to schools over the next decade. But tax revenue is down. Unless Colorado's economy turns around very quickly, NN will bring in much less. But it still equals hundreds of millions of dollars more than the state spends on education and childcare today. Even if Prop N and Amendment 87 both pass, the combined revenue will still put Colorado in the middle of the pack nationally, according to Professor Teske.

SPEAKER_05 16:58

Even if both of them pass, we moved from a low below average state on education to average, and maybe not even to average. I mean, there were two so-called adequacy studies done around school finance at the state level a couple of years ago by professional firms that asked the question how much more money does the state need to spend to get kids up to the level of achievement that we want to see. And they both were around 4 billion. And so if both of these pass, we'll get to 2 billion, 2.5 billion in the next couple of years. So it's, you know, it's a lot of money, but it's also not making us a big crazy spending state either.

SPEAKER_09 17:32

Though it's framed as education funding, Prop NN is better understood as the end of Tabor caps and refunds forever. Education funding would get a big boost for 10 years, but after that, the state only has to increase education funding by 2% annually. The rest of the money, the government can spend however it wants, effectively doing away with Tabor limits altogether.

SPEAKER_01 17:54

They're saying let's remove your Tabor refunds forever. Any overcollection, we're going to keep no matter what. Voters have to understand that if they give the government this power, it's very hard to get it back.

SPEAKER_09 18:07

Prop NN and Amendment 87 would keep parts of Tabor, including the requirement that governments ask voters before raising or implementing new taxes. That's probably kept Colorado's spending low.

SPEAKER_05 18:18

This is not entirely causal from Tabor, but Colorado is a wealthy state. We're a top 10 in most years per capita income state or per household, however you want to measure it. And we are at the state level only a bottom 10 spending state. And if you combine state and local, which is probably fair, a bottom 20 spending state. So we're a rich state that spends low, right? So we're like in the rich part, we're more like Connecticut, Maryland, Massachusetts. And in the low spending, we're more like Alabama, Mississippi. I'm not sure call runs in their mind have realized we've become a wealthier state, right? We actually could spend more.

SPEAKER_09 18:56

And while Tabor refunds have sometimes reached into the hundreds of dollars, in recent years, they averaged 28 for a single filer and 56 for joint filers. About half of the 34 years it's been in place, there have been no Tabor refunds at all, as the state doesn't even bring in enough money to cover its operations.

SPEAKER_07 19:13

The average Tabor refund that individuals see in any given year isn't massive. We're talking about anywhere from $20 to $100 per person. And when you talk to voters across the state, and we've been able to do this and talk about what these investments could mean for our kids and our schools, they are very accepting about the idea of giving up a $20, $30, $40 Tabor refund in order to reinvest that in our education system.

SPEAKER_09 19:41

For Zach and Professor Tesky, getting rid of Tabor via Prop NN makes sense. It will boost education spending and undo what has been a very limiting policy.

SPEAKER_04 19:50

What we know is that that doesn't keep up with the things that the state spends money on. Colorado's population has grown 42% since Tabor was created, and the cost of living in Colorado has increased 168% since Tabor was created. But the cap has only been updated one time. And what that means is we as a state are 43rd in the country in spending on our K-12, even though we are one of the most successful economically.

SPEAKER_05 20:29

And what they've ascertained is that Coloradans spend about $1,000 more per year than the average American on car maintenance. And so kind of the picture in my head with Tabor is we don't have money to fix the roads. We have a lot of potholes, a lot of crappy roads. So you drive around and your shops in your car or your tires hit potholes. And so you go and get them fixed and you pay more money. And so, like, is that better than paying the money up front to have smoother roads? There are interesting questions about investing the money in state services of various kinds, from education to healthcare to transportation to criminal justice versus spending less, maybe being more efficient, but having a bigger problem in the real world because of it. So I think it's a balance of those things.

SPEAKER_09 21:16

I highly encourage you to read the write-ups from the Colorado Sun on Prof NN and Amenda 87, which I'll link to in the show notes. Election coverage continues next week when we travel to Longmont and Louisville and explore taxes and other measures on the ballots there. If you find these election episodes valuable, consider donating to the Frequency at patreon.comslash boulder frequency pod.