No to the governor's tax
Amendment 58 picks the wrong targets for its largess
Rocky Mountain News
Published September 26, 2008 at 12:05 a.m.
Video: Colorado Governor Bill Ritter speaks in support of Amendment 58. Watch »
Video: Dan Hopkins, from Coloradans for a Stable Economy, speaks against Amendment 58. Watch »
Amendment 58 is a missed opportunity.
We agree with Gov. Bill Ritter that Colorado's severance tax is relatively low compared to some neighboring states.
Why, we argued for adjusting the tax on oil and natural gas production months before the governor announced his ballot plans. With this significant difference: We expected the money to be spent in areas that most lawmakers agree are truly underfunded - or, on the other hand, funneled into a large permanent fund that would provide the state with an ongoing legacy of capital projects after the energy boom subsided.
Transportation is a prime example of a high-priority target. State colleges and universities are another.
But Amendment 58 simply ignores such needs. Instead, it would boost the severance tax and spend the money on the pet programs of the governor and the Nature Conservancy, which is helping to pay for the campaign. It's a disappointing proposal that should be defeated.
The amendment would hike taxes by $321 million or more a year and distribute 60 percent in college scholarships to perhaps two-thirds of in-state students. Not just for poor kids, in other words, but the middle class, too. The rest of the funds would go to wildlife habitat (15 percent), clean-energy projects (10 percent), transportation in impacted areas (10 percent) and small drinking water and wastewater projects (5 percent).
It's not easy to raise taxes in Colorado - and it shouldn't be. If you're going to try, you ought to tackle a major funding problem rather than pour money into areas that are relatively well supported or where the result will be uncertain.
Colorado is already a national leader in protecting habitat and in subsidizing renewable energy. It's not enough to say that more money could be spent in those areas. More money could be spent on every program. Such reasoning is weak justification for a higher tax.
The same goes for the scholarship program. The governor is proposing, in only his second year in office, to create a brand new middle- class entitlement. His intentions may be admirable - a sincere desire to alleviate the tuition crunch - but intentions are beside the point.
If our society enjoyed unlimited resources, it might be a good idea to subsidize tuition for families with adjusted gross incomes of up to $102,000 (the figure comes from a document produced by the Colorado Commission on Higher Education). But Colorado does not have unlimited resources.
Moreover, the scholarship grants are likely to fuel even larger tuition hikes once officials conclude that the pressure for restraint has receded. After all, higher-ed officials have been pleading for help with operating expenses. Amendment 58 gives them no relief whatever unless it translates into tuition.
A final point on scholarships: Although tuition in Colorado has been rising much faster than we'd like, higher-ed institutions here are still not expensive compared to similar schools in other states. But all bets are off once these scholarships are in place. They will be the green light for state and higher-ed officials to boost tuition at a faster rate than ever.
At a time when the economy is rocky, Coloradans are being asked to raise the state sales tax for the developmentally disabled; to hike betting limits in the mountain gaming towns to increase the tax haul for community colleges; and, most important, to lift future spending limits on the Taxpayer's Bill of Rights so that surpluses that will eventually total billions can be spent by lawmakers.
And that doesn't even begin to catalog the tax proposals at the local level.
Voters might be tempted to think they spy a freebie in Amendment 58, since the money comes out of the hide of what critics misleadingly call Big Oil. But it is not a freebie. It's $321 million diverted from the private economy to government - and literally billions over time that would have remained in private hands, much of it poured into worthy investments.
Amendment 58 is poorly conceived and poorly targeted. It ignores the state's most urgent needs. Even if you think the severance tax is too low, you should say no to the governor's plan.
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September 26, 2008
4:40 a.m.
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roger44 writes:
I will vote no on the amendment. tax is a tax, and when they spend more than they take in they will want more from somewhere else. The comparison that this state severance tax is lower than surrounding states is lame. These kids that want to go to college can do what a lot of people did in my generation, join the military and get a education under the GI bill. My Son got his degree through it, and worked while going to school. We can't give everyone a free ride, they earn it, they will appreciate it more. Given the choice of a kid with a degree, and one with some common sense, I'll take the common sense one very time.
September 26, 2008
5:46 a.m.
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socrates writes:
The voters should pass Amendment 58. The Rocky completely misses the mark on this editorial.
The state has to set priorities for spending. Right now, we're spending $300M in subsidies to the oil and gas industry. I think we can all agree, they don't need the subsidy. And yes, this is a state subsidy - when you allow an industry to not send money to the state that it otherwise owes, you are doing the same thing as if those funds were sent to the state and then spent on that same industry. We are currently supporting corporate welfare for an industry that is, quite frankly, doing pretty darn good for itself with worldwide gas and oil prices.
So we should re-allocate those funds on the future of Colorado. This is not a "middle-class entitlement" as the Rocky claims. This is an investment in Colorado's kids and Colorado's institutions. As tuitions rise, we're pricing our own kids out of college in Colorado. They're either not going, or they're going somewhere else. This proposal would address both of those problems by allowing them a scholarship to stay here in Colorado and go to college. That's a GOOD investment for the state.
It also takes revenues and invests in renewable energy and efficiency technologies that will save Coloradans money as energy prices rise. Those same investments also create jobs in a new energy economy.
It also addresses local impacts of oil and gas exploration. Take a ride outside of the front range - head to the west slope and see the impacts. It's stunning.
Plain and simple, this is a re-investment in Colorado's future. The people should pass Amendment 58.
September 26, 2008
6:14 a.m.
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Mike846 writes:
Vote NO on this measure. No more taxes for the Democrats to re-distribute as they see fit. No more taxes for special interest groups with "feel good" initiatives that waste time and money while NOT taking care of the peoples infrastructure needs, like roads. No more whipping the "villain of the week", energy companies, because the government sees them as ripe for what amounts to a penalty for producing and selling the most basic commodity in the country. NO to Bill "Tax" Ritter's latest plan to gut Tabor and fund pet projects. NO on 58. Mike
September 26, 2008
6:49 a.m.
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Mike_In_Hartsel writes:
socrates - when one subsidizes something one uses money in-house to support it. Low Taxes on the other hand is revenue not collected and therefore not available. This is about raising a low tax to raise another $300 million to spend. This is not the re-allocation of existing funds as socialists claim it is.
Renewable energy is the latest socialistic hoax being pandered about by the left. It is not reliable, it is not inexpensive and will not be inexpensive for many years to come, and it will never replace power plants, regardless of the pin-in-sky claims.
Higher education is not free. I object to socialists putting their hands into my pockets to fund lower and lower college costs while opposing spending cuts in other areas.
NO to ANY new taxes without limits or without spending adjustments.
September 26, 2008
7:34 a.m.
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a_watcher writes:
I got an education in another state at a time when student loans didn't exist - yes I know we aren't talking about loans, but the effect is the same.
My tuition at that time (45 years ago) was 2% of what it costs to attend that university now. The loan program made it possible to unhook tuition from normal inflation on the theory that students with unlimited borrowing capabilities could pay unlimited amounts.
Amendment 58 will have the same ratchet effect on tuition but will not have unlimited funds to match the ratchet. If this year it would buy tuition for those earning up to $100,000 then in ten years it will only buy tuition for those under an inflation adjusted $50,000, and ten years after that only half again.
The middle class, instead of getting a freebie, would find their children priced out of college.
September 26, 2008
9:21 a.m.
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JYP3500 writes:
No more taxes! This is exactly what Democrats do when in power. Redistribute wealth to the dumb and the lazy. To give more money to liberal biased colleges is unacceptable. Let the universities tap into their massive endowment funds to help students, and begin using fiscal responsibility to cut expenses.
September 26, 2008
9:46 a.m.
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INC writes:
It is a Severance tax the Oil companies aren't paying now!
(expletive here)
NOT any new tax.
Give the State what it is already due!
YES on 58
September 26, 2008
11:42 a.m.
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peterpi writes:
I'm quite liberal, but I'm against Amendment 58.
First, some supporters are being dishonest. There's no way you can not call this a tax. It removes a tax exemption. Therefore, it taxes. Period. If we can't be honest about what we're doing, let's not even try.
Second, there's no rational basis between the Amendment 58 tax hike and what it funds. I agree with the Rocky: This could have gone into a fund to improve roads and highways, fund mass transit, and create a capital construction trust fund. Instead, it's trying to be Santa Claus.
I'm also against Amendment 52. That cutesy ad with the ol' timey farmer talking that it's not a tax increase is technically correct, but misleading as hell. It would take minerals severance taxes already allocated to certain needs and transfer them to fund I-70 improvements. So someone gets the short end of the stick. If the Amendment 52 crowd thinks I-70 needs more money, they should ask the voters for it, not ask the voters to steal it from someone else's needs.
September 26, 2008
11:49 a.m.
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P_Denver writes:
"No" on 58
I will always vote NO on giving more money to politicians.
THEY WASTE TOO MUCH OF IT NOW!
There is PLENTY of money available to fund the necessary social, welfare, and public-protection needs of the community. If they quit dumping it down the sewer on state versions of earmarks they would not need more.
"No" on more tax money for the politicians to waste!
September 26, 2008
11:55 a.m.
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Faux_Noise writes:
Peterpi, your points are, as usual, well taken. I think they illustrate the nonsense budgetary process that exists in Colorado due to TABOR.
However, the reflexive anti-tax crowd should consider that by raising the severence tax as 58 would, the increase will not be paid mostly by Colorado taxpayers. Since most of our natural gas flows out of the state, these tax increases would be borne by other states, and result in a net revenue flow into Colorado, rather than just redistributing money within CO.
September 26, 2008
12:50 p.m.
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Proud_American_Citizen writes:
I don't mind raising the severance tax but I DO MIND having the money parceled out like it is. It should go to the General Fund so the money can be used as needed with as much flexibility as possible. Since the Gov decided to partition this money, I will vote NO on this amendment.
September 26, 2008
1:13 p.m.
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socrates writes:
Tax credits are spending by the state. They are funding priorities that are put in place to advance some policy objective.
For thirty years, the oil and gas companies have had an advantage that other taxpayers don't have. They can deduct their property taxes from what they owe the state. I can't do that. If I could, it would be passed by the legislature to achieve a policy objective. It would be the same as spending money to advance that policy objective.
That's what's happening here. Except the only policy objective we're achieving today is increasing the profits of the oil and gas companies. I think profits are good, but I think we can probably all agree that the oil and gas market today can survive on its own without this public subsidy.
So, as responsible citizens, we should focus these revenues toward someplace they're needed. If you don't think the next generation of colorado's kids should be able to go to college unless they're wealthy, ok - you should vote against this initiative. But, otherwise, this is a good thing to do.
September 26, 2008
2:31 p.m.
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Darwin writes:
I agree with what Proud_American_Citizen stated "...It should go to the General Fund so the money can be used as needed with as much flexibility as possible."
We continue to throw more and more money at education and the results show little, if any improvement in the results. Clearly we need to look at the approach being used. Why are other countries achieving better results with less money? socrates, while you make some good points, I can honestly say I heard the same statement "If you don't think the next generation of colorado's kids should be able to go to college unless they're wealthy..." for the past 30-40 years, and yet more kids are going to college today than ever before. Scholarships for the poor? My niece (physical therapist) and her husband (MD) have three kids in college at the current time on full ride scholarships. Yes, based on standards, they earned it, but a family with a $350,000+ income could easily pay for their kids college education rather than have the taxpayers pay for it.
September 26, 2008
2:41 p.m.
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denverinfidel writes:
58 needs to be defeated. You'll notice the argument from the left always starts with the assumption that all private revenues belong to the state. The state is being nice and letting you keep some of it.
This is simply just the state letting private biz keep less of what was never theirs to begin with. See, no tax increase here because it all belongs to the guv.
Keep up the good work Ritter, you socialist union hack.
September 26, 2008
2:53 p.m.
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gary writes:
Since most of our natural gas flows out of the state, these tax increases would be borne by other states, and result in a net revenue flow into Colorado, rather than just redistributing money within CO.
REally?? Gee...my house is heated by natural gas and my car runs on gasoline.
Just who does everyone think will pay the $320 million tax increase?
Well, no the oil companies...they will pass it on to us.
So 58 is a tax increase on all Colorado working taxpayers.
NO ON 58!
Nuff Said!
September 27, 2008
9:57 a.m.
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GetaReal writes:
Socrates! "we're spending $300M"? This statement indicates that the state has this money in it's coffers and sends it out to the companies somehow. Ok, if true keep it in the coffers.
However, allowing someone to keep what they have created is not government spending. Unless, of course, you believe everything belongs to the government first and be grateful if it let's you keep a crumb or two.
September 27, 2008
1:08 p.m.
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masondav2004 writes:
Even if you assume 58 is a flawed proposal in terms of where the money is intended to go- and this is an open question, IMO- 58 will be a VAST improvement over the current situation where the oil and gas industry reaps a nearly half-billion dollar annual subsidy from the state at a time when that same industry in enjoying skyrocketing and historic profits.
It is laughable to suggest, as COGA does, that oil and gas producers will PULL OUT of Colorado if 58 passes. The minerals are in the ground, either way, and developers have a strong incentive to stay active and expand in Colorado- taking advantage of a bullish sellers' market- either way. The notion that this will negatively impact jobs is equally laughable, as the industry will need more workers to operate the increasing number of rigs it has going in on the Western Slope, near Trinidad, and elsewhere in the state.
And, as for the effect on energy prices- they're going up, either way. What 58 does is shift some of the tax burden of education, infrastructure, and other essential state activities off of the backs of taxpayers, and on to the companies benefitting from mineral leases to develop resources that belong to us- the public- not them- the energy developers.
58 is not without flaws, I'll grant you (though hunters, anglers, and conservationists might take issue with the Rocky's rather cavalier dismissal of the importance of funding habitat conservation and clean water protections). I just have a hard time finding those flaws. Investing in renewable energy is every bit as essential as making sure production of oil and gas continues (in an environmentally responsible fashion, of course). And providing scholarships, even for- gasp!- middle class students is also essential as we see college tuition and cost of living skyrocket.
The Rocky prides itself on its editorial independence, but its claim that it supports- "in general"- the idea of doing away with the severance tax exemption for oil and gas developers rings hollow, and really sounds like an echo of the arguments made by the oil and gas lobby. They already won concessions on the Commission rule making, which is likely to result, unfortunately, in dire environmental and economic effects for Coloradans long after the developers have packed up and moved on to greener pastures; Amendment 58 is our opportunity, as voters, to draw a line in the sand where the Commission failed to do so.
We shouldn't pass up this opportunity to make sure oil and gas development is a good deal for our state, not just the oil companies. PASS AMENDMENT 58!!!
September 28, 2008
11:39 a.m.
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gary writes:
We shouldn't pass up this opportunity to make sure oil and gas development is a good deal for our state, not just the oil companies. PASS AMENDMENT 58!!!
masondav2004
Yes...it is a good deal for the "state'.
But it is a bad deal for the "consumer".
The state gets to TAX the companies.
Then the companies will pass that increase to the consumers.
So...the consumers pay $320 million more in TAXES.
Then Ritter and the group says....it is not A TAX INCREASE.
Just like his property tax proclamation.
Hmmm..seems the court has already ruled against him once.
NO MORE NEW TAXES
VOTE NO ON 58
Nuff Said!
September 28, 2008
2:59 p.m.
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masondav2004 writes:
It's not a tax increase, it's the end of a tax subsidy. Two different things, unless you subscribe to the Grover Norquist/Newt Gingrich school of economics, under which we're supposed to print our own money, I guess...
Energy prices, at best, have an attenuated relationship to closing this loophole for oil and gas development in western Colorado. Market demand in the eastern US, not to mention Asia and elsewhere, plays a significant role in affecting price at the pump (or the boiler) in Colorado, as compared to the negligible- yes, I said negligible- effect closing this loophole will.
The prices will go up either way, as gas and oil are finite and scarce resources in high and growing demand, so I think making these companies pay their fair share into the tax base of our state, before shipping the gas OUT of our state where they can get a better price, is the best way to go.
Basic economics, my friend.
September 28, 2008
7:02 p.m.
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HopiMedicineMan writes:
Basic economics:
You don't need a degree in Economics to be a welder on an oil platform.
We've had enough "smart" in America and it's cost our economy. We need a heavy dose of "dumb" to straighten out the mess created by the MBAs, the economists, the enviros, the lawyers and the race exploiters.
October 25, 2008
11:33 a.m.
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blh1616 writes:
I think this article fails to point out that Colorado is among the worst (49th last I checked) in the country in higher education funding. The estimated $180 million that would be funneled into our institutions of higher learning wouldn't even put us close to the middle of the country in funding.
This is an attempt by Bill Ritter to fund programs that are grossly underfunding after Doug Bruce pillaged the state. We are constitutionally unable to take care of our kids. We are unable to keep our roads up. Think about it, unless we repeal TABOR, what else do we have???????
Oh yeah, not to mention that Wyoming charges more than we do and they pay less for their natural gas. Go figure.
YES on 58.
October 31, 2008
10:49 a.m.
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Slimjim_800 writes:
The best reason to support this tax is that a lot of it will be paid by people outside of Colorado to support projects inside of Colorado. While it may be un-american to tax people who have no representation. We need to take a lesson from Alaska and Wyoming who have used these types of taxes to lower taxes for their citizens while providing all kinds of services. If you need to rationalize taxing our fellow states Colorado is one of the states that pays more in federal taxes than it receives in federal services.