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Colorado voters recently rejected a $2.9 billion income and sales tax increase ostensibly designed to compensate for ongoing cuts in education funding. Proposition 103 would have temporarily raised Colorado's sales tax to 3% from 2.9%, and would have raised the income tax rate to 5% from 4.63%. The new funds would have been earmarked for K-12 and college education, which make up over 40% of the state's general fund budget despite a series of ongoing budget cuts.
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Had the proposed tax increase passed, it would have allowed education union officials to bypass the state's landmark Taxpayer Bill of Rights (TABOR), a measure adopted in the 1990s to help slow the growth of government by capping the state budget to the growth of population and inflation. TABOR mandates that any state revenue above this cap be sent back to tax payers. Union officials hoped to erode these spending caps by exempting education spending and by funneling new tax revenues to schools. Colorado voters rejected these efforts by a nearly 2 to 1 margin.
Colorado Governor John Hickenlooper's 2012 budget proposal reduces education spending by $89 million for K-12 schools and another $60 million for public colleges to make way for huge increases in state Medicaid spending. Medicaid enrollment in Colorado has gone up about 72% in the past six years, while general fund revenue is still low compared to pre-recession numbers. Medicaid spending accounts for $185.6 million of the $227.1 increase in the 2012 Colorado general fund.
Henry Sobanet, the governor's budget director, says the increased Medicaid spending is inevitable: "The weak economy means more people qualify for this program. It's a federal entitlement, and so people show up for the program, we are obligated to pay those bills."
Schools and higher education have been prime targets for budget cuts in recent years because they take up such a large percentage of general fund. Tuition at public colleges has increased, and some schools have had to lay off teachers, increase class sizes, and operate on a four-day-a-week schedule.
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