Kelly Sloan

Kelly Sloan

A great deal of the chatter at the (virtual) Capitol these days revolves around how exactly to effect a return to the legislative session — safety protocols; building access; to what extent to permit remote work; that sort of thing. But hanging over everything and permeating every thought and discussion is the condition of the state budget.

No one is under any illusion that the state of the budget resulting from the government-imposed shutdowns in response to the COVID-19 pandemic is anything less than dire. The budget forecast released earlier this week shows a $3.3 billion hole that needs to be reconciled. The Joint Budget Committee has been spending the past week reviewing cuts proposed by harried staff members desperately looking for a million here, a million there.

While JBC has been doing the bulk of the work, the final decisions are ultimately up to the legislature. The $3 billion-plus in required budget cuts likely spells doom for many of the legislative priorities the Democratic majorities in each chamber had planned for 2020, most of which came with a price tag. It also means carving into previously adopted programs.

It may seem somewhat counter-intuitive to the non-economically inclined, but two key features of Colorado’s constitution — the balanced-budget amendment and the Taxpayer’s Bill of Rights — have ensured the process is rather less painful than it could be. Together, over the years, they have successfully averted the risk of a spending free-for-all that would have propelled the state budget to stratospheric heights from which it would now have to plummet. It would be far better for everyone, of course, had the reserve fund required by TABOR not been diverted to inaccessible slush funds, but at least the fall the state must suffer, while still painful, won’t be as high or steep as it might otherwise of have been.

TABOR’s other function at this time is to provide a check against reflexive economic suicide — increased tax rates, which are the default place for governments to retreat when cash-strapped, however myopic and counter-productive that may be. TABOR imposes discipline, a trait which tends to flee in the face of crisis.

Constitutionally imposed discipline does not, however, eliminate temptation. In the face of such severe cuts (and they are severe) that temptation is to dig up additional revenue wherever, however. In Colorado, that generally means “fees,” which the courts have determined are different than taxes, on account that they are spelled differently, and therefore not subject to TABOR rules. Orthographic distinctions aside, fees, tautologically, inflict the same stultifying impacts on economic activity as do taxes. It is a regeneration of economic activity, not the taxing of it, that will refill the state coffers.

It is fitting that state legislators, therefore, in formulating their response to the economic crisis should adopt a sort of economic Hippocratic Oath. Dan Haley, the director the Colorado Oil and Gas Association and a man of considerable rhetorical talents, beat me to the phrase in his well-written submission to this journal a few days ago offering advice to lawmakers — "first do no harm." It is a concept that bears repeating. Haley’s point was largely in connection to the layers of regulation that weigh down business and lay a burden on every step and turn of economic life. The same is to be said for taxes, fees or any other measure designed by government to separate earnings from business.

The channel by which to replace the shortfall in the state budget is the return, in due course, to a functioning economy. As more businesses return to operation, more goods and services are produced and exchanged again, and more taxes are paid. State action that would impede that will needlessly prolong the economic pain being acutely felt at present, and ultimately exacerbate, rather than help, the budget situation.

Among the series of essays to which Haley contributed his piece this week were those from other business leaders in the state — people like Debbie Brown from the Colorado Business Roundtable, and Tony Gagliardi from the state chapter of the National Federation of Independent Business — each of whom echoed a similar refrain in their pleas to the legislature; first do no harm, do not erect barricades in the path of already tenuous economic growth.

The legislature will have extraordinarily hard decisions to make in the next few weeks, and many of those decision will be deeply painful. That pain will not be ameliorated by redirecting it on those who are the sole source of ultimate relief.

Kelly Sloan is a political and public affairs consultant and a recovering journalist based in Denver.

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