Five weeks ago I noted the legislative exertions of the TABOR Band-Aid brigade and its 2019 ballot proposal to de-Bruce state revenues going forward, thereby allowing the Colorado Legislature to retain any and all future TABOR surpluses. A companion measure promises these moneys will be transferred exclusively to the sacred trinity of transportation, K-12 and higher education funding. That measure is now on its way to voters.
It may be making the trip with at least two other tax questions. First up is approval of sports betting in Colorado with a 10% tax rake from the top of all bets to be reserved for implementation of the state water plan. House Majority leader Alec Garnett and Minority Leader Patrick Neville have jumped on the U. S. Supreme Court’s decision that sports wagering is a matter for states to administer as they see fit. While it’s unlikely these tax dollars will ever prove sufficient to fund actual projects, they should help move Colorado’s planning process along — a worthy goal. Residual squabbling exists over who gets to take bets, including a provision for internet gaming, but that’s likely to sort itself out prior to sine die.
Lunging out of the shadows last week is a burly proposal, swiftly passed out of House committee with the governor’s endorsement, to triple tobacco taxes while imposing a 60% levy on vaping products. Projections that these might generate as much as $300 million annually for pre-school programs and the reduction of health care costs represent real money. If you notice a pattern, it’s because there is a pattern here. Identify a prospective revenue source, swaddle it in good intentions and hope voters can be convinced they won’t actually pay for the purported benefits. The attraction of sin taxes is that only sinners will pay them. Consider the ready approval of marijuana taxes at the municipal, county and state levels.
Following approval of the U. S. Constitution, Congress attempted to pay off the nation’s war debts primarily with tariffs and sin taxes. This resulted in the Whiskey Rebellion that required dispatching George Washington, as president, and 13,000 militia members to burn stills in Pennsylvania. Whenever taxes become confiscatory they not only generate black markets, but the economic costs of evasion can prove less than the price of compliance. New Yorkers have proven willing to pay five dollars a pack for cigarettes and so may Colorado smokers. Perhaps not.
Let’s not kid ourselves — all the fine phrases about protecting public health by reducing the number of teenage vapers is largely a smokescreen to obscure a money grab. I might feel better about all this if there appeared to be a coordinated strategy at work for expanding state revenues. You don’t have to be either an economist or a demographer to recognize that, like the lottery, these are flagrantly regressive mechanisms designed to fund government on the backs of residents with the fewest resources. Beyond this distasteful reality is the fact that the revenues are being earmarked to finance special-interest priorities, however noble their purpose. Consequently Colorado’s fiscal house of cards grows more precarious and legislative budgeting ever more convoluted with each new ballot approval.
Taxes are perceived as fairer when there is an apparent connection between the source of revenue and the programs they fund. What possible nexus is there between vaping and the funding of additional slots in pre-school classrooms? While raising taxes on tobacco and vaping may be warranted, wouldn’t it make more sense to direct resulting revenues entirely to health care costs? We may not have seen the last of TABOR questions that will appear on the 2019 ballot. Several citizen groups are currently advancing “fixes” through the initiative process. If past results teach us anything it is that the more tax questions that appear, the smaller the chance of success for any.
Colorado’s scattershot history of tinkering with TABOR is evidence of a larger system failure. If the path to Hades is indeed paved with good intentions, we are well on our way to perdition. It may eventually require a constitutional convention to unravel TABOR, Gallagher, Amendment 23 and their interactions. A few more gimmicks can buy us time, but only a comprehensive rethinking of Colorado’s fiscal rules will restore sanity to taxing and spending. Without a comprehensive strategy to restore fiscal authority, we will eventually trip over the can we keep kicking down the road.
Miller Hudson is a public affairs consultant and a former state legislator. He can be reached at firstname.lastname@example.org.