If Referenda C and D fail this November, Colorado taxpayers and business owners stand to make an economic gain, but if the ballot items pass, they stand to gain a whole lot more – eventually.
That’s according to an economic analysis by Southern Colorado Economic Forum and University of Colorado at Colorado Springs economists Fred Crowley and Tom Zwirlein.
Referendum C asks voters to allow a five-year suspension of state government spending limits and mandated refunds. The suspension would allow the state to keep an estimated $3.7 billion, which would be earmarked for education, health care and transportation.
Referendum D asks voters to allow the state to use Referendum C money to borrow about $2 billion, which would be used for education spending and road projects.
Referenda C and D support and opposition groups have come out in force on television, radio and billboards, promoting their positions using a few facts that can be packed into limited space.
Zwirlein called the ads emotionally based arguments.
“We just got tired of all the rhetoric,” he said. “We simply wanted to look at the bottom-line impact of it.”
Crowley agreed that was the motivation for the study.
The UCCS analysis weighed the pass/fail benefits in the areas of job creation, wages, property tax income, proprietor’s income and indirect business taxes.
If the tandem measures fail and refunds go to residents, the UCCS analysis projects the state will see marginal benefits, mostly from increased commerce and revenue from sales taxes.
If voters approve the referenda and agree to let state keep the money, it will act as an investment, resulting in significantly more jobs and higher wages, along with tax revenue, according to the study.
The study used the Input/Output method to measure economic intervention.
The method was devised in the 1930s by Russian student Wassily Leontief, who later became a Harvard professor and used Input/Output as a predictor of the American economy. The method won him the Nobel Prize in 1973.
The Southern Colorado Economic Forum used an Input/Output method developed by the Minnesota-based IMPLAN group that allows a number of economic variables to be entered to render final impact computations.
While Input/Output is widely used in the United States to predict economic development impacts, Crowley acknowledged that some people have pointed out flaws.
Nonetheless, it’s still a valuable economic measuring tool, he said.
“It’s one method we can use to study the impacts, especially if we want to put emotion aside,” he said.
Crowley said that even though long-term benefits of approving Referenda C and D outweigh defeating them, it’s important to note that positive impacts to the study areas are expected even if voters defeat the ballot measures.
In the area of employment, about 6,000 new jobs are expected each year during the next five years if C and D are defeated. If the measures pass, more than 19,000 jobs are expected to be created each year, according to the study.
Employment wages are predicted to climb $184.5 million a year if the measures fail and $636.9 million if they pass, according to the study.
Crowley explained that if tax refunds are given to residents, their purchasing power will increase and both business and government will see benefits from sales and sales tax revenues.
But, if tax refunds are retained by the government and spent to construct roads and schools, more jobs will be created and business and government will see even greater revenue in the coming years.
If C and D pass, Crowley estimated that the overall benefit of the government investment would amount to an 8.5 percent return.
“That’s not a bad return no matter who you ask,” he said.
Still, come Nov. 1, it will be a question of whether voters will want to forego future state investments and keep their tax money, claiming more immediate financial benefits.
“It’s true,” Crowley said. “It will be their choice.”
–Rob.Larimer@csbj.com

If Referenda C and D fail this November, Colorado taxpayers and business owners stand to make an economic gain, but if the ballot items pass, they stand to gain a whole lot more – eventually.

That’s according to an economic analysis by Southern Colorado Economic Forum and University of Colorado at Colorado Springs economists Fred Crowley and Tom Zwirlein.

Referendum C asks voters to allow a five-year suspension of state government spending limits and mandated refunds. The suspension would allow the state to keep an estimated $3.7 billion, which would be earmarked for education, health care and transportation.

Referendum D asks voters to allow the state to use Referendum C money to borrow about $2 billion, which would be used for education spending and road projects.

Referenda C and D support and opposition groups have come out in force on television, radio and billboards, promoting their positions using a few facts that can be packed into limited space.

- Advertisement -

Zwirlein called the ads emotionally based arguments.

“We just got tired of all the rhetoric,” he said. “We simply wanted to look at the bottom-line impact of it.”

Crowley agreed that was the motivation for the study.

The UCCS analysis weighed the pass/fail benefits in the areas of job creation, wages, property tax income, proprietor’s income and indirect business taxes.

If the tandem measures fail and refunds go to residents, the UCCS analysis projects the state will see marginal benefits, mostly from increased commerce and revenue from sales taxes.

If voters approve the referenda and agree to let state keep the money, it will act as an investment, resulting in significantly more jobs and higher wages, along with tax revenue, according to the study.

The study used the Input/Output method to measure economic intervention.

The method was devised in the 1930s by Russian student Wassily Leontief, who later became a Harvard professor and used Input/Output as a predictor of the American economy. The method won him the Nobel Prize in 1973.

The Southern Colorado Economic Forum used an Input/Output method developed by the Minnesota-based IMPLAN group that allows a number of economic variables to be entered to render final impact computations.

While Input/Output is widely used in the United States to predict economic development impacts, Crowley acknowledged that some people have pointed out flaws.

Nonetheless, it’s still a valuable economic measuring tool, he said.

“It’s one method we can use to study the impacts, especially if we want to put emotion aside,” he said.

Crowley said that even though long-term benefits of approving Referenda C and D outweigh defeating them, it’s important to note that positive impacts to the study areas are expected even if voters defeat the ballot measures.

In the area of employment, about 6,000 new jobs are expected each year during the next five years if C and D are defeated. If the measures pass, more than 19,000 jobs are expected to be created each year, according to the study.

Employment wages are predicted to climb $184.5 million a year if the measures fail and $636.9 million if they pass, according to the study.

Crowley explained that if tax refunds are given to residents, their purchasing power will increase and both business and government will see benefits from sales and sales tax revenues.

But, if tax refunds are retained by the government and spent to construct roads and schools, more jobs will be created and business and government will see even greater revenue in the coming years.

If C and D pass, Crowley estimated that the overall benefit of the government investment would amount to an 8.5 percent return.

“That’s not a bad return no matter who you ask,” he said.

Still, come Nov. 1, it will be a question of whether voters will want to forego future state investments and keep their tax money, claiming more immediate financial benefits.

“It’s true,” Crowley said. “It will be their choice.”

–Rob.Larimer@csbj.com

Summary of Referenda C&D passing vs. failing
C&D fail C&D pass Difference
(TABOR surplus refunded) (Colorado uses surplus)
New jobs created 6,518 jobs 19,422 jobs 13,265 jobs
Overall wage growth $184.5 m $636.9 m $452.40 m
Property income growth $103 m $119 m $16 m
Business income growth $21.2 m $46.7 m $25.5 m
Indirect business tax growth $27.9 m $30.9 m $3 m
Total $741.3 m $1,320.9 m $576.6 m
Source: UCCS and Southern Colorado Economic Forum