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The focus of the Nov. 3 election might be candidates vying for national and local offices, but the 2020 ballot is also packed with issues that voters are being asked to decide.

The ballot contains 11 statewide measures. Voters in Colorado Springs will be deciding three questions, and several other local jurisdictions are seeking passage of local issues.

They cover a range of important topics from abortion to voting and taxes.

The measures propose changes to the state’s constitution and laws; several ask for approval of new taxes and retention of revenue above constitutional limits.

Among the most important measures in terms of their direct effect on businesses are Amendment B, which would repeal the Gallagher Amendment that determines the rate of residential and nonresidential property taxes; and Proposition 118, which proposes a paid family and medical leave insurance program.

The names of the state measures reflect how they came to be placed on the ballot and indicate the vote required for passage.

Amendments are measures placed on the ballot by the state Legislature and are assigned alphabetic designations, while measures referred by the Legislature that would amend state statutes or are referred as tax questions are called propositions and designated by a double letter.

Measures reaching the ballot through a signature collection process aiming to amend the constitution are also called amendments but are assigned numerical designations. If a citizen-referred measure seeks to amend state statutes, it’s labeled a proposition, followed by a number.

Passage of constitutional amendments requires a 55 percent majority vote, except that repeal measures require only a simple majority to pass.

Here’s a breakdown of nine significant issues on the 2020 ballot.

AMENDMENT B: REPEAL GALLAGHER AMENDMENT

Since 1982, residential and nonresidential property taxes have been calculated by a formula set out in the Gallagher Amendment to the state’s constitution.

Prompted at the time by rising residential property taxes, the amendment specified that the total taxable value of residential property can make up no more than 45 percent of the state’s property tax base, leaving nonresidential property owners such as businesses to make up the 55 percent.

Because valuations change, the state must periodically recalculate the ratio and adjust property tax rates.

In practice, residential property taxes are adjusted by raising or lowering the assessment rate, which is the percentage of a property’s value on which property taxes are levied. 

Over time, residential property tax rates have dropped, because residential property values have increased faster than nonresidential values. It’s why Colorado homeowners enjoy some of the lowest property taxes in the country.

Residential assessment rates have declined from about 21 percent when Gallagher was passed to 7.15 percent in 2019. Businesses, however, are assessed at a fixed 29 percent of property value.

The result is that businesses pay an effective tax rate about four times higher than residential property owners, and the gap is expected to widen if the current rules continue.

Amendment B would repeal the 29 percent nonresidential assessment rate, as well as the requirement to periodically change the residential property tax assessment rate.

“Gallagher is something that the business community has hated for decades,” said Rachel Beck, vice president, government affairs for the Colorado Springs Chamber & EDC. “If we can repeal that, that’s going to be some much needed relief to businesses in terms of costs.”

Although businesses have had some temporary tax relief during the pandemic, it’s especially important that they get this relief under Amendment B now because so many businesses are struggling to survive, Beck said.

A companion measure passed by the Legislature freezes assessment rates at their current levels. Businesses are not happy about that, but Amendment B is considered a first step.

“The real benefit here is just to stop the bleeding so that it doesn’t get worse,” Beck said. “The Legislature did talk about possible steps to follow.”

Passage of Amendment B would also prevent automatic increases in local mill levies on nonresidential property that some jurisdictions have adopted to offset revenue losses from residential property tax rate declines. 

According to the chamber’s 2020 voting guide, Gallagher has “resulted in fewer dollars for K-12 education and services like fire, police, water and hospitals.” Rural communities, where property values have not risen as much as they have along the Front Range, have been hurt the most.

The amendment’s passage also would be a step toward streamlining the state’s welter of tax provisions, which include TABOR, Amendment 23, Gallagher and some minor provisions.

“Our state budget is kind of a mess,” Beck said. “Part of the reason is all these conflicting formulas, and mandates in the state constitution that compete with each other. … Maybe that means there’s hope in the future to clean that up a bit and address some of those long-standing problems that so affect our state budget and take away the flexibility to respond to Colorado’s needs.”

Opponents of Amendment B state that the current system keeps residential property taxes low and that many homeowners already are paying higher property taxes because of increases in the value of their homes.

AMENDMENT C: CONDUCT OF CHARITABLE GAMING

Amendment C would allow nonprofit organizations that have operated in the state for at least three years to apply for a bingo-raffle license and to hire outside managers and game operators. 

The constitution currently mandates five years’ operation to apply for a license. It also requires workers be unpaid volunteers and members of the organization.

According to the State Legislative Council, passage of Amendment C would increase state revenue by about $5,000 a year, beginning in Fiscal Year 2020-21. The increase is a result of additional application fees as more organizations could apply for bingo-raffle licenses, a service that carries a $100 fee per application. Revenue from increased administrative fees would also be possible. 

The amendment is estimated to increase state spending by about $83,000 in 2020-21 in order to process additional licenses, including additional compliance investigations.

Proponents of Amendment C say that passage would help more nonprofit organizations raise funds to support their programs.

Opponents view the amendment as “professionalizing” bingo-raffle operations, which is contrary to the charitable purposes of nonprofits, and that paying workers would reduce the funds organizations are able to raise.

AMENDMENT 77: LOCAL VOTER APPROVAL OF CASINO BET LIMITS

Amendment 77, placed on the ballot through a citizen initiative, seeks to allow voters in Black Hawk, Central City and Cripple Creek to change bet limits and approve new casino games.

It also would expand the current use of casino tax revenue for community colleges to include student retention and completion programs.

Colorado voters approved a constitutional amendment in 1990 allowing limited stakes casino gambling in the three mountain towns. Its purpose was to preserve their heritage and shore up their crumbling economies by fostering economic development.

The amendment allowed bets of up to $5 on slot machines, blackjack and poker. 

A constitutional amendment in 2008 raised the stakes to a maximum of $100, allowed casinos to operate roulette and craps games and extended permitted hours of operation. Today many of the state’s nearly 40 casinos are open 24 hours a day.

Amendment 77 would remove restrictions on bet amounts and the types of games casinos could offer, starting May 1, 2021.

Proponents say that passage of the amendment likely would generate additional tax revenue that would benefit community colleges, Gilpin and Teller counties and the cities of Black Hawk, Central City and Cripple Creek. 

Opponents state that the amendment does nothing to address the problems of gambling addiction and negative social impacts, since it does not allocate any of the new tax revenue to addressing these issues.

Additionally, opponents say expanded casino gambling could negatively impact communities outside the three mountain towns, including traffic and driving while intoxicated, while not allowing voters outside those communities to have a voice in regulating gambling.

The amendment would apply only to casino gambling in the three mountain towns.

Legal casino gambling run by the Southern Ute and Ute Mountain Ute tribes in the Four Corners area would not be affected. Neither would gambling on horse and dog races, the state lottery or bingo and raffles operated by nonprofit organizations.

PROPOSITION EE: TAXES ON NICOTINE PRODUCTS

In July, the Colorado Legislature passed House Bill 1427, which enacted new taxes on cigarette and tobacco products.

But because all tax increases require voter approval under the state constitution, the legislation has been put to voters through Proposition EE.

If approved, the measure would increase taxes on cigarettes and tobacco products and create a new tax on nicotine products, including electronic cigarettes used for vaping. 

The additional tax revenue would be used to fund expanded preschool programs, as well as K-12 education, rural schools, affordable housing, eviction assistance, tobacco education and health care.

Cigarettes currently are taxed at 4.2 cents per cigarette, or 84 cents for a 20-cigarette pack. Other tobacco products, like chewing tobacco, cigars and snuff, are taxed at 40 percent of the manufacturer’s suggested retail price. Nicotine products are only subject to state sales tax. 

If Proposition EE passes, new taxes would incrementally phase in from 2021 through 2027, generating up to $175 million in revenue for state budget year 2021-22, and up to $275 million beginning in 2027-28, when the new tax rates have reached their maximum.

If the percentage of the state’s adult smokers remains constant at 14.5 percent, each will pay an additional $222 in 2021-22, and $291 in 2027-28.

Opponents of Proposition EE, including the group A Bad Deal for Colorado, say the additional taxes would impose an unfair financial burden on tobacco consumers, many of whom are low-income. It could also hurt businesses that sell tobacco products. 

Opponents argue the state should not be dependent on tax revenue from a specific, addictive product to fund services. 

Supporters of the measure argue that Colorado has one of the highest rates of youth vaping in the country while also having one of the nation’s lowest tax rates on cigarettes — 39th in the country, according to a June report by the Campaign for Tobacco-Free Kids.

Supporters see the proposition as a way to generate much-needed funding for public education, as the COVID-19 pandemic has forced a 10 percent decrease in the state share of public school funding for the 2020-21 school year. 

Michele Ames, a spokesperson for Yes on EE, said aside from the proposition’s public health benefits, there are potential long-term benefits for Colorado businesses.

She said another funding source for Colorado public education will free up more from the General Fund for infrastructure and other state programs. She added that funding to preschools, which would kick in after July 2023 and include at least 10 hours per week of free preschool for every child in the state during their final year before kindergarten, would help working families.

PROPOSITION 116: STATE INCOME TAX RATE REDUCTION

The passage of Proposition 116 would mean reducing Colorado’s state income taxes from their current rate of 4.63 percent to 4.55 percent in 2020 and beyond.

The state’s income tax rate has been flat since 2000. All taxpayers pay the same rate regardless of taxable income.

State income taxes are the main source of Colorado General Fund revenue, which is the primary resource for funding state government operations.

In budget year 2018-19, state income tax generated $9.2 billion, accounting for 67 percent of General Fund revenue.

If Proposition 116 passes, it is expected to reduce state income tax revenue by $203 million in budget year 2020-21, and $154 million in budget year 2021-22. The first-year estimate includes the measure’s full impact for tax year 2020 and half of its impact for tax year 2021, due to the timing of the change of the tax rate. 

Proponents of the measure say households and businesses struggling due to the COVID-19 pandemic will keep more of their money. They argue Colorado can handle a tax decrease after years of budget growth.

Opposition says reducing state revenue will further exacerbate the current economic crisis by forcing additional cuts to the state budget. They point out most of the measure’s benefits will go to a small population of high-earning taxpayers, including corporations. 

About 75 percent of Colorado taxpayers would see a tax cut of less than $50 per year, whereas those with incomes over $500,000 — representing less than 2 percent of state taxpayers — would receive more than half of the total tax savings.

PROPOSITION 118: PAID FAMILY AND MEDICAL LEAVE INSURANCE PROGRAM

The Paid Family and Medical Leave Insurance Program, posed to voters as Proposition 118, would allow eligible Colorado employees to take up to 12 weeks of paid family and medical leave insurance benefits beginning in 2024. 

It would create job protections for employees who take leave in specific circumstances, including serious health conditions, caring for a new child, caring for a family member with a serious health condition, a family member’s active-duty military service and reasons related to domestic violence, stalking and sexual assault.

To finance the program, employers and employees would be required to pay a payroll premium beginning in 2023.

The premium rate would be based on an employee’s taxable wages and initially set at 0.9 percent of wages per employee in the program’s first two years, with employers paying at least 50 percent of the premium and workers paying the remainder.

Employers and employees would each pay approximately 0.45 percent of an employee’s wage, and the average Colorado worker would pay $3.83 per week.

But beginning in 2025, the program director would have the option to raise the premium to 1.2 percent of an employee’s taxable wages.

Businesses with nine or fewer employees would not have to pay the employer portion of the premium, and local governments and employers with approved paid-leave plans would be exempt. Self-employed workers would also have the option of paying into the program to be eligible for benefits. 

The amount of benefits an eligible employee could receive would be based on their average weekly wage as compared to the state average weekly wage, set annually by the Colorado Department of Labor and Employment.

The maximum weekly benefit an individual can receive is $1,100 for leave taken in 2024, but the amount would be adjusted over time as the state average weekly wage increases.

Lower-wage workers would get up to 90 percent of their weekly wages, while higher-wage workers would qualify for less.  

The measure is expected to increase state revenue from by approximately $575 million in budget year 2022-23 (representing a half-year impact), and $1.2 billion in 2023-24.

It is projected to increase state spending by $3.2 million in 2021-22, $48 million in 2022-23, and $523 million in 2023-24.

Supporters of Proposition 118 say it will have a positive impact on the health of Colorado families and increase employment opportunities for workers, benefiting the state’s economy. According to the Bureau of Labor Statistics, only 18 percent of U.S. private sector workers currently have access to paid family leave.

“Proposition 118 means that 2.6 million Colorado workers will no longer have to choose between paying their bills and caring for a newborn, themselves or a seriously ill family member,” says the Yes on 118 website.

“Small businesses want to do right by their employees and provide them with benefits like paid family leave, but it’s often too costly for them on their own. As small businesses struggle to recover from this economic downturn, this program is part of the solution, providing an affordable paid leave option that helps level the playing field with big corporations.”

Opponents of the measure, including the Colorado Springs Chamber & EDC, say it will hurt businesses and employees by forcing them to bear the cost of an uncertain and expensive new government program. 

The chamber’s 2020 ballot guide states that the proposition would create the most expensive paid leave program in the country, as well as an expensive new state department that could be insolvent within a few years if program usage rates are higher than currently projected. 

“Now is not the time to add a new cost to employers, or to take out of employee paychecks,” Beck said.

“Nobody understands the value of employees better than employers, and what we hear from our businesses is that most of them do offer paid leave in some form,” she said. “If they don’t offer it, they often work with their employees on an individual basis because they care about them. So our problem here is not with the concept of paid family medical leave. It’s the way that this particular proposal would do it.”

COLORADO SPRINGS BALLOT ISSUE 2A: TABOR RETENTION

Voters added the Taxpayer’s Bill of Rights to Colorado’s Constitution in 1992. The amendment restricts revenue that can be collected and spent, and regulates how taxes can be raised — requiring a vote of the people for any increase.

Many, including Mayor John Suthers, support voting to increase taxes.

But the so-called ratchet-down effect, which limits local or state government revenue growth over time, has created funding problems for both state and local jurisdictions. 

“When you have a decline in revenue from one year to the next, your base from which you can grow in future years also declines,” Suthers said. “And so if you have a significant decline, it becomes an issue. … And we can only grow from that by the allowed TABOR formula amount, which over the last years that I’ve been mayor, has averaged about 3 percent per year.”

Revenue is expected to decline in 2020 due to the effects of the COVID-19 pandemic; the shortfall is estimated to be between 5 and 10 percent.

“So if we have a 10 percent decline in revenue, it’s going to take us three to four years to recover back to the 2019 level,” he said.

To offset this effect, the city is asking voters to retain the city’s 2019 revenue base going forward, rather than using the 2020 base. Doing so will allow the city to keep revenue at 2019 levels plus 3 percent, allowing the city’s revenue to grow in 2021.

“The good news,” Suthers said, “is that when it’s all said and done, Colorado Springs is going to wind up being among the most resilient large cities in America in terms of dealing with the COVID crisis and in particular, the economic shortfall. … While we have 200 less employees, we haven’t had any major, noticeable reductions in services to our citizens. But then 2021 becomes the issue. 

“Basically, 2A allows us to be even more resilient and get through this COVID economic crisis in really amazingly good shape.”

Ballot Issue 2A also would allow the city to retain $1.9 million in 2019 revenue that exceeded the 2019 TABOR limit.

“That’s to help us through 2021,” Suthers said. “It has to be used for public safety.”

Suthers said the funds likely will be used to train Colorado Springs Police Department recruits.

“We have higher-than-ordinary police department attrition right now,” due primarily to accelerated retirements, he said. As a result, the city will need to expand training at the police academy, especially in 2021.

“It’s going to be more expensive, and we’ll be able to use that $1.9 million to help defray that additional, one-time expense,” he said.

The overall benefits of Ballot Issue 2A will be to “help us be as resilient as we possibly can be without any kind of a tax increase,” Suthers said. “A healthy city budget-wise is good for the business community … in terms of public safety and critical public infrastructure and providing appropriate services.”

Opponents of 2A say voters already provided a permanent public safety sales tax increase and that sales taxes in Colorado Springs are the highest of Colorado’s bigger cities.

The El Paso County voter guide states city revenue slowed this year because “politicians shut down business and fired tens of thousands of people” and should not be allowed to keep excess revenue to make up for their mistakes.

COLORADO SPRINGS BALLOT ISSUES 2B AND 2C: PARKLAND

Competing ballot measures 2B and 2C both deal with the sale or trade of public parkland. If passed, 2B would mandate a citywide vote before city-owned parkland can be sold or traded to a private entity; 2C would enable a super-majority of city council members [seven of nine] to make that decision.

Only one measure can become law — if both 2B and 2C are passed by voters, the one with more votes would go into effect.

The Protect Our Parks coalition, which is spearheading the effort to pass 2B, says its initiative gives more power to voters and less to politicians.

Its website notes that more than 80 percent of Colorado cities already require a public vote to exchange parklands to a private entity. 

“This is the same requirement that exists in the majority of Colorado cities and towns including Denver, Aurora, Arvada, Longmont, Boulder, Manitou Springs, Woodland Park, to name only a few,” the website says.

“These cities thrive and protect their parks with a required vote of the people on any conveyance of their parkland. A yes vote on 2B means we can thrive and vote on protection of our parklands too.”

Supporters of 2C, including the Colorado Springs Chamber & EDC, say the measure provides more protection for parks, as citizens want, while maintaining city council’s flexibility to act on land deals quickly.

“Cost is the major factor,” Beck said, “and also concerns about slowing down deals that maybe are time sensitive.”

The Trails and Open Space Coalition has also endorsed 2C, explaining in a post on its website that its board of directors supported the supermajority approach, though not unanimously.

“The majority felt the Parks Advisory Board has done a good job over the years deliberating over staff proposed land exchanges involving parks. Many are complicated and require careful, considerable discussion,” the post said.

“Under ‘Protect our Parks’, all land exchanges would require a public vote which could require a special election and cost around $300,000 to conduct. Our Board had concerns given our cash-strapped parks department.”

TOWN OF MONUMENT BALLOT ISSUE 2E: SALES AND USE TAX INCREASE

Monument’s Issue 2E would increase local sales and use taxes exclusively to fund the Monument Police Department, police programs and facilities.

If approved, the town would impose an additional sales and use tax of 0.5 percent — raising its current rate from 3 percent to 3.5 percent — translating to $1.4 million in tax revenue funding in 2021.

In a resolution issued by Monument’s board of trustees in August, Monument has grown by 34 percent in the past 10 years. During that time, the number of incidents requiring police response has risen 53 percent.

“But due to a lack of a dedicated revenue source,” the resolution said, “the police department’s staffing levels have not kept up with the growth and service demand.”

The ballot issue has been endorsed by the Tri-Lakes Chamber of Commerce in its 2020 ballot guide, which notes the town’s “quaint, small town feel is an important component to drawing business to the community.”

“There is a direct link from crime to the level of economic development,” said Terri Hayes, president and CEO of the Tri-Lakes Chamber of Commerce. “Our community has grown considerably and with that comes an expected increase in crime. We have, right now, a great reputation for being a safe community and to us, maintaining that reputation is key to keeping our current population numbers and also our residents who support local business. A fiscally healthy police department is key to a well-run community, and a well-run community is a place where people want to live and have a business.”

 

Reporter

Jeanne Davant is a graduate of the University of North Carolina. She worked for daily newspapers in D.C., North Carolina and Colorado, and has taught journalism and creative writing. She joined the Business Journal in 2017.

Reporter

Zach Hillstrom is a Colorado Springs native and graduate of Colorado State University-Pueblo. He has worked as a reporter for Southern Colorado print outlets since 2015.