The Loveland Citizens’ Finance Advisory Commission submitted their report on the proposed ballot issues at Tuesday’s council meeting. The commission is appointed by the Loveland City Council to participate in a review of the budget, evaluate all financial policies and report its findings to the council. The nine member commission delivered a comprehensive report on the effects of the ballot initiatives, Amendments 60 and 61 and Proposition 101.
The report, though designed for Loveland, is a very good primer for the effects these tax reducing measures will have on the service provided by local governments and school districts. In a discussion at the Thompson School Board of Education meeting on Wednesday evening, board president, Lucille Steiner said it would reduce the districts fund’s by 45%.
The Citizen’s Finance Advisory Commission appears to have done its homework in preparing this report and in finding the ways the bills will impact the city. The full text of the report, without the mentioned attachments follows.
To: The City Council, City of Loveland
From: Citizen’s Finance Advisory Commission, City of Loveland
Date: August 17, 2010
Subject: 2010 Ballot Initiatives, Amendment 60, Amendment 61 and Proposition 101 – Loveland Does Not Deserve This
Recommendation. That the Loveland City Council should resolve to oppose the passage of Amendment 60, Amendment 61 and Proposition 101 in the November 2010 General Election.
Summary. Detailed examinations of Amendment 60, Amendment 61 and Proposition 101 (60-61-101) have produced no evidence of positive benefits for Loveland and numerous detrimental impacts if any of these initiatives are approved. The growing opposition to 60-61-101 presents an impressive and compelling case for the defeat of all three initiatives.
The general conclusion by CFAC is that although the proponents of these initiatives may firmly believe that these measures are necessary, CFAC is convinced that they are unnecessary for the City of Loveland and would do great harm to the quality of life of Loveland citizens and the economic vitality of the community.
The supporters of 60-61-101 make attractive and simplistic arguments for passage that are focused on personal savings and condemnation of bonding as equivalent to Federal Government deficit spending. There is no indication of responsibility, processes or sources of revenue for the future capabilities of governments at all levels in Colorado to provide essential services should these initiatives become law.
Increased unemployment in both the private and public sectors, evaporating funding for roads and bridges, and crippling revenue cuts to the public school districts are among the primary criticisms of 60-61-101. City of Loveland (COL) residents will face a reduction of city services, program reductions or eliminations, and increased enterprise fees should any of the initiatives pass in November. Related detrimental impacts on Larimer County (Larimer) and the Thompson R2-J School District (R2-J) will also adversely impact COL residents and businesses.
The deficiencies of all three measures are summarized by –
1. Combined General Fund revenue reductions for the City of Loveland of up to 20% within four years ($59.5 million general fund budget in 2010 reduced to at least $50.3 million by 2014).
2. Transportation infrastructure funding reduction of 53% within four years (street rehabilitation reduced from $3 Million in 2010 to an estimated $1.6 Million by 2014).
3. Loveland residents will face City Utilities increases. For example – a water rate increase of approximately 12% ($20.14 in 2010 to a projected $22.56).
4. The current storm water fee would be eliminated. This supports Federally mandated programs costing the COL $4 million annually that must then be either absorbed by the General Fund, or reduced by undetermined means.
5. The combined impacts of 60-61-101 will deplete some COL reserves and may result in the cancelling of the vast majority of Capital Improvement Projects.
6. Across the board budget cuts of 20% present the high risk (almost inevitable) of COL staff reductions, program elimination and reduction of services.
7. The combined impacts of all three initiatives produce an unprecedented elevation and consolidation of government fiscal authority to the state level, disenfranchising cities, counties and special districts throughout Colorado.
8. The increased fiscal requirements upon the State of Colorado will further shift responsibility and capability to fund public education to the State government and further reduce the local influence of a Board of Education. This is consistent with the legislative and fiscal record in Colorado over the past 20 years.
9. Criticism of deficit spending by the Federal government is not valid justification for limiting Colorado revenues and restricting bonding as a local government funding mechanism.
10. Past de-Brucing votes approved by Colorado citizens in 400 local districts would be nullified (ordered to expire by Amendment 60). All would then face a complex and controversial mandate to roll-back property-tax formulations to the date of the previous election. Specifically, this provision is a threat to the home-rule authority of the City of Loveland Charter.
11. That Colorado should be the only State in the Union without government bonds as a fiscal practice and end that generations-long respected investment mechanism.
12. Establishes more uncertain language in the Colorado Constitution and State Statutes that will lead to a new burden of litigation on taxpayers and Colorado’s courts.
13. Places the lives and property of Loveland citizens at risk by arbitrarily freezing the emergency communications infrastructure at 2009 levels
14. Mandates a new four year limit on the voter decision of any future de-Brucing election and a new public burden to pay for cyclic elections.
Proposition 101 – Findings. In consideration of immediate and direct impacts on the fiscal solvency of the City of Loveland, Proposition 101 is a serious threat.
Revenues currently in COL annual budgets from the Highway Users Trust Fund (HUTF) will be reduced (current estimates are by 38%). This adversely impacts roads maintained by the COL, Larimer County and the Colorado Department of Transportation (CDOT). The COL street rehabilitation program will be cut by 53%. The resulting deterioration of COL roads is detrimental to businesses, citizens and tourism.
- The phased reduction of vehicle registration, license, title and other fees is a significant contributor to COL facing up to a 20% reduction in general fund revenues between 2011-2014.
- The prohibition of taxes on vehicle rentals and leases establishes a state-wide fiscal bias in favor of vehicle leases. This is likely to produce court challenges. This clause may also place all local taxes related to commercial transactions at risk (i.e., make Loveland’s voter approved Lodging Tax subject to court challenges, 4-year or 10-year automatic expirations). COL sales tax revenue collections will be further reduced as vehicle sales drop in favor of un-taxable leases.
- The “Statewide concern and supersedes conflicting law” clause is the specific threat to home-rule provisions of the City of Loveland Charter. It is certain to produce court challenges.
- Government entities in Colorado will be reduced to second-class participants in future litigation connected to Proposition 101. Only the legal fees and court costs of successful plaintiffs (not defendants – government entities) must be repaid. The COL faces the prospects of successfully defending itself against a frivolous lawsuit and being the fiscal loser. The prospects for lop-sided settlements are a high risk. This is almost certainly a “sue and get money from the government” scenario.
- COL will be burdened by a new requirement for the State of Colorado to audit and enforce the provisions of Proposition 101.
Amendment 60 – Findings. In consideration of immediate and direct impacts on the fiscal solvency of the City of Loveland, Amendment 60 represents an unreasonable attack on the legitimacy of the home-rule provisions of the City of Loveland Charter, revokes TABOR revenue votes approved by the citizens of Loveland (de-Brucing), and undermines the Loveland community by removing vital revenue sources for the Thompson R2-J School District and Larimer County. COL residents/taxpayers will experience a drop in Federal Income-tax deductible property taxes, while absorbing new burdens of increased utility and services fees.
- Places a new electoral burden upon the COL to provide a ballot on any property tax issue to any and all property owners, regardless of their city, county, state or perhaps even national residency. Corporate owners of property may gain the designation of elector and require the production of a ballot for each owned piece of real property. This initiative is the prime instigator of future court challenges.
- Requires school districts (R2-J) to reduce their property tax mill levy by 50% and requires the state to replace that revenue while simultaneously experiencing as much as an additional $4.2 Billion budget deficit. This is a highly controversial provision that portends extensive court challenges, and places COL finances at risk that the State of Colorado will further reduce other fiscal distributions from programs beneficial to COL.
- COL residents will face increased fees to pay the new property tax burden imposed on enterprises and authorities. COL will face property tax payments to the city, county and R2-J for all city owned real property (buildings, golf courses, water plants, etc.). The required converse reduction in the collecting entity’s tax rates is a confusing process that also promises to create court challenges.
- The COL will face a new requirement to re-define any enterprise fee based on property. Current utility and infrastructure maintenance fees connected to real property will become prohibited by Amendment 60.
- The viability of every currently established Local Improvement District (LID) and other appointed district boards within the boundaries of COL, or adjacent to COL, will be placed at risk as Amendment 60 removes their authority to set mill levies. This adversely impacts homeowners associations and water conservancy districts. At this time it is uncertain how this Amendment will impact the Centerra Metro District(s) and its/their appointed board.
- COL residents will be burdened by costly and repetitive 10-year cycles of property tax referendum elections. Amendment 60 requires that any voter approved property tax increase will expire after 10 years and can only be placed on the ballot for November elections. This further strains the size and scope of November General Election ballots.
Amendment 61 – Findings. In consideration of immediate and direct impacts on the fiscal solvency of the City of Loveland, Amendment 61 places the near-term and long-term fiscal programs at severe risk with little or no prospect for the City Council or citizens to have positive influence on the future of Loveland.
- It is generally agreed that operating leases would become prohibited as a form of borrowing (long-term financial agreements to make payments). This places an unreasonable new fiscal burden on COL taxpayers to support same-year purchase of equipment. COL would face a requirement to cancel existing leases for office equipment, vehicles and other devices.
- Loveland’s neighboring entities (R2-J and Larimer) will be immediately impacted by a new prohibition on renegotiating existing bonded debt. This also places COL at a new fiscal disadvantage for any future program of infrastructure improvements using even a voter approved bonding mechanism.
- Compromises the long-term fiscal vitality of municipals bonds by establishing a 10-year limit, and denies all of Colorado access to the national standard of 30-year bonds. This degrades the ability of current, and future, Urban Renewal Authorities to complete infrastructure improvements due to the pressures of pursuing voter approval each November. The potential impacts on the bond debt of the Centerra Metropolitan Districts is unknown at this time. Throughout Colorado, bonding government entities will be placed at a fiscally competitive dis-advantage due to this compressed timeline (value of money over time) and inferior posture to other municipal bonds throughout the Nation.
- Loveland’s neighboring entities (R2-J and Larimer) will be immediately impacted by the new borrowing (bonding) limit of 10% of assessed real property value (note – assessed value, not real or market value). COL will experience a new burden to manage and respond to property tax valuations. This is likely to produce appeals to the Larimer County Assessor and costly court actions.
The Opposition. The state-wide effort advocating for the defeat of Amendment 60, Amendment 61 and Proposition 101 in November 2010 is represented by the organization COLORADANS FOR RESPONSIBLE REFORM, using the website donthurtcolorado.com . (Note: website includes ballot language) This is the contact information for this Issue Committee:
COLORADANS FOR RESPONSIBLE REFORM
RICK REITER, REGISTERED AGENT
PO BOX 18459
DENVER CO 80218
PHONE – 303-504-4405
This is the list of partner organizations that have declared opposition to 60-61-101 (as of August 10, 2010):
- Action 22
- Club 20
- Colorado Farm Bureau
- Colorado Corn Growers Association
- Colorado Competitive Council
- Colorado Association of Commerce and Industry
- Colorado Concern
- Colorado Education Association
- Colorado Rural Electrical Association
- Colorado Space Coalition
- Denver Metro Chamber of Commerce
- Economic Development Council of Colorado
- Jefferson County Economic Development Council
- Grand Junction Area Chamber of Commerce
- Lower Arkansas Valley Water Conservancy District
- NAIOP- National Association of Industrial and Office Properties
- Progressive 15
- State Board for Community Colleges and Occupational Education
- Visit Denver Visitor and Convention Bureau
The Poudre School District Board of Education passed resolutions in opposition to each of the three initiatives on June 8, 2010. Copies are included with this report as attachments.
The Larimer County Budget Manager Bob Keister and Finance Director Carol Block provided detailed information that was published in the Loveland Daily Report Herald (“Triple threat for county budget: Voters could take away $18 million”), June 8, 2010, page B4 (not accessible online – scanned copy attached to this report).
Originators and Supporters. CO Tax Reforms is the name of the group supporting all three initiatives. They have created the website cotaxreforms.com that consolidates the supporting arguments. These are the known websites presenting supporting materials for each initiative:
Proposition 101 – www.cotaxreform.com 
Amendment 60 – www.limitpropertytax.com 
Amendment 61 – www.limitcodebt.com 
Proposition 101 – These are the sponsors from the initiative filing.
Jeff Gross, Kersey, CO
Freda Poundstone, Centennial, CO
Amendment 60 – These are the sponsors from the initiative filing.
Bonnie Sloan, Black Hawk, CO
Louis Schroeder, Greenwood Village, CO
Amendment 61 – These are the sponsors from the initiative filing.
Russell Haas, Golden, CO
Michelle Northrup, Blackhawk, CO
Sources Analyzed to Prepare this Report
1. Colorado Municipal Leagues and the Colorado Government Finance Officers Association, May 13, 2010 Roundtable Questions on Amendment 60, 61 and Proposition 101
2. Kutak Rock, LLP, 2010 Colorado Debt and Tax Initiatives Analyzed based on Existing TABOR Case Law, May 19, 2010 (provided by Colorado Government Finance Officers Association)
3. Sherman and Howard, LLC, Election November 2010: Proposition 101 and Amendments 60 and 61, presentation to the Loveland City Council and Larimer County Board of County Commissioners, April 1, 2010.