Tim Hoover of Colorado Fiscal Institute presented a snapshot of Colorado’s budget at Region 10 July 30.

Tim Hoover of Colorado Fiscal Institute presented a snapshot of Colorado’s budget at Region 10 July 30.

MONTROSE—(August 5, 2014)  Here in Colorado we may dislike paying taxes, but those looking for a state with a lower tax rate don’t have many choices; in fact only one state in the Union gives its residents a better deal–New Hampshire.

Colorado’s ranking as 49th in the nation when it comes to taxing every $1,000 of income was just one surprising fact shared by the non-profit Colorado Fiscal Institute (CFI) in Montrose last week. The state also ranks 49th in higher education funding, and 43rd nationwide for K-12 education and for highway spending.

CFI Economist Chris Stiffler and Communications Director Tim Hoover brought “The CFI Roadshow: Taxes, TABOR and the Road Ahead,” to the Region 10 Enterprise Center July 30. The informative and eye-opening discussion was sponsored by the Montrose County League of Women Voters.

The program began with a snapshot provided by Hoover of the Colorado budget, and the Federal, cash and general sources that total roughly $22.6 billion.

Five areas consume 90 percent of the budget, Hoover noted; K-12 education, health care, higher education, corrections and human services.

Stiffler then offered an analysis of the state’s economy, which has seen an ongoing drop in personal income and economic growth paralleled by increased unemployment.

“Fewer Coloradoans are finding the jobs they want,” he said. “Long-term unemployment levels are at historic highs.”

Under-employment is also an issue, he said, and described a vicious circle in which the Middle Class, feeling squeezed out of existence, is no longer purchasing the consumer goods that drive the economy. Colorado wages increased with productivity between the years 1947 and 1979, but have not kept pace since.

“The average Colorado household is losing ground,” Stiffler said. “The income of a family in the middle class has fallen in real terms–and that means we are adjusting the numbers for inflation–since 1985.”

The uneven recovery following the great Recession of 2009 is due to the income gap between Colorado’s poorest and wealthiest households, Stiffler said.

“Colorado ranks 24th in the nation for income inequality,” he said, “But that gap is growing quickly; since 2009 95 percent of income gains have gone to the top earners. Twenty percent of the population has less money than it did 15 years ago.”

The gap poses a problem because the nation’s economy is built on the spending of the middle class, Stiffler said, noting that 70 percent of all economic activity stems from consumer spending.

“The less economic activity we see, the less tax revenue we take in,” he said. “This is not a political issue, but an economic one.”

However, the amplified voice that the wealthy enjoy in politics does play a role in perpetuating income disparity, he said, adding that Colorado can reverse the trend by investing in areas that help the middle class.

Stiffler also discussed the impact of the State’s Taxpayer Bill of Rights, or TABOR, which was passed in 1992.

“It passed the fifth time it got on the ballot,” he  said. “TABOR limits the ability of politicians to raise taxes, limits revenue collection and how we tax.  It limits the ability to manage where money comes from and who pays. When the economy is growing, TABOR impacts the state’s ability to save for a rainy day, and it removes options for addressing the income gap.

“We need all the tools we can get to adapt to the changing economy,” Stiffler said. “We are seeing more Internet purchases, and our population is aging. The skills needed to make a sustaining wage are changing.”

The economy should not work only for the wealthy few, however, he said.

Hoover concluded the presentation by reminding listeners that even Wall Street recognizes that income disparity keeps consumers from spending.

“The middle class creates the jobs in this country,” Hoover said. “A long time ago we understood this–that it takes everyone. There is no argument coming from Wall Street–the wealthy only get rich when others have money to spend.”