Shall State Taxes Be Increased? November Ballot Features Temporary Tax Increase Initiative for Public Education

by Holly Mandis

This November, a single citizen-sponsored initiative will appear on the ballot:  Proposition 103, the Temporary Tax Increase for Public Education.  State Senator Rollie Heath, who initially proposed the idea, turned in 142,000 signatures, and, on August 24, 2011, Secretary of State Scott Gessler certified Proposition 103 for the November ballot.

Proposition 103 creates a five-year “timeout” from education funding cuts.  It seeks to increase school funding by raising the sales and use tax rate from the current 2.9% to 3.0% and the state income tax rate from 4.63% to 5.0%.  These increases would be in effect from 2012 to 2017 and are anticipated to raise an additional $3 billion for schools over those five years.  The proposal allows the additional revenue to be used only for public schools and the state’s higher education system and prevents the General Assembly from using the new revenue to supplant existing funding.  The measure also establishes the amounts appropriated in fiscal year 2011-12 for public elementary and secondary schools and higher education as a floor.  The General Assembly would decide how to allocate the additional funding.

For fiscal year 2011-12, the General Assembly appropriated $3.7 billion for preschool through high school education and $624 million for higher education.  Combined, this spending on public education represents about 50% of the total general fund moneys appropriated.  Direct state funding for public education has declined in the past few years; for fiscal year 2011-12, the General Assembly made cuts of $228 million. Some of the reductions have been offset by local community tax contributions and by increases in tuition rates and fees, in addition to private donations.

Supporters of the measure say that a long-term economic recovery in the state will rely on a highly educated workforce and that businesses value a good public education system for the benefits it provides to business and its employees.  Supporters also point out that, since 2006, tuition costs for higher education for in-state students have increased by 43%, and the proposed tax increase is needed to offset those increased costs.  Proposition 103 restores tax rates to 1999 levels, and proponents argue that this very small temporary tax increase will allow policymakers additional time to implement a long-term solution for education funding.

Opponents of the measure say that raising taxes during this economic downturn will slow Colorado’s economic recovery.  Charging people and businesses more in taxes may result in lower consumer spending and business investment, and raising sales taxes disproportionately burdens lower- and middle-income consumers.  Opponents also contend that Proposition 103 lacks accountability to taxpayers, as the text of the proposal does not provide a plan for specifically how the additional funds will improve public education.  Education is a local issue, and schools are accountable to their communities.  Schools and communities can seek local options and private resources.  Higher education is an individual choice and subsequently should not be further subsidized by the state.  Finally, opponents say that Proposition 103 is an irresponsible approach to increasing education funding – if the economy fails to recover during the five-year period of the tax increase, larger cuts to other programs may be necessary to meet the minimum education funding levels set in the measure.

If recent history is any guide, Proposition 103 will face an uphill battle at the ballot box.  Other initiatives that would have raised revenue in Colorado for a variety of causes have recently been voted down, including Amendments 51, 52, 58, and 59 in 2008.  Tax increase supporters, however, are counting on a shift in the public’s priorities in 2011.  In 2010, Oregon voters upheld legislatively approved individual and corporate tax increases at the polls, while Arizona voters approved a temporary sales tax increase that the legislature placed on the ballot.  However, there are signs that the pro-tax side is also struggling.  In Georgia, a referendum set for the state ballot in 2012 to increase taxes for transportation funding is trailing in the polls, despite support of the measure by the business community.  For more information on Proposition 103, see the Legislative Council 2011 Blue Book analysis.  The supporters’ website can be found at, and the opponents’ website can be found at