Initiative 93 raises funds for education; lowers taxes for some small businesses, ag
May 10, 2018
As the largest school districts in the state of Colorado protested at the Capitol to demand better funding for schools, more than half of the students enrolled in the state were affected by school closures. For the most part, rural school districts were not represented. To help combat low educational funding, especially in rural areas, a group of superintendents supported the development of the Great Schools, Thriving Communities Ballot Initiative, Initiative 93, which stands to raise funds for education, while lowering taxes for some small businesses and agriculture.
The initiative, which is gathering signatures in earnest between now and the end of the school year, will create a Quality Public Education Fund dedicated to public schools. Funds will be derived on federal taxable income after deductions and exemptions, above $150,000 annually. That, in addition to the corporate tax, will raise the revenue for the fund, ultimately resulting in increased base funding for all schools, including rural schools. The corporate tax rate would see an increase of 1.37 percentage points. When combined with current federal corporation tax cuts, corporations will still see a tax savings and will leave Colorado among the 10 lowest corporate tax rates in the nations among the 44 states with corporate taxes.
According to Susan Meek, communications director for Great Education Colorado, the formula for the sustainable funding was written with rural schools in mind and takes into account full day kindergarten funding; widening the definition of at-risk students to include those who qualify for reduced lunch rates; significant funding increases for special education, English language learners, gifted and talented programs; and increased preschool funding.
"The group of organizations that worked together to develop this policy thought it important that we not only raise revenue for schools, but that revenue also needed to be sustainable," Meek said. "We also wanted to make sure there is taxpayer equity, meaning those farmers and ranchers and landowners who have been footing a large portion of the property taxes with their non-residential assessment rates, would see some tax relief as well."
Residential assessments that, at the beginning of Gallagher were assessed at 21 percent have since fallen to 7.2 percent. With the passage of the initiative, those assessments would fall and be locked in at 7.0 whereas agricultural and small business assessment, previously at 29 percent would be locked in at 24 percent. The measure only applies to property taxes levied by school districts and all other local governments are unaffected by the measure.
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Additionally, Meek said, equitable distribution across all of Colorado's districts is ensured. It relies on the current school finance act but increases base level funding for students so all students, statewide, will see an increase. Meek said a statewide education funding initiative has been difficult in previous years given the wide differences in salaries and funding, but this initiative stands to benefit rural Colorado districts and communities.
"We plan to localize information for every single school district so that individuals know what it means to them personally, in regard to tax changes, but also showing what it can do for local schools," she said.
In northeastern Colorado's Senate District 1, represented by Jerry Sonnenberg, teachers earn, on average, $10,572 below the cost of living. The district, comprised of Cheyenne, Elbert, Kit Carson, Lincoln, Logan, Morgan, Phillips, Sedgwick, Washington, Weld, and Yuma counties, is primarily agriculture based and, according to Trent Kerr, superintendent of Wiggins School District, stand to benefit with the tax cuts the initiative would bring. According to the Colorado Department of Education, the rural school districts in the northeastern corner's senate district, totaling 37 districts, include four of the five schools, located in both Elbert and Washington counties, that pay the state's lowest average salaries and no schools in the senate district pay an average salary at or above the state average.
According to Kerr, the agriculture community will be given some relief in the form of taxation. In the Wiggins District where the levy is 23.726, residential property is taxed at 7.2 percent while commercial and agricultural property are both taxed at 29 percent. Under the initiative, residential property will be taxed at 7 percent, instead of a predicted 2019 rate of 6.1 percent. Commercial property and agriculture taxation rates will drop to 24 percent. While this initiative is statewide, corporate tax does not apply to S corporations, sole proprietors or LLCs. Only C Corporations will be affected.
For farmers and ranchers in Kerr's district, an irrigated sprinkler quarter currently taxed at $372 will fall to $308, a flood irrigated quarter would drop from $292 to $241, a dryland quarter would drop from $118 to $98, and a quarter of grazed pasture would fall from $37 to $31.
"The superintendents spent the better part of two years creating a formula that is equitable to all school districts no matter the size," Kerr said. "It takes into account the number of poverty-stricken students, English language learners, gifted and talented students, and special education students, giving a certain amount of money to each. The formula also takes into account cost of living, and the size of the school, giving more money to schools with low populations."
According to Meek, the superintendents will have another opportunity in the next legislative session to get their work implemented and until a new, more equitable school finance plan is in place, the ballot initiative will utilize the existing formula, with the enhanced funding as described.
"It's not going to just help education but also rural communities that could really benefit from some of these tax policy changes," Meek said.
Initiative organizers are currently collecting the required 98,492 signatures across the state to gather the required 2 percent of registered voters in each of the 35 senate districts. In Sonnenberg's district, organizers will need 1,936 signatures. ❖
— Spencer Gabel is a freelance writer from Wiggins, Colo., where she and her family raise cattle and show goats. She can be reached at firstname.lastname@example.org or on Facebook at Rachel Spencer Media.