In Blue Colorado, the Taxpayer’s Bill of Rights matters more than ever
In Colorado, the recent election reaffirms the right of citizens to have the final say on proposals to increase taxes or debt.
Solving the Funding Crises in PERA
The paper is based on testimony presented to the Senate Finance Committee regarding the soundness of the Public Employees Retirement Association fund. Dr. Poulson recommends steps to fix the actuarial problems, and modifying the retirement.
Unfunded Liabilities in PERA’s Health Plan Accumulate
by Penn Pfiffner and Barry Poulson This legislative session Colorado HB1250 was introduced to begin addressing an unfunded billion-dollar liability in the Public Employee Retirement Association’s (PERA) retiree health care benefit program. Its own sponsor then killed the bill after it came under a fire storm of hysteria-tinged and false criticisms, fueled by one-sided media […]
Proposition 103: What is the Cost to Colorado Taxpayers?
Proposition 103 is an initiative that will increase Colorado tax rates and require the state to spend the money on government schools. Prop 103 increases the personal income tax, the corporate income tax, and the statewide sales and use tax for the years 2012 through 2016.
The Fiscal Impact Statement prepared by Colorado’s Legislative Council Staff estimates the cost of the tax increase at $2.9 billion. However, the cost for Colorado taxpayers will be significantly greater than staff estimates. Legislative Council uses static analysis, measuring only the direct impact of the higher taxes on state revenue. They ignore the negative impact the tax increase will have on economic growth and jobs in Colorado.
Washington Voters Rein in Big Gov’t
by Barry Poulson In the November election, Washington citizens approved Initiative I-1053 by a more than 64 percent margin, requiring that “Legislative actions raising taxes must be approved by two thirds legislative majorities or receive voter approval.” In other words, Washingtonians have elected to reign in their legislature’s ability to further tax them through a […]
How to Save a Billion Dollars in Other Post-Employment Benefit Costs
This study focuses on the retiree health plan administered by the Colorado Public Employees’ Retirement Association (PERA). The PERA Health Care Program is a cost sharing multiple-employer plan. The “employers” in this context are the various governments that hire most public employees, such as public school teachers, fire fighters, police officers and state employees. Under this program, PERA subsidizes a portion of the premium for health care coverage, and the retiree pays any remaining amount of that premium. The Colorado legislature created the Health Care Trust Fund in 1999 to provide state subsidies to the Health Care Program.
Washington Should Reform Itself First
By Barry W. Poulson In a May 12 Denver Post editorial, “Reforming Wall Street is Essential,” President Barack Obama makes the case for Senator Chris Dodd’s financial reform bill (what the president calls “Wall Street reforms”). The president argues that the financial crisis was caused by irresponsible practices on Wall Street, that the Dodd bill […]
Politicians Fail the Simple Economics of Prosperity
Isn’t economics the “dismal science”; that thing you had to suffer through in college with graphs and equations, none of which seemed to make sense? Economics is actually very simple. Human beings, by their nature, must be free to take action to achieve their goals. We don’t have fur, claws and instincts like lower animals. […]
PERA Falls Off A Cliff
The Public Employees Retirement System (PERA) in Colorado is experiencing a funding crisis. The recent collapse of financial markets has resulted in a significant decrease in the value of the PERA portfolio. But the funding crisis in PERA is not just the result of problems in financial markets.
A Fiscal Roadmap for Colorado
Colorado appears to be at a crossroads similar to that in California in the late 1980s. At that point California was a dynamic growing economy. That prosperity reflected a fiscal constitution that kept the growth of government in line with the growth of the private economy. California’s GANN Amendment, which was a precursor of the TABOR Amendment in Colorado, limited the growth of state revenue and spending to the sum of inflation and population growth. In the late 1980s, under pressure from the education employee lobby, the California legislature abandoned the GANN Amendment, and the rest is history.
What Now For PERA: Déjà Vu All Over Again?
Colorado’s Public Employee Retirement Association (PERA) is experiencing a financial crisis. The current financial crisis has resulted in a significant decrease in the value of PERA’s portfolio. But the financial crisis in PERA is not just the result of the current financial crisis. PERA’s defined benefit pension plan is fundamentally flawed; the problems in the plan have emerged over several decades. While the current financial crisis has exacerbated these problems, PERA is facing a long-run deterioration in its financial condition.
The legislature has enacted several reforms over the past decade to address PERA’s financial problems. These reforms have included changes in benefits, increased contribution rates, and administrative changes. Unfortunately, these reforms have failed to address the fundamental flaw in PERA’s defined benefit plan.
This Issue Paper explores the financial crisis in PERA. Different measures of the magnitude of the crisis are examined, and the flaws in PERA’s defined benefit plan are analyzed. The failed legislative reforms of PERA are critically evaluated. The Issue Paper concludes that the legislature should consider declaring a financial emergency and enacting the fundamental reforms needed to solve PERA’s financial crisis. Other states have successfully reformed their own state employee pension plans by replacing a defined benefit plan with a defined contribution plan.
Tax and Spending Limits: Theory, Analysis, and Polic
Tax and spending limits (TELs) are budgetary rules that determine how much taxes and/or expenditures can increase from one year to the next. TELs can be statutory or constitutional rules. Statutory TELs can be modified by legislative action, while constitutional TELs can only be modified by a majority vote of citizens. TELs may originate through a legislative statute or referendum, or they may be initiated by citizens in states that provide for this form of direct democracy. TELs are now in place in 26 states.
