Bloomberg News

Two-Thirds of Colorado Voters Reject Tax Increase for Schools

November 15, 2011

Nov. 2 (Bloomberg) -- Colorado voters by a margin of almost 2-to-1 defeated a citizen initiative to increase taxes for public education that would have raised $2.9 billion.

Proposition 103, the only statewide tax vote in the U.S. this election season, failed 64-36 percent with 84 percent of the projected vote counted, the Associated Press said today.

The rejection continued a nationwide trend against new taxes. In November 2010, Washington voters spurned an income tax on top earners and dropped levies on candy, bottled water and carbonated beverages. The last successful statewide voter initiative to increase taxes was in 2006 in South Dakota.

“One of the concerns with Prop 103 was that it was a grassroots movement, done on a low budget with not a lot of advertising,” said Mike Wetzel, a spokesman for the Colorado Education Association, the state’s largest teachers’ union. The organization endorsed the measure. He spoke in an interview before the results of yesterday’s balloting were known.

Proposition 103 would have raised the personal and corporate income-tax rate to 5 percent from 4.63 percent and increased the sales and use levy to 3 percent from 2.9 percent. Both increases would have lasted five years, to finance public education.

The vote came the same day Democratic Governor John Hickenlooper, who didn’t take a position for or against the initiative, called for cuts to public schools and universities to help close a $500 million gap in the $20 billion fiscal 2013 state budget.

Student Spending

Colorado spent $1,781 less per public-school pupil than the national average of $10,499 in 2008-2009, according to U.S. Census Bureau data, the latest available. Only 11 states spent less. Before 1982, Colorado’s spending was about equal to the national average, according to the Education Department’s National Center for Education Statistics.

Supporters of the tax plan, endorsed by union leaders and the school boards in the state’s largest districts, raised $607,000 through Oct. 31, according to a campaign filing by Support Schools for a Bright Colorado on the secretary of state’s website.

Opponents including Too Taxing for Colorado and Save Colorado Jobs, a group headed by a former state Representative Victor Mitchell, a Republican, raised about $25,000, according to the most recent filings.

Republican Opposition

The National Federation of Independent Business and the Colorado Republican Business Coalition fought the increases, saying they would harm the state’s economy as it struggles with an 8.3 percent unemployment rate.

“I’m opposed to raising taxes on Colorado families and small businesses,” Frank McNulty, the Republican Speaker of the House of Representatives from Highlands Ranch, said in an interview before the election. “Our efforts must be focused on job creation.”

Colorado was the only state with an initiative to raise income taxes in this month’s U.S. elections. A 1992 amendment to the state constitution bars the Legislature and local lawmakers from increasing levies without voter approval. Coloradans last year voted not to lower their income tax.

Statewide tax increases blessed by voters are not unheard of when the economy is struggling. In 2010, voters in Arizona and Oregon approved measures to increase taxes.

Standard & Poor’s said in a report Oct. 25 that it didn’t expect the passage of any state ballot initiative in this election cycle, including Proposition 103, to “have an immediate credit impact on any state ratings.”

--Editors: Pete Young, Mike Millard

To contact the reporter on this story: Jennifer Oldham in Denver at joldham1@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net


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