COLORADO - BALLOT ISSUES AND VOTER GUIDE

Report Summary

CWPMA Trustees have asked staff to compile a list of recommendations for our membership for the 2020 Colorado Election from the perspective of working towards the future health of our industry and the continued effectiveness of CWPMA at the Legislature.

As this is an industry focused report not all ballot titles will be on the summary as they don’t affect the operations of the industry per se. As a reminder, CWPMA is a nonpartisan industry focused membership association. We have made recommendations for legislators that we have identified as being receptive to our issues regardless of political affiliation.   Depending on the issue, there are times when Democrats and progressives are more receptive than Republicans and conservatives and vice versa.

These recommendations are also made in the backdrop of the political environment.  It is likely that Colorado will remain strongly in one party control for the next two years.  After redistricting and depending on the actions of the forthcoming congress and administration, it is also likely and historically accurate that there will be a readjustment in 2022.

Moving into 2021 it is also important to consider the states proposed agenda, including what is shaping up to be a massive transportation package which will likely end around TABOR to impose additional fees and other assessments on drivers.  It is important that liquid fuels is part of that conversation.

Depending on the outcome of several of the questions outlined in this report, the state will either be further restricted in terms of spending flexibility or have additional resources in order to help recover from the pandemic.

Per our mission CWPMA seeks to give our member companies the ability to serve their customers and take care of their employees in a fair and balanced regulatory environment.  It is not our role to pick winners and losers in the market and though state leaders are increasingly interfering in the market in an ongoing quest to socialize fuels, Colorado remains a growth market for our industry and our members.

We are thankful for the strong regulatory partnerships we enjoy with several key agencies and continue to work on others … especially CDPHE.

Summaries of the amendments are compiled from CWPMA staff as well as outside sources – we have endeavored to only include information and links from credible sources

Proposition B – Repeal of the Gallagher Amendment 

Staff recommendation is “bone up” on this complex issue and make an informed vote – This measure has an impact that is relative to where in the state you are and other factors.  For the Front Range residents and relative to the property taxes both residential and commercial that you pay, the impact is different than in rural communities where residential values has grown less and the corresponding tax base is not as large to make up the difference. From the perspective of continuing services for communities, this is likely a good thing but it will may hit residential tax rates – This measure was referred to the voters by the legislature on a fairly strong bi-partisan basis for the purpose of supporting government services, with opposition worried about the impact on residential property rates. If Amendment B passes, both residential and nonresidential rates are fixed where they are now unless changes are approved by the voters.

More information: Annotated

In 1982, voters approved a constitutional measure governing property taxes, including a provision known as the Gallagher Amendment (Gallagher).  Gallagher sought to protect homeowners from rising property taxes by maintaining a relatively constant ratio of residential and nonresidential property values in the statewide tax base. Gallagher worked as intended for many years with local government being allowed to raise or lower the mill levy to meet local needs. When TABOR was passed in 1992, the Gallagher ratios were locked and began the disproportionate annual hit on non-residential property as residential values in Colorado increased substantially.

Mechanically, Gallagher works by establishing target percentages for the portions of the property tax base comprising residential and nonresidential property.  The target percentage is achieved using different statewide assessment rates for different classes of property.  Because the nonresidential assessment rate is fixed constitutionally at 29 percent (when TABOR passed) and the actual value of residential property has increased more quickly than that of nonresidential property, the residential assessment rate (RAR) has declined over time. This residential reduction has limited the tax base for local governments, while providing tax relief to homeowners. The residential rate is currently 7.15% and is anticipated to be 5.88% in 2021 while non-residential property (i.e. your business) will experience an anticipated 500% rate differential higher than residential.

The impact of Gallagher has varied across different regions of the state.  In some rural areas where property values have not increased as significantly, Gallagher has resulted in substantial reductions in the tax base.  Under the 1992 Taxpayer’s Bill of Rights (TABOR) Amendment, local governments in these areas must seek voter approval to increase the tax rate if they wish to offset reductions to the tax base and maintain a constant level of service.

This below linked legislative memorandum is divided into four sections.  First, it provides background information on key concepts related to property taxation and Gallagher. Second, it reviews the impacts on residential and nonresidential assessed values, the total tax base, and property taxes since the passage of Gallagher.   Third, the memorandum explores how these impacts vary for different counties in the state, depending on the rate of appreciation in property values.  The memorandum concludes by summarizing the potential effect of Gallagher on the 2021 reassessment cycle, given the current pandemic. The last paragraph clearly states what lies ahead for businesses relative to Amendment B’s passage or failure.

Download (hyperlink takes you to the nonpartisan staff report which is the most balanced)

Proposition118 - Paid family Sick Leave

Staff recommendation is to vote “no” on the well intentioned but poorly designed measure.

This measure creates, for the first time, a payroll tax in Colorado. This is a tax on wages that comes directly out of workers’ paychecks before they even see it. Except in cases where the employees work at a place with less than 10 employees.

The Colorado legislature has tried numerous times to pass some work of paid sick leave mandate.  These efforts have consistently failed as local governments and union groups have tried to get themselves treated differently than private sector employers.

Projections show that already in its first year, the premium collections will be insufficient to cover the program’s expenses. Further, there is a provision allowing the director of the program to independently elect to raise the payroll tax.

Based upon expert recommendations provided to the 2019 FAMLI Colorado Task Force, a study from the University of Denver School of Social Work, a broader range of potential program utilization levels are assumed. In year-5 when the program costs are most likely to stabilize, the following results summarize the range of costs.

• Solvency – If the program starts at a claims rate of 6.2% and an average length of leave of 9.5 weeks, the 2023 premium collections will not be sufficient to cover benefit and administrative costs in the first year of the program in 2024. In 2025, once the premium can increase to 1.2%, the program utilization can at most increase to a utilization level equivalent to a claims rate of 7.5% and an average length of leave of 10.2 weeks while maintaining solvency. Any higher and the program would face insolvency and likely require further legislative action.
• Direct Costs – The three constructed scenarios show a range of wage premiums to fund the benefit of .71%, 1.12% and 1.70%.
  • This would amount to an annual premium of $178, $281 or $425, for an individual making $50,000.
  • Given the current flat income tax of 4.63%, the wage premiums amount to between a 10% to 18% increase in income related taxes on those wages.
  • The state government, a large employer required to participate in the program, would see the single year cost of between $39,000,000 and $94,000,000.
  • In 2025, the total premiums to be paid by employers could total over $1.34 billion. This would be an effective increase of the corporate income tax of 204%.
• Indirect Costs – Given the one size-fits-all approach to the program, some businesses will face much higher net costs than others. A restaurant which must replace nearly 100% of the worker who take leave, would see their already low margin be reduced by 10%. On the other hand, a higher wage biotech research company, with a high margin, would see a decline in their margin of just 2% and a per employee net cost of $545.

Amendment 76: Citizenship Qualification of Voters

Staff recommendation – No industry impact

This measure was placed on the ballot by a citizen initiative, and it’s a fine example of the law of unintended consequences, among other things. Since it’s a constitutional amendment, it will require 55 percent of the vote to pass.

The language of the Colorado Constitution will be changed to specify that “only a citizen” of the United States, rather than “every citizen,” is eligible to vote in the Colorado elections, if that citizen meets all other qualifications (has lived in Colorado for at least 22 days prior to the election and has registered to vote, for example). But because of a nuance in that language change, seventeen-year-olds who are currently allowed to vote in a primary election if they will be eighteen by the November election will no longer be allowed to participate in primaries.

National Popular Vote - Proposition 113

Staff recommendation – This really isn’t an industry issue but the likely outcome of a national popular vote is that candidates would increasingly concentrate all of there time in population centers in the U.S. Which will harm the political and legislative influence of states like Colorado.  The electoral college is far from perfect but it reflects to a greater degree, though imperfectly, the balance of interests in a varied and vast country. Urban and rural parts of the country have vastly different priorities and desires. It bears mentioning that states that have signed onto the National popular vote compact are overwhelmingly blue leaning states.  Further, there is a process to change how the electoral college works that is already established in the constitution through the amendment process and this compact is an attempt to “end around” that process. More often than not, throughout our country’s history, the winner of the electoral college and the popular vote is one in the same. 

One very interesting point is that should a majority of Coloradoans vote for someone other than the winner of the national popular vote, then in that election the majority of Coloradoans would have their wishes overturned by voters in other states.

Perhaps a fair method would be to proportionally allocate the number of electoral college votes in Colorado based on the percentage of votes a candidate receives through our own popular vote process. For example, in 2016 Clinton would have garnered approximately 5 of our votes and Trump would have been allocated 4.  If the rest of the states did that, it would be more reflective of the differences within each state without throwing the concept of an equal republic out the window.

Here are two interesting maps to illustrate the urban rural divide:  This is a map of current congressional districts after the “blue wave of 2018” – together this illustrates the far left’s frustration with the current electoral college.