A fascinating story by the Colorado Springs Gazette‘s Megan Schrader will make this year’s already difficult campaign to raise taxes by a billion dollars even more difficult.
The headline itself pretty much sums it up: “Flush with cash, Colorado officials back tax hike.”
Schrader reports that the state’s coffers swelled by $1.1 billion this year, essentially undermining the entire argument for raising taxes.
After some lean recession years, this year Colorado lawmakers were swimming in cash – a $1.1 billion pool of unspent dollars over what budget forecasters had predicted…
The 2012-13 fiscal year had a huge surplus – $1.1 billion – all of which will go into the state Education Fund – an account which receives about 7.5 percent of the state’s income tax revenue directly for the sole use of education. And the June revenue forecast estimated about $112.1 million in surplus will go to the fund at the end of the 2013-14 fiscal year.
“The Education Fund is healthier than it’s been in years,” [Democratic Senator Pat] Steadman said.
It is expected to get healthier. At the end of the 2013-14 fiscal year the Education Fund is expected to have $1.6 billion in reserves.
How is the tax hike campaign going to make the argument that education is severely underfunded when the “Education Fund” is expected to have $1.6 billion in reserves by the end of next school year?
There will be a lot of numbers tossed out during the tax hike campaign, but one set will make things pretty clear for the Colorado electorate: we have a billion dollars more this year than last, so why do we need another billion from a tax increase?
THE STATE WITH AN EXTRA BILLION FACES SUCH A FINANCIAL "CRISIS" THAT IT IS FORCED TO BREAK ITS CONTRACTS.
A PENSION COLA IS SIMPLY A METHOD OF DELIVERING A DEFINED PENSION BENEFIT.
USE OF THIS METHOD DOES NOT JUSTIFY BREACH OF PENSION CONTRACTS.
Three years ago, a majority of Colorado legislators decided to attempt to break state contracts to cut the debt of Colorado state and local governments. In 2010, Colorado legislators passed a bill, SB10-001, that attempts to discard the obligation of Colorado governments and the state's pension system, Colorado PERA, to pay cost-of-living (COLA) increases due retirees under their state pension contracts. Retirees in the Colorado PERA pension system, unwilling to allow the State of Colorado to take one-third of their contracted PERA pension benefits, immediately filed a lawsuit (Justus v. State.) Last year, the Colorado Court of Appeals agreed with the retirees that Colorado state and local governments have a contractual obligation to pay the annual cost-of-living adjustments due under the retiree's contracts. The Court of Appeals also decided that (since the matter has not yet been heard by a jury) the retiree's lawsuit should be sent back to the trial court (Denver District Court.) The trial court was ordered to determine if the Colorado General Assembly's breach of Colorado PERA contracts in 2010 was "reasonable," or "necessary." Immediately after the Court of Appeal's ruling last year, both the PERA retirees and the State of Colorado appealed the Court of Appeal's decision to the Colorado Supreme Court. Both the plaintiffs and the defendants in the case are currently waiting to see if the Colorado Supreme Court will take the case, or send it back to the Denver District Court to make a determination as to "reasonableness" and "necessity."
http://saveperacola.com/
In 2010, a majority of Colorado legislators decided to attempt to break Colorado PERA pension contracts to free up money for "discretionary" state and local public programs. Although the constituents of these state legislators want public services (good roads, education, police and fire protection) they do not want to pay for these services. Incredibly, many of the constituents of Colorado legislators do not want to pay for public services that they have already consumed. Therefore, they encouraged Colorado legislators to break Colorado PERA pension contracts.
For some reason, in 2010, a majority of Colorado state legislators arrived at the conclusion that Colorado's public pension contracts are inferior to the state's corporate contracts. If there is a threat to the financial well-being of the State of Colorado (i.e., the state with an extra billion dollars to spend next year) all Colorado contracts should be on the table, not just one set of contracts.
Like salary, Colorado PERA pension COLA benefits are compensation for work performed; specifically "deferred compensation," presently earned. When a Colorado PERA member has completed the job, and finished earning her salary, her employer cannot retroactively take that salary from her. Her right to receive her earned salary is plainly a contractual obligation of her employer. The pension benefits that this PERA member earns each day are, similarly, a contractual obligation of her employer.
For each day that a Colorado PERA member works she is entitled to know precisely what she is earning that day. She deserves to know both the salary and the pension benefit that she earned in exchange for her day of labor. When her day of work is complete, her employer cannot retroactively change the agreement. Her compensation for the day of work is defined, just as her deferred pension compensation is defined in Colorado law. As we have seen, deferred compensation due Colorado PERA members must stand "immutable for work already performed."
A public pension COLA is simply a method by which a defined pension benefit is provided. There is nothing inherent in this "method" (provision of a pension COLA) that negates its essence as a contractual obligation of Colorado PERA-affiliated employers.
Colorado PERA active and retired members. Help restore some degree of rationality to discussion of Colorado PERA public pensions. Contribute at saveperacola.com, and "Friend" Save Pera Cola on Facebook!
How many billions do they need? Shameless actions by the Co Legislature. $1.6 Billion in "Educational Fund Reserves" next year and yet they want another $1.1 Billion?
Back to it is not an money issue it is a spending problem. Tell the state house and senate NO when it comes to the tax hike bill in November.