Post article misled on mill levy freeze, lawsuit

Summary: Reporting on disagreement among members of the Colorado State Board of Education about a lawsuit challenging the state's mill levy freeze, The Denver Post falsely claimed that Jon Caldara, who filed the suit, "is suing to let taxpayers vote on the freeze." In fact, the suit promoted by the Independence Institute asks the court to strike down the legislation. Additionally, the article reported that the measure "will add an estimated $3.8 billion to state coffers over the next 10 years" when in fact, local school districts will collect and spend that amount instead of the state.

In an April 8 article about disagreement among members of the Colorado State Board of Education over the panel's official stance on a lawsuit challenging the constitutionality of Gov. Bill Ritter's (D) mill levy freeze, The Denver Post misleadingly reported that the lawsuit's organizer "is suing to let taxpayers vote on the freeze." In fact, the suit filed December 13, 2007, by Jon Caldara, president of the "free market" Independence Institute, asks the court to strike down the freeze, enacted as Senate Bill 199 in May 2007, because it was not approved by a statewide ballot vote. As Colorado Media Matters has noted, the mill levy freeze contained in SB 199 is applicable only in the 175 (of 178) Colorado school districts that voted to waive restrictions on retaining and spending revenues mandated by the Taxpayer's Bill of Rights (TABOR) provisions of the Colorado Constitution.

Further, the Post mischaracterized the funding mechanism contained in SB 199 by reporting that the mill levy freeze "will add an estimated $3.8 billion to state coffers over the next 10 years by preventing mill levies from falling as property values increase." As Colorado Media Matters has noted, while the measure amends the Public School Finance Act of 1994 so that beginning this year many local communities will pay a greater share of public education financing, it does not impact the amount of state tax collections or refunds. Rather, it redistributes sources of funding between the state and individual school districts.

From The Denver Post's April 8 article by Jessica Fender, "Sunshine law abused, say critics of ed board":

When deciding whether to fight or effectively bow out of a lawsuit challenging a politically volatile property tax freeze, the state's education board opted for secret meetings instead of a public vote, records show.

E-mails obtained Monday by The Denver Post reveal internal turmoil between a cadre of Republican members, who argue that the governor-backed freeze is unconstitutional, and the panel's Republican chairwoman, who has blocked attempts at public discussion.

[...]

Lawsuit organizer Jon Caldara, of the free-market think tank the Independence Institute, said an on-record vote would put the publicly elected board members at odds with either Gov. Bill Ritter or the taxpayers. Caldara is suing to let taxpayers vote on the freeze.

If the board, on which Republicans hold a 4-3 majority, sided with the plaintiffs, it would leave Ritter as the only defendant backing the tax freeze, which will add an estimated $3.8 billion to state coffers over the next 10 years by preventing mill levies from falling as property values increase.

Republican Attorney General John Suthers has already opined that the freeze violates the state constitution.

"Whether or not to fight a lawsuit is a matter of public interest," Caldara said. "There's no way you just 'know' how the board feels. The only way you know is by an on-record vote."

Contrary to the Post's claim that "Caldara is suing to let taxpayers vote on the freeze," on December 14, 2007, the Rocky Mountain News reported:

The lawsuit asks a Denver District Court to strike down the new law, arguing it amounts to a tax policy change and should have gone to the voters as required by the Taxpayer's Bill of Rights.

"This bill has to do with respecting the taxpayers and asking them first before the state takes money out their pockets," said Caldara, president of the Independence Institute, a think tank based in Golden. [emphasis added]

As Colorado Media Matters has noted, in its December 14, 2007, article about the lawsuit, the Post reported that the freeze applies only to districts that voted to allow the retention of mill levy revenues above limits set in the state constitution:

A provision in the Colorado Constitution forces mill levies -- the rate at which property tax is charged -- to drop as property values rise. That, combined with the effects of other provisions in the constitution, have pushed a greater share of public-school funding onto the state.

The state now pays for about 64 percent of school funding, as opposed to about 54 percent a little more than a decade ago, according to a Department of Education budget briefing presented last week.

The rate freeze means mill levies will be higher than they would have been in 106 districts, lower than they would have been in 34 districts and unchanged in 38 districts, according to last week's briefing. The freeze applies only to districts where voters have decided to shed certain Taxpayer's Bill of Rights, or TABOR, rules, and it also sets a mill-levy cap.

Ritter's spokesman, Evan Dreyer, said the freeze did not need to go to an election because voters in the districts where it applies have already decided to break free of TABOR.

"The question had already been asked and answered in 98 percent of the state -- 175 of 178 school districts," Dreyer said.

Further, contrary to the Post's April 8 assertion that the mill levy freeze "will add an estimated $3.8 billion to state coffers over the next 10 years by preventing mill levies from falling as property values increase," the $3.8 billion is in fact the amount that the state would have paid to support local school districts. Under the mill levy freeze, which redistributes the burden of public school funding, local school districts will collect and spend that amount instead. According to S.B. 199's fiscal note, prepared by the nonpartisan Colorado Legislative Council Staff, "As amended, the bill freezes school finance mill levies, allowing a greater portion of school finance act funding to be paid from local property taxes in districts where voters have approved a ballot question allowing the district to retain revenue in excess of its constitutional limit." The fiscal note further states:

Summary of Legislation

As amended, the bill modifies several laws affecting public schools, including the Public School Finance Act of 1994. Specifically, the bill makes the following changes, which are described in greater detail in the State Expenditures section:

• increases the statewide "base" per pupil amount by 4.6 percent to match inflation plus 1 percent, as required by the state constitution;
• freezes the school finance mill levy for many school districts and caps the levy for other districts at 27 mills;
• adds 2,000 preschool slots in FY 2007-08 and another 3,500 slots in FY 2008-09, bringing the total to 19,860;
• increases the minimum per pupil funding amount over 2 years to 95 percent of statewide average per pupil funding; and
• increases funding for the national credential fee assistance by $25,000.

[...]

Freezing mill levies and setting a cap on levies at 27 mills will reduce the need for state expenditures for school finance by $47.4 million in FY 2007-08 and $47.8 million in FY 2008-09. Under current law, a school district's mill levy under the school finance act is based on the levy imposed in the prior year, unless that levy would generate more property tax revenue than allowed under the act, in which case the district's levy is reduced. As amended, the bill freezes school finance mill levies, allowing a greater portion of school finance act funding to be paid from local property taxes in districts where voters have approved a ballot question allowing the district to retain revenue in excess of its constitutional limit. For districts with school finance levies greater than 27 mills, the bill sets a cap on the school finance act mill levy at 27 mills. [emphases added]

—E.B.