Residents of Colorado should know how their tax burden compares with Americans throughout the nation. Colorado ranks 26th nationally, compared to all other states for the combined state and local tax burden, on a per capita basis.

Proposition 103 is an initiative that will increase Colorado tax rates and require the state to spend the money on government schools. Prop 103 increases the personal income tax, the corporate income tax, and the statewide sales and use tax for the years 2012 through 2016.

The Fiscal Impact Statement prepared by Colorado’s Legislative Council Staff estimates the cost of the tax increase at $2.9 billion. However, the cost for Colorado taxpayers will be significantly greater than staff estimates. Legislative Council uses static analysis, measuring only the direct impact of the higher taxes on state revenue. They ignore the negative impact the tax increase will have on economic growth and jobs in Colorado.

This study focuses on the retiree health plan administered by the Colorado Public Employees’ Retirement Association (PERA). The PERA Health Care Program is a cost sharing multiple-employer plan. The “employers” in this context are the various governments that hire most public employees, such as public school teachers, fire fighters, police officers and state employees. Under this program, PERA subsidizes a portion of the premium for health care coverage, and the retiree pays any remaining amount of that premium. The Colorado legislature created the Health Care Trust Fund in 1999 to provide state subsidies to the Health Care Program.

The world is seeing levels of unprecedented government debt. However, the media focuses mostly on debt levels of national and state governments. For the most part, the general public has ignored the subject of local government debt. The root cause of this ignorance lies in the difficulty associated with uncovering information on local debt.

The Public Employees Retirement System (PERA) in Colorado is experiencing a funding crisis. The recent collapse of financial markets has resulted in a significant decrease in the value of the PERA portfolio. But the funding crisis in PERA is not just the result of problems in financial markets.

Colorado appears to be at a crossroads similar to that in California in the late 1980s. At that point California was a dynamic growing economy. That prosperity reflected a fiscal constitution that kept the growth of government in line with the growth of the private economy. California’s GANN Amendment, which was a precursor of the TABOR Amendment in Colorado, limited the growth of state revenue and spending to the sum of inflation and population growth. In the late 1980s, under pressure from the education employee lobby, the California legislature abandoned the GANN Amendment, and the rest is history.

In the last three years alone, CU’s budget has ballooned from $1.9 billion to $2.4 billion, with increases to salaries eating up a big part of the total. Between 2006 and 2009, CU’s three chancellors received a collective annual taxpayer-funded raise of more than $500,000.9 And even in the aftermath of the cuts recently announced by Benson, Denver Chancellor Roy Wilson could still make over $700,000 this year.

Students, meanwhile, have been forced to foot the bill through skyrocketing tuition increases. CU-Boulder undergraduates saw an average tuition increase of 9.3 percent this year; in Denver, the average was 8.5 percent; and in Colorado Springs, 7.5 percent. These increases followed 2007-2008 hikes ranging from 7 percent at CU-Colorado Springs and 14.6 at CU-Boulder.

Colorado’s Public Employee Retirement Association (PERA) is experiencing a financial crisis. The current financial crisis has resulted in a significant decrease in the value of PERA’s portfolio. But the financial crisis in PERA is not just the result of the current financial crisis. PERA’s defined benefit pension plan is fundamentally flawed; the problems in the plan have emerged over several decades. While the current financial crisis has exacerbated these problems, PERA is facing a long-run deterioration in its financial condition.

The legislature has enacted several reforms over the past decade to address PERA’s financial problems. These reforms have included changes in benefits, increased contribution rates, and administrative changes. Unfortunately, these reforms have failed to address the fundamental flaw in PERA’s defined benefit plan.

This Issue Paper explores the financial crisis in PERA. Different measures of the magnitude of the crisis are examined, and the flaws in PERA’s defined benefit plan are analyzed. The failed legislative reforms of PERA are critically evaluated. The Issue Paper concludes that the legislature should consider declaring a financial emergency and enacting the fundamental reforms needed to solve PERA’s financial crisis. Other states have successfully reformed their own state employee pension plans by replacing a defined benefit plan with a defined contribution plan.

• County governments are the only legislative bodies in Colorado which are not subject to the people’s right of initiative and referendum.
• The people’s right of initiative and referendum was placed in Colorado’s Constitution in 1910 by a contentious Extraordinary Session of the Colorado General Assembly, followed by a popular vote of the people.
• Examination of the ratification history shows that application of the initiative and referendum powers to county governments seems not even to have been a subject of discussion.
• The taken-for-granted omission of county governments from the explicit reservation of the powers of initiative and referendum made sense in 1910, when counties were seen as purely administrative arms of the state government with no independent legislative powers or functions of their own.
• The nature and functions of county governments in Colorado have evolved a great deal since 1910; now, county governments manifestly exercise extensive independent legislative powers.
• In our state constitution’s structure, the only source of the county governments’ new and evolving legislative powers is the explicit or implicit delegation of power from the General Assembly; the General Assembly is, of course, subject to the people’s powers of initiative and referendum.
• The result is that if the General Assembly’s power is exercised directly, by the General Assembly itself, the exercise of that power is subject of the checks and balances of initiative and referendum. But strangely, if that same power is exercised secondhand, as when a county government exercises power delegated from the General Assembly, the exercise of the same power is not subject to the constitutional checks of balances of initiative and referendum.
• Thus, in terms of the original meaning of the constitutional amendment which created the initiative and referendum process, county governments are today operating without the appropriate opportunity for direct democracy to remedy legislative abuses or mistakes.

Rocky Mountain News columnist Jason Salzman was correct when he wrote, “To prove a liberal bias, [you] need to show a pattern of skewed news coverage, over time, with measurable data like biased sources or headlines, improper story placement or selection, etc…. Anecdotes are meaningless. Without proof… conservatives are saying, in effect, that the News has a liberal bias because they say so.” He followed up that statement with a question: “Why should anyone believe them?” It is a classic “he said-she said” type of debate. Conservatives claim mainstream media are biased. While liberals admit that journalists are “left leaning,” they claim bias is removed during the editing process. Who is right? Does bias survive the editorial process and skew what should be objective news coverage?