Is your head spinning? Not as it happens in "The Exorcist." Or when you’ve been drinking too much. But as it does when you’ve heard some things so completely off the wall that you can’t believe your eyes and ears.
The state’s bewildering responses to various tax inputs and outputs should make our heads spin. First came the governor’s aspiration in his State of the State address that he wants to reduce taxes and spread the tax bill more widely. The state’s General Fund owes public schools roughly $8 billion since it stopped implementing Amendment 23 that was supposed to bring more funds into school finance. The damage from underfunding schools is ongoing, with the first children affected in primary grades now beginning to graduate.
In 2021, high school seniors, products of the $8 billion underfund, will face graduation requirements that include passing tests such as the ACT or SAT. These requirements were instituted at the height of the so-called “education reform” movement over a decade ago. Critics at the time noted that schools didn’t have enough money to implement the program, but they were out-voted in the state legislature.
The state Department of Education, always game to try to implement what legislators cook up, has established graduation “paths,” but in Denver Public Schools, as an example, many children may not have received what they need to meet the requirements. John Albright, DPS student engagement director, says most of the children affected are minorities.
Then, a few weeks ago, a state audit described how badly administered is the Colorado Oil and Gas Conservation Commission’s (COGCC) oil and gas production report program. Over 50,000 production reports were not submitted and thus production values were not disclosed for tax calculation. That’s a big blow of the raspberry to the state’s citizens, most of whom pay sales taxes and income taxes and suck up fines and interest when they don’t.
According to the COGCC, it’s too late to collect the $200-per-day-per-well fines for noncompliance. There’s a year’s limit on charging the penalties. So far, it doesn’t appear the COGCC has gone back a year and started with any assessments. The director, Jeff Robbins, says the commission wouldn’t typically collect the fines anyway because they negotiate for compliance. Don’t all taxpayers wish the state would be so accommodating.
Which brings up the next tax input-output fiasco. In 1999, the state ramped up its conservation easement program. This allows landowners to set aside property for non-development in perpetuity. The landowners receive income tax credits that they can use to reduce their state tax liability. About 2003, landowners caught on to the idea that they could sell their income tax credits to wealthy Coloradans who wanted a tax reduction.
Tax salespeople, also known as brokers, lawyers, appraisers, land trust managers and accountants showed up at farmers’ and ranchers’ porches enticing these landowners with the prospect of cashing out some of their property. Not all of these so-called professionals were on the up and up. The state’s oversight was lackadaisical until the IRS started disallowing credits.
Suddenly aroused, the state Department of Revenue tossed out easements for tax credits. Over 400 farmers and ranchers who’d bit on the prospect of ready cash and the people who bought their tax credits were suddenly hit with huge tax bills on upaid taxes plus interest plus fines. The tax salespeople, lawyers, appraisers, land trust managers and accountants slid back into their caves.
This catastrophe of $140 million-plus has boiled on the state’s burner now for almost two decades. A bill is coming to help the farmers, ranchers and tax credit purchasers. The state currently sets aside $35 million/year in tax credits for easements. If the legislature decides to refund the money, it should cease the easement program until the account is settled. At a billion in tax credits already dished out, perhaps the legislature should go further and end the program entirely until the $8 billion school debt is paid.
It would be helpful if legislators and governors learned from these disasters. It’s hard to be dizzy all the time.
Paula Noonan owns Colorado Capitol Watch, the state’s premier legislature tracking platform.