DENVER First, the good news.
University of Denver economists think Colorados economy is due for a long-term expansion, adding a healthy number of jobs and revenue for the government for the next decade.
But it wont be enough to save schools, colleges and the court system from a looming catastrophe.
Legislators will have to make a nearly permanent 20 percent cut to the public school budget through 2025, and all but eliminate state support for colleges, according to a study released Wednesday by DUs Center for Colorados Economic Future.
To avoid the cuts, Colorado voters would need to agree to a variety of tax increases on just about everyone, including a statewide property tax for schools, a sales tax on services and a graduated income tax that would impose higher rates on people making at least $100,000.
Charlie Brown, director of the DU center, acknowledged that it will be very difficult for lawmakers to take his advice.
I havent seen anybody saying, Send me to the Capitol. Ill cut your services and raise your taxes, he said.
By 2025, inflation and population growth will push the states roughly $8 billion general budget to nearly $18 billion. But, based on the current needs of schools, prisons and medical and welfare programs, the state would need $3.5 billion more per year.
In fact, the gap is so big that 12 years from now, the state will be able to pay for only K-12 schools, prisons and medical benefits, and there will be no money left for colleges, the state court system, crime labs, water rights administration or other government functions.
Cuts, new taxes or a mix of both will have to fill the gap, the study said.
We think the problem is of a sufficient magnitude that the solutions are going to be very difficult. Its going to be very tough to either cut our way out of this or tax our way out of this, Brown said.
A mix of significant new taxes would be sufficient to cover the gap by 2025, the report said. But some of the new taxes would even amount to a tax cut for some people.
If a statewide property tax for schools replaced local taxes, then property-rich districts like those in La Plata County probably would see an increase. But homeowners in places with relatively higher mill levies, like Cortez, could see a decrease.
Under DUs proposal for a graduated income tax, people making $50,000 a year or less would see their taxes cut to 4 percent, from the current 4.63 percent. People making $50,000 to $100,000 would see very little change, to 4.7 percent.
Tax rates would top out at 6.1 percent for people making more than $200,000.
Colorados constitution requires voter approval for all tax increases.
DU released the first phase of the study early this year. It identified the long-term problems with state finances. Wednesdays second phase showed possible solutions cuts or new taxes.
The DU center enjoys a high reputation across the political spectrum as a source of nonpartisan information.
Were not advocating policy at this point. Were not pushing an agenda. Were just trying to bring some depth to the conversation, Brown said.
An executive summary of the study, Financing Colorados Future An Analysis of the Fiscal Sustainability of State Government, is available on DUs website at www.du.edu/economicfuture/bridgethegap.html.
Reach Joe Hanel at [email protected].
