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Monday, December 6, 2010

The rhetoric sounds familiar

My OpEd in the Denver Post. Originally Published Oct. 24, 2010.

Mark Twain is believed to have said, "History may not repeat itself, but it rhymes a lot." We have certainly heard the tune surrounding the anti-Amendments 60, 61, and Propositions 101 camp before.


Anti-Taxpayer's Bill of Rights (TABOR) advocates used the same hyperbolic scare tactics that we are seeing now. Fortunately (and unsurprisingly) the dooms day predictions about TABOR turned out to be completely wrong.

Colorado thrived once people were allowed to keep their money and the state did not experience "economic Armageddon." As Aerosmith put it, the rhetoric against the so-called "ugly three" is "the same old story, same old song and dance, my friend."

The anti-Amendments 60 and 61 and Proposition 101 camp recently released a TV ad claiming that these measures "will trigger a second recession," "Seventy-three thousand jobs gone. Eight thousand teachers lost," "Huge class sizes that hit schools the hardest," and "No bonding for roads, schools or water projects."

The Colorado Springs City Council recently passed a resolution calling the three measures, "evil," "dangerous" and the work of anarchists. The political class, unions, and corporate welfare schemers made these same statements about TABOR and guess what? They were all completely wrong.
During the 1992 TABOR campaign, then-Governor Roy Romer predicted that TABOR would result in "economic Armageddon," and warned of signs posted on the state line saying, "Colorado is closed for business."

Wrong.

By 2006, Colorado ranked 8th on the Tax Foundation's State Business Tax Climate Index. Between 1995 and 2000 Colorado was first among states in gross state product growth and according to the National Association of State Budget Officers, Colorado was one of only five states that did not run a deficit during the 2002 fiscal year.

An anti-TABOR brochure said the measure "limits school spending growth to the rate of inflation and growth in student population. Experts fear this will make it difficult for schools to keep up and create further impetus for cuts."

Wrong.

From 1988-89 to 2002-03, total per pupil spending grew by more than 17 percent. After adjusting for inflation, Colorado only had total per-pupil spending decreases in 1993, 1994, and 2000. However, the increases that occurred during other years more than made up for the three decreases.
The bond rating firm Moody's chimed in on TABOR predicting that Colorado would see a "long-term deterioration" of its credit rating. Then as now, opponents warned about threats to bonding for roads, schools, and water projects.

Friday, July 30, 2010

Colo. transit flunks out

Last year saw a government failure of spectacular proportion: “Cash-For-Clunkers.” The program subsidized sales for the auto companies in the very short term at a staggering cost of $3 billion, while reducing the number of cheap used cars available for younger and lower income people.

Independence Institute Senior Fellow Randall O’Toole has been studying another epic failure for nearly a decade: public transportation. His latest study, “Colorado Transit: A Costly Failure” explains how, like “Cash-For-Clunkers,” transit has failed at every measure. But unlike “Cash-for-Clunkers,” it didn’t go away after one month.

O’Toole’s latest analysis explains that public transportation costs more, wastes more, and pollutes more than driving. Transit costs four times more per mile and is subsidized 40 times more than passenger driving. In 2008, the national average for public transit was 90 cents per passenger mile, 70 cents of which is subsidized by non-transit users. Colorado is even higher: 1 dollar per passenger mile, with 84 cents subsidized. Driving, however, only costs an average of 23 cents per passenger mile, and only two cents of that is subsidized.

Transit users cover only a small percent of the operating costs for Colorado transit agencies. Colorado transit collected $97 million in fares in 2008, but spent $419 million just on operating costs. These costs don’t include the costs of capital purchases such as buses and trains. After averaging the capital costs over the last 17 years and accounting for depreciation, O’Toole found that capital expenditures added $181 million to the cost. Taxpayers are on the hook for $503 million per year for transit systems in seven Colorado cities.

The extra costs are worth it, though, if we can save the planet and have clean air though, right? Colorado transit fails here as well.

Most transit systems in Colorado use more energy and pollute more than driving. The most energy efficient form of public transit is vanpools which, as O’Toole points out, is the closest form to actual cars. If one looks at the per passenger mile emissions of public transit versus an average light truck or car, it would appear that light rail is slightly more efficient than light trucks, but not as efficient as cars. However, this doesn’t take into account the huge amount of energy required to build a light rail system.

Much of the energy waste is a result of an inability to fill seats. The average bus operates around one-sixth capacity, and the light-rail system fills an average of 22 percent of its seats.

Colorado obviously isn’t alone in its transit failure. Reason Magazine recently reported that California spent $8 billion on a public light rail project. However, the Los Angeles Metropolitan Transit Authority is now carrying fewer passengers than it did 20 years ago when it started the project.

As O’Toole concludes, “Many people think that a major goal for transit is to persuade people to get out of their cars and drive less. Considering that the transit systems we know today are more expensive, less convenient, and have greater environmental impacts than driving, this goal is self-defeating.”

So you can go ahead and keep driving your car guilt free and enjoy the view of the mostly empty buses and trains that you will be heavily subsidizing for years to come.

This Op-Ed Appeared in the Denver Daily News on July 30, 2010.

Monday, July 19, 2010

Bad Solution to the Wrong Problem

On July 1st a provision of Referendum C, the five-year Taxpayer Bill of Rights (TABOR) refund suspension, came to an end in Colorado. As we cast off this bipartisan travesty, it is important to look back and see why it happened, so it never, ever, happens again. Ref. C was a bad solution for a problem that didn’t exist.
Colorado’s economy was doing quite well throughout the ’90s. However, from 2001 to 2002 the economy took a dive and general fund tax revenue decreased from $8.8 billion to $7.7 billion, a 12 percent decrease. Those who see TABOR as a threat to their power decided to do as Rahm Emanuel advocates, “Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.”
This was their chance to cripple TABOR.
Supporters of Referendum C blamed the need for budget adjustments on the TABOR limit and so-called “ratchet effect.” They told Colorado voters that a five year exemption from the TABOR revenue limit was needed to prevent the state from collapsing into Mad Max style chaos. In 2005, Ref. C was predicted to raise $3.7 billion over five years, making it the largest tax increase in Colorado history. All of this, however, was based on the premise that the budget shortfall was caused by TABOR in the first place.
Reality disagreed.
The economy in most states suffered during the 2001 recession. Aggregate general fund revenues declined an average of 6 percent for all states. The 9/11 terrorist attacks compounded this problem and not only damaged the nationwide economy, but hit the Colorado tourist industry particularly hard. At the time, tourism accounted for 8 percent of all jobs in Colorado. As a result of 9/11, visits to ski resorts declined by 14 percent for the first part of the season and 4.4 percent for the entire season. National Parks visits fell by 8 percent, and the rafting industry saw its first commercial decrease since 1988.
On top of the recession and terrorist attacks, Colorado also faced the worst drought in 25 years in 2002. The entire state was declared a disaster area for the first time since 1977. It was the driest year since 1703 along the South Platte basin, and since 1579 along the Colorado River. As you can imagine, this was not a good year to be a farmer or rancher. Dry-land wheat production was at 45 percent of its 10-year average. Cattle breeding stock was down 40-50 percent and Southern Colorado ranchers lost 80 percent of their herd and $460 million.
The third major problem with the budget was a result of an earlier “solution,” Amendment 23. Amendment 23 mandates yearly increases in K-12 education regardless of revenue collections. If revenues are high, the increases come out of the TABOR refund, but if revenues are low, the increases come out of the general fund. In tough economic times, education spending continues to increase, but other services decrease even more than they would have otherwise. When the budget decreased from 2001-2002 by over $1 billion (12 percent), education spending actually increased by $846 million (16 percent). From 2001-2006, state school finance spending increased by 39 percent in Colorado.
Crisis (or perceived crisis) can cause people to act irrationally and to listen to opportunists looking to expand their power. TABOR was unnecessarily handcuffed and the taxpayers suffered. The silver lining will come if we can learn from this mistake and work towards solutions to problems that actually exist, such as so much of our current state budget being tied to federal programs that require automatic state spending increases every year.
Originally appeared in the Denver Daily NewsColorado Springs Gazette, and The Independence Institute on July 16, 2010
More information on Referendum C is available in my Independence Institute paper "Referendum C: The Wrong Solution for the Wrong Problem." 

Thursday, July 15, 2010

LTE: Private trash option would help problem

This letter to the editor appeared in the Denver Post on June 18, 2010

Re: “Gripes, garbage pile up as city reduces service,” June 15 news story.
Residents in north Denver are learning the lessons of government failure the messy way. Trash piles up as the city-run trash monopoly is strapped for cash and reduces services.

Bill Vidal, Denver’s manager of public works, explains that “Budgetary constraints are budgetary constraints. I can’t print money.” He is right — this isn’t the federal government, after all. However, when the government creates a monopoly on a service, there is no competition and there are no options for customers. When the government fails, everyone suffers.

Colorado Springs doesn’t have this problem. Trash service is private, competitive, and working great. In fact, the only area of trash service that is suffering is availability of trash cans in public parks. Again, this could be solved by private sponsorship of trash cans, which PETA recently offered and the city rejected.

Todd HollenbeckWoodland Park