Lets Talk FINAL

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  1. 1. Fiscal Education Network Toolkit LETS TALK! Take an Hour to Change Colorados Future
  2. 2. Fiscal Education Network Toolkit 2 Table of Contents Introduction........................................................................................2 Making Sense of the States Revenue Challenges....................................3 The General Fund...............................................................................4 Compounding Factors to the Structural Problems........................... 5 6 How Does Colorado Compare?......................................................79 What Are the Options?...................................................................... 10 Nonprofits are Vital to Community Conversations................................ 10 Leadership Challenge................................................................... 1011 Steps.........................................................................................1213 Strategies...................................................................................1415 Resources/Figures.......................................................................15-6 Introduction Colorados projected long-term revenues are insufficient to sustain the public services Coloradans have come to expect. Colorado voters have the unique responsibility of deciding how best to balance the publics desires for both low taxes and robust public services. The purpose of the Fiscal Education Network is to help Coloradans make informed choices about state fiscal policies and public services through community engagement led by a statewide network of nonprofit organizations. Research conducted by John Creighton on behalf of the Fiscal Education Network has produced an approach to com- munity engagement geared toward building public will long term rather than simply swaying public opinion as many political campaigns achieve in the short term. The framework presented in this toolkit clarifies the differences between building public will and swaying public opinion, as well as identifying the stages of public thinking people go through before they commit to public action. We need your help and leadership to engage Colorados communities in these vital discussions about our states future.
  3. 3. 3 Help Coloradans Make Sense of the States Revenue Challenges Colorado faces an unprecedented budget challenge that goes far beyond the typical taxes versus services debate that preoccupies any government body. At the ballot box and in countless opinion surveys, Coloradans express consistent support for education, fundamental health care services, public safety, services for seniors, roads, highways and transit. Many Coloradans are concerned that these vital services are underfunded. Majorities of people surveyed oppose more cuts to these public services, yet the costs of mandated, necessary and/ or popular services and infrastructure increasingly exceed state revenues. The challenge is this: Colorado has grown but state revenues havent kept pace. Over the past decade The population has grown by nearly 20 percent. The number of registered vehicles on the road has in- creased by just over 25 percent. The number of K-12 students has increased 15 percent. The number of college students in the state has grown by more than 30 percent. Medicaid caseloads have doubled. Yet state revenues available to fund these services are not much more than they were in 2001. General Fund revenues have increased by 7 percent and per capita state spending fell from $2,237 to $2,211 (adjusted for inflation) between 2001 and 2010. Specific revenue sources like Colorados gas tax also havent kept up with the states growth. Colorados gas tax has not increased since 1992 while the states population increased by more than 60 percent dur- ing that same time period. In that time period, the popula- tion has grown more than 60 percent. The current value of the gas tax adjusted for inflation is less than half of its value in 1992, according to the Colorado Department of Transportation. Although revenues are not sufficient to maintain public services at their current levels, the Colorado General As- sembly continues to make cuts including: K12 education $260 million (FY 201011), $130 million (FY 200910). FY 201011 per student funding is $450 less than in 2008-09; Child welfare services $6.7 million; Human services 2.3 percent cut; and Medicaid spending $138 cut per recipient. Coloradans have made it clear that we expect state and local governments to fund good schools, maintain roads and bridges, provide fire and police protection, and sup- port the most vulnerable members of our communities. State revenues, however, are not sufficient to meet these expectations in the short term or long term. Colorados General Fund revenue in 2010 was nearly the same as 2001. The Independence Institute, a fiscally conservative think- tank in the state, says in its report Citizens Budget, The states budget problems arise not just from recent difficult economic times, but originate from structural spending problems that allow recurring crises. In other words, we face a long-term problem that wont go away when the recession ends.
  4. 4. Fiscal Education Network Toolkit 4 40% 9% 9% 9% 4% 5% 24% K-12 Education Health Care Higher Education Corrections Human Services Judiciary Everything Else -10 0 10 20 30 40 50 60 70 80 Medicaid Childrens Higher K-12 State Park General Fund Changes in Demand Since FY 2007-2008 72% 19% 21% 7% 7% -5% $20,000.0 $18,000.0 $16,000.0 $14,000.0 $12,000.0 $10,000.0 $8,000.0 $6,000.0 $4,000.0 $2,000.0 $0.0 DollarsinMillions Fiscal Year 11-12 12-13 13-14 14-15 15-16 16-17 17-18 18-19 19-20 20-21 21-22 22-23 23-24 24-25 Other Agencies SB 228 Big 3 GFSEF Revenue The General Fund Demand for state services has increased in general, while revenues to fund these services have not kept pace. Since fiscal year 20072008, enrollment in and use of state services has increased, in some cases dramatically. The general funds purchasing power has decreased 11 percent, adjusted for inflation since 2001. The child poverty rate rose 102 percent in Colorado over a tenyear span from 20012011. Yet, the general fund rose only .5 percent (fig. 1) to support vulnerable children and families, including a 2 percent decline in funds for medical services for special needs children over the same time period. In light of Med- icaid and K12 education forecasts, economists predict corrections, Medicaid, and K12 education will account for all general fund expenditures by fiscal year 202425, leaving services, including higher education, human services, and transportation, unfunded from general fund dollars.
  5. 5. 5 Compounding Factors to the Structural Problems Aging population Coloradans are getting older. By 2025, Colorados population of those over the age of 65 is expected to grow to 17 per- cent of the total population. This is an increase of 70 percent. Seniors contribute nearly half the amount of the sales tax base per household than people between the ages of 4564 contribute. Additionally, while seniors represent a small, yet growing population in Colorado, they are significant consumers of public services. Medicaid Enrollees to Expenditures (FY 2010) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 59.4% 16.9% 12.1% 7.7% 3.2% 0.7% 0.7% 2.4% 27.9% 33.0% 13.9% 22.1% Non Citizens Partial Eligibles Elderly Disabled Adults Children Expenditures (2,929,236,158) Shifting K12 education funding system How K12 education is funded has shifted over the last 20 years. In 1993, the state funded 35 percent of local school expenditures. In 2010, that number grew to 63 percent, due in large part to a decrease in local mill levies, which raise funds for local schools through property taxes. State law requires that the state pay a larger percentage for K12 education when the local share is reduced, Accord- ing to current projections, this figure is expected to grow to 70 percent by FY 202425. Families must pay more of the cost of higher education Colorado State University estimates that it educates a student for 4 percent less in inflation-adjusted dollars than it did 20 years ago. What has changed is that 20 years ago two-thirds of the cost of a CSU education was paid by the state.
  6. 6. Fiscal Education Network Toolkit 6 0 10 20 30 40 40% 60% 1983 2012 72% Family Share (TuitionFees) 28% 50 60 70 80 Transportation Needs? Additional Transportation Revenue Required by Level of Service $380 $31 $57 $276 $50 $131 $203 $461$500 $830 $688 Highway Repairs Bridge Repairs Maintenance Total Level of Service C+ B A $1380 Millions $1,400 $1,300 $1,000 $800 $600 $400 $300 $0 Transportation infrastructure continues to deteriorate The Transportation Department gives Colorados current road and bridge conditions a C+ grade. Fifty percent of Colo- rados roads and bridges are in good or fair condition. Seven percent are in poor conditions, including 128 bridges that will be unsafe in the next five years.
  7. 7. 7 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 1959 1965 1973 1983 1993 2003 2013 2023 2033 2039 45.67% 54.33% Goods Shared 23.29% 76.71% Services Shared Personal Consumption Expenditures for Goods and Services as a Share of Total: U.S. History and Forecast Colorados Changing Economy When the state sales tax was implemented we consumed more goods than services, so only goods were taxed. Now we consume more services-tax free. The sales tax base has declined because it applies less to what Coloradans buy more often. We Pay Less Tax GeneralFundAsShareTotalState PersonalIncome 2% 3% 4% 5% 6% 1989 2011 4.4% 4.1% 4.7% 4.5% 4.2% 3.5% 3.7% 3.2% How Does Colorado Compare to Other States? Combined state and local tax burden = 39 (Tax Foundation) Best states for retiree taxes = 5 (MSN Money) Business tax climate = 15 (Tax Foundation) State tax burden as percentage of income = 49 (Colorado Legislative Cou