IP-18-88 (September 1988)
Author: Fred Holden

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Introduction

Budget crisis or false alarm? In March 1988, Denver’s largest newspaper headlined a five-part series called Colorado Government: Running on Empty. In May 1988, the beleaguered legislature called in reinforcements, creating a citizen task force to run a six-month Vision Colorado study on how to stretch the state dollar in coming years.

But economic analyst Fred Holden draws a different conclusion from the numbers. Tracking trends through the years and the decades, comparing our state with all the others, he argues that it is Colorado taxpayers, not tax users, who are in danger of being drained dry. State spending has grown twice as fast as population and inflation since 1982, the author shows.

Holden explains that payroll, the biggest cost factor in most human endeavors, is also the fat item here. the state workforce — when measured against cold national averages, not subjective criteria — seems unnecessarily large and high-paid.

Here is a documented rebuttal to the above-mentioned journalistic broadside which alleged: “Public agencies often cannot perform basic services because of tight budgets and inflexible spending restrictions. Popular decisions to cut taxes and limit state spending during the late 1970s damaged the state’s ability to cope with population growth and the current economic downturn. The public’s health and safety often are endangered because of funding shortages” (Rocky Mountain News, March 13, 1988, pp.1 and 6).

Here is a practical action plan to help the legislature’s Vision task force answer its exam question: “What should be the role od state government, in terms of revenue collections and expenditures, to ensure a healthy, vital, competitive Colorado economy for the year 2000 and beyond?”

The Holden prescription is to flatten the bulge currently keeping state employee numbers and pay levels conspicuously above those of their public counterparts elsewhere and their private-sector counterparts here in the state. Saving when this is done (and he recommends 1992 as a phase down target) could exceed one third of a billion dollars per year. As for alternate uses of the money, no lack of persuasive “visions” on that subject is likely.