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Eric Sondermann

Eric Sondermann

Amidst all the flurry and breathless pro and con commercials for eleven ballot issues this fall, two measures will prove of long-term consequence dwarfing all of the others.

Colorado voters, in their biennial bacchanal of direct democracy, were certainly in an affirmative mood, saying “yes” to the overwhelming share of these questions. A modest income tax cut was too enticing to turn down. The TABOR ethic of “ask first” was again endorsed and applied going forward to large, fee-based state enterprises. The three gaming towns were given authority to raise betting limits, which they will do as surely as Drew Lock throws interceptions. A sin tax was placed on vapers and ratcheted up on smokers to fund preschool programs, a painfully inapparent connection.

Wolves will be reintroduced to northwestern Colorado to the annoyance of those living nearby but the accrued virtue of those far greater numbers living far away. And Colorado will remain part of some national popular vote pact likely never to take effect given that not enough states have signed on even with most of the low-hanging blue states now on board.

Which leaves two successful ballot issues that we will be talking about, adjusting to and living with for many years to come. Those being Amendment B that repealed the 38-year-old Gallagher Amendment and Proposition 118 that created a statewide medical and family leave program.

To Amendment B, first, or as one keen budget observer referred to it, “a big damn deal.”

For the state’s business and political leadership which has long lamented the “fiscal thicket” of overlapping constraints, the passage of this measure was a breakthrough moment and the first tangible unwinding of that knot.

My own situation was illustrative of the problem. Until two years ago, I had owned a small office building that was worth almost exactly the same as our central Denver home a mile away. Yet, due to the Gallagher Amendment and its compounding effect over the years, the property tax bill I paid on that office building was over four times the size of the bill on our similarly valued home.

Some mistakenly think that in repealing Gallagher, taxes on residential and commercial property will suddenly equalize. Not at all. Amendment B just freezes the current imbalance in place and prevents it from growing still further out of whack.

Had Amendment B not been enacted, the residential assessment rate would have declined still further.

Of course, this will be a boon to the coffers of the state as well as local governments. In just the first year, Gallagher repeal revenues will more than make up for the $150 million or more that the state will forego as a result of the income tax reduction. As tradeoffs go, this one is revenue positive, though of course many in government would have preferred to keep the income tax where it was.

Let me offer a pair of predictions: First, set your clocks for five or six or seven years down the road. Assuming an economic recovery and another strong real estate market in the interim, residential property taxes will increase quite substantially which will create a political reaction perhaps similar to what led to the adoption of Gallagher four decades back.

Second, while some in power would like to check this box as “problem solved,” there are plenty of forces out there with other thoughts. Already, within a month of this past election, conservative interests led by Colorado Rising Action, many of the same folks who sponsored the Proposition 116 income tax cut, have filed an initiative for 2022 to reduce the residential assessment rate from the now fixed 7.15 percent to 6.5 percent. Anyone want to bet that it doesn’t have a comparable, too-good-to-turn-down voter allure?

Which brings us to the other measure of lasting impact — Proposition 118 and Colorado’s new family medical leave program.

Few argue with this intent. For most voters, that was more than enough with the details relegated to an afterthought. But those details can be pesky things, far more relevant in the funding and administration of a new program than in securing voter approval.

There is almost no end to the serious questions that will determine whether this program adds to the quality of Colorado living or becomes another economic drag and taxpayer money-suck.

Are the benefits affordable or overly generous? Was the formula appropriately benchmarked against other states with working programs? Are the actuarial estimates on the mark? Is the payroll deduction premium of .9 percent of employee wages (divided equally between employer and employee; and authorized to grow up to 1.2 percent) adequate to pay costs and benefits? Will enough employees be paying into the program or were too many waivers offered? What assumptions have been made as to investment returns?

By way of this program, Colorado has taken on another rather significant entitlement. That is well and good, though one might hope for more consideration than that provided by 30-second campaign ads. It is noteworthy that Gov. Jared Polis, seldom mistaken for a small-government conservative, did not support the proposal.

Colorado PERA, the state’s public employee retirement plan, was likewise born out of noble intentions. But those good motives have not kept PERA from financially slipping further and further underwater and becoming an ever-growing burden on members and taxpayers alike.

The concern here and in many circles is that if you like the financial condition of PERA, you will absolutely love that of the state’s family medical leave program a number of years down the line. Please prove me wrong.

Eric Sondermann is a Colorado-based independent political commentator. His weekly column appears every Sunday in ColoradoPolitics. Reach him at EWS@EricSondermann.com; follow him at @EricSondermann on Twitter

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