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Well, it seems that the old mantra of “tax and spend” lives on in Colorado. Democrat Governor Bill Ritter, who pushed a $1.7 billion tax increase in 2007, has decided to freeze property taxes in Colorado rather than lowering them as planned. This is tantamount to raising taxes up to $3.8 billion over the next 10 years. The debate rages strongly as of January 2008, when legislative sessions commenced. As if that weren’t enough, the Colorado state Constitution clearly states that any tax increase must go to a vote by the people. But this tax scheme has not gone to the people for a vote. Republican Senate and House members had fought against Ritter’s initial tax, and now are rightly upset at the latest news. "It's modern-day bank robbery," Rep. Cory Gardner, a Yuma Republican stated.
Besides being a gross violation of the citizens of Colorado’s rights, this tax actually punishes productivity. What is known as a property mill levy is a tax on property values. This tax calculates based on the value of the home using a multiplier. When home values increase in a growing housing market, taxes rise due to the multiplier effect. Home values are on the rise, according to a memo to Gardner from the Legislative Council: "The primary reason for the increase is adjustments to assessed value forecasts: through FY 2011-12, the assessed value forecast increased by a cumulative total of about $42 billion, or almost 10 percent. Based on recently revised forecasts for inflation, pupil counts, and assessed value, the projected, cumulative ten-year impact of the property tax provisions of Senate Bill 07-199 is just under $3.8 billion. This figure updates the $1.7 billion amount provided in the spring of 2007." The property mill levy was supposed to be frozen at the $1.7 billion mark, a number Coloradans had agreed to. Now Ritter wants to change that. The more property values rise, the higher the property tax becomes. In an era where the federal government is looking to bail out reckless homeowners, punishing Colorado property owners is not the answer.
The president of the Independence Institute, Jon Caldara, has taken this issue to the courts. He is suing on the grounds that the tax is in violation of the Colorado state Constitution. The mill levy in 116 districts is going to be higher than it would have been before the freeze, which will add up to $123.2 million in property taxes. While 30 school districts benefit by a reduction in levies (with a lowering of taxes by $5.4 million), there was no effect in another 32 districts. This is an uneven and unconstitutional tax and Caldara notes that taxpayers "are going to become incensed."
In court, Democrat Treasurer Cary Kennedy, who helped to construct the mill levy freeze, conceded that it was indeed a tax increase. "Apparently, it took a Bible and a witness stand to get the governor and his allies to admit their tax hike is, in fact, a tax hike," said Senate GOP leader Andy McElhany. A short victory was won on June 11, 2008, when local courts upheld the plea of the taxpayers against the state and Ritter. However, Ritter’s spokesman Evan Dryer has indicated that the fight will continue to the Colorado State Supreme Court. If the Court upholds a stay of the ruling, Ritter will be able to collect revenue from the mill levy freeze during the next fiscal year. "It's not a surprise," Dreyer said. "We knew all along that this was going to be decided by the Supreme Court regardless of what happened at the district court level."
What local taxpayers had thought they had agreed to is suddenly changing as Gov. Ritter places Colorado taxpayers on the equivalent of shifting sand as far as tax policy goes. Coloradans, when approving the initial measures, only agreed to keep excess revenue that would have been refunded according to state spending limits, not effect an increase in property taxes which would supposedly support their local districts. In the courts, several folks have said they were informed that there would be no higher taxes with the approval of the 2007 measures. In addition, the voters never agreed to give more money to the state government via the governor’s twisting of the proposed legislation. With this change in tax policy, districts must collect new taxes while on the other hand the state keeps that same amount from what normally is budgeted to those districts. "In other words, the districts get to do the dirty work, but the state walks away with the loot," Gardner said.
The proposed tax will allegedly be used to stabilize the State Education Fund and also go toward education programs. But none of the money local taxpayers must pay will stay in their local areas. Instead, it goes into the stateside budget along with other revenues collected. As Gardner put it, "Let's be honest about this: None of the money collected under this sweeping tax hike is going to stay with local school districts. Those local voters never meant for their hard-earned money to disappear into the black hole of the state budget." In response to this issue, Evan Dreyer, a Ritter spokesman stated that budget estimates "can fluctuate greatly. That's just the way the state budgeting process works."
The irate citizens of Colorado beg to differ, and intend to fight every step of the way to keep their hard-earned money, their state rights, and protect their property values.