A couple of days ago I asked Jeff Wright why he supports Colorado ballot measures 60, 61, and 101. But I still had some questions about the measures, and I figured I should ask a critic to reply to Wright. Rich Jones of the Bell Policy Center agreed to take my questions. Note that I still haven’t formulated a position on the measures; my dad and I will be working up an article about the measures for Grand Junction Free Press.
1. Even if these measures passed, isn’t it possible for voters to approve spending at the same rate as if the measures weren’t passed? If so, then apparently the thrust of the measures is to make spending increases harder, not impossible.
Jones: No. The measures cut revenues to state and local governments and do not address spending. Because we have balanced budget requirements at the state and local levels in Colorado, revenues drive spending. As revenues are cut state and local governments would not be able to spend at the same rate let alone at increased rates. The trust of the measures is to make increases impossible. If the measures are approved, the only way voters could approve spending at the same or higher rates would be to reverse course and either vote against the revenue reductions contained in them or approve revenue increases.
2. Wright claims that it’s totally possible to finance long-term projects through annual revenues, rather than through debt. In other word, according to Wright, 61 doesn’t so much restrict the types of projects funded, but alters HOW those projects must be funded. Is his point accurate?
Jones: The capital projects currently financed in Colorado have long useful lives, in many instances 30 to 50 years. In the case of water projects the useful life could be as long as 50 to 100 years. It makes sense to borrow the money to build them now and pay them off over time. We need them now and we can use revenues that we will receive over time to pay them off. In this way the people who will benefit from the projects today pay part of the costs as do those who will benefit from them in the future. Students in college today will benefit from a new classroom building as will the students 20 years from now and both should pay a portion of its costs. Current residents who receive water from a water project benefit from the project as will those who will be getting water 20 to 30 years from now and both should pay for the costs of the project. In this way we are using annual revenues to pay off the bonds used to finance the projects.
It would be near impossible to build a large scale project such as a bridge one year at a time and pay for it with annual revenues. I doubt you would find many contractors willing to take on such a project and I doubt that it would be feasible to construct it in such a way. It would be like trying to build your house a little bit each year. By taking out a mortgage you are able to live in the house while you pay it off thus getting immediate benefits.
Below are links to several web sites that contain information that we prepared on the effects of the three proposals.
www.bellpolicy.org – Our web site
www.lookingforwardcolorado.com – A collaborative between the Bell, Colorado Children’s Campaign and the Fiscal Policy Institute.
I hope this information helps.