GOP fans embers of 6 percent cap as Ritter douses it

By Jason Kosena
THE COLORADO STATESMAN

The controversy surrounding the Arveschoug-Bird limit — a legislative provision that, for the past 18 years, has allowed the state’s General Fund to grow by only 6 percent each year — seems destined to continue forever.

Gov. Bill Ritter shakes the hand of Rep. Don Marostica, R-Loveland, while handing him one of the pens he used to sign SB 228.
Photo by Jason Kosena
The Colorado Statesman

It certainly showed no sign of abating by Wednesday morning, as Gov. Bill Ritter signed Senate Bill 228, repealing the 1991 growth limit. In a Fort Collins debate only a few days earlier, Republican lawmakers had continued to assail the repeal — and its GOP sponsor.

During the hour-long League of Women Voters debate, Rep. Cory Gardner, R-Yuma, and Sen. Kevin Lundberg, R-Berthoud, took turns discrediting the legislation, while the bill’s House sponsor, Rep. Don Marostica, R-Loveland, supported by Rep. Randy Fischer, D-Fort Collins, returned each volley in its defense.

The Republicans saw Arveschoug-Bird extinguished when SB 228 passed back in April, but they continue to fan the embers.

Calling the repeal of the 6 percent spending limit an “illegal, unconstitutional, bait-and-switch,” Gardner and Lundberg promised the passage of SB 228 would undoubtedly grow the size of state government.

As he did during the legislative session, Marostica returned each shot as it came, asserting that the bill will neither raise taxes nor increase spending. Instead, he said, it will allow the state more control over budgeting during hard economic times.

Both sides remained adamant.

At issue are the nuances. Unlike the Arveschoug-Bird limit, which restrains the state’s General Fund growth to 6 percent each year, SB 228 links spending growth of the General Fund to 5 percent of the state’s personal income growth. It also sets up a rainy day fund and guarantees funding for transportation while eliminating the “ratchet effect” caused by the 6 percent limit, which hinders recovery from recession once the economy has improved.

When Ritter signed the legislation into law this week, he called it a large step forward in “modernizing Colorado’s state budget” and hailed its effort to resolve conflicting budget requirements that have been written into the state Constitution over the years.

Gov. Bill Ritter signs Senate Bill 228 into law Wednesday in Denver.
Photo by Jason Kosena/The Colorado Statesman

“This modernization act levels the playing field,” Ritter said. “This is a fiscally responsible measure that maintains one of the nation’s tightest caps on spending and does not raise taxes. It simply provides greater flexibility so the state can make wiser investments with existing resources.”

Ritter was referencing the intricacies of the bill, which, instead of raising taxes, implements a shift in how existing state revenue is used by allocating more money to the General Fund.

With more money in the General Fund, the Joint Budget Committee will have greater flexibility to fund such state programs as higher education, among others. Formerly, the 6 percent spending cap forced excess revenue to be used only on prescribed services such as transportation and capital construction.

Republicans, however, argue that the fatal flaw is in the details. By allowing more money to be spent in the General Fund on state programs, the Legislature will find itself in a better position to raise fees to fund state services such as transportation, which will result in additional state spending in a roundabout way. And, because TABOR requires residents to approve tax increases in order to pay for state programs but does not require a vote to increase fees to fund state services, the result of SB 228 in the long run will be higher government spending.

The GOP argument was validated at least in part during the 2009 legislative session. Backed by Democratic lawmakers, Ritter supported legislation raising fees on a number of state services, including the FASTER bill, which implemented a new car registration fee estimated to generate $250 million in new revenue annually for road construction.

“If the Legislature decides it wants to spend more money beyond the (Arveschoug-Bird) 6 percent limit on the General Fund, it can do that by asking the voters for a tax increase,” Gardner said. “But, when it comes to the FASTER bill, if you are struggling to make ends meet in Colorado, you just got hit with a massive fee increase on your vehicles to pay for roads in Colorado. Hundreds of millions of dollars are being raised now in fees, not by a tax.

Gov. Bill Ritter shakes the hand of state Treasurer Cary Kennedy during the Senate Bill 228 bill signing ceremony.
Photo by Jason Kosena/The Colorado Statesman

“But I think we can call it a new tax.”

Toeing the line the GOP walked throughout the legislative session, Gardner and Lundberg reiterated numerous times during last week’s debate that they believe SB 228 is unconstitutional because of the way it will, in their opinion, increase state spending beyond the limits of TABOR.

“It’s unconstitutional and it’s illegal,” Gardner said.

That depends on whom you ask. As SB 228 moved through the Legislature, Republican Attorney General John Suthers told The Colorado Statesman that he doesn’t see an adequate legal case to be made against the legislation and affirmed that he would defend the state in the event of a court challenge. As of this week, there is no indication any group is considering a battle against SB 228 on legal grounds.

While in Fort Collins, Marostica, who has become a target in his own caucus for sponsoring the bill, pulled out his usual charts. They show the General Fund’s growing spending requirements, such as Amendment 23, which guarantees increases in K-12 education each year, and how the Arveschoug-Bird 6 percent limit would have hampered the state’s ability to meet them.

“When you look at the numbers, and you add them up, I can tell you there is no way the state can continue to go down this path,” Marostica argued. “It’s just not feasible, and it’s fiscally impossible.”

Lundberg disagreed with Marostica’s premise, though, saying the state’s budget problems should not be solved by eliminating the General Fund’s spending limit but instead by eliminating the spending requirements that tie up the state’s revenue.

“The problem is not that there is a limit on spending. The problem is that we spend too much, and we have too many cost drivers that increase spending,” Lundberg said.

Rep. Cory Gardner, R-Yuma, smiles as he listens to Sen. Kevin Lundberg, R-Berthoud speak during a debate in Fort Collins on Senate Bill 228. At right is Rep. Don Marostica, R-Loveland, and to his left is Rep. Randy Fischer, D-Fort Collins.
Photo by Jason Kosena/The Colorado Statesman

“It’s impossible to discuss the spending limitations without discussing the cost drivers, like Amendment 23, which are driving the spending through automatic mechanisms that (in effect) are breaking the budget,” he continued. “To go after the spending limit first is to say that what we really want to do is grow the government without any restraint.”

As much as Gardner and Lundberg were willing to continue the debate over SB 228 weeks after it passed and days before it was signed into law, the discussion did not have an impact on the eventual result: 18 years after its passage in the Statehouse, the Arveschoug-Bird limit has joined the long list of old state laws that no longer apply.

And, taking advantage of his role as governor, Ritter got the last word on the debate.

“This is a great day for progress in our efforts, and the efforts of so many, to bring modern and sensible budgeting to the state of Colorado,” Ritter said before signing SB 228 into law.

“We (work) in Colorado under a host of 20th century budget restrictions (and) while some of these laws provide important fiscal discipline, others prevent us from doing one of our most important jobs, which is determining how to most effectively use our limited resources to best serve all Coloradans,” Ritter continued. “Regardless of what any opponent will tell you, this does not raise taxes. This will not raise spending. In fact, it is a prudent step that decreases spending during (good) times to support a rainy day fund.”

Jason@coloradostatesman.com