Thread: CO...Not a"Tax"..It's a"Fee"

YOUR GOVERNMENT AT WORK
Can't raise taxes? Just call it a 'fee'
Colorado grabbing $100 million more though voters never asked for increase

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Posted: June 04, 2011
11:10 pm Eastern


By Bob Unruh
© 2011 WND





In a society where voters more and more are choosing to restrain government and its activities, lawmakers in Colorado were faced with a dilemma: They wanted to borrow and spend hundreds of millions of dollars on bridge repairs and feared voters, who under the state Constitution would have to approve any borrowing plan or tax increase, would object because of the state's rocky economy.

So the solution adopted in Colorado's Democrat-controlled legislature was to create an "enterprise" – an entity owned and run by the state Department of Transportation – to take over the responsibility to repair and replace those bridges. As an "enterprise," its managers, the same people who make decisions for the state agency, could borrow money without voter approval and could raise taxes on taxpayers as long as they called them "fees."

But now a think tank in Golden, Colo., has published a series of commentaries from analysts in what could be the start of a campaign to highlight what lawmakers did to their constituents, or at least publicize the maneuvers so that voters are aware of why their license "fees" for a $400 homemade trailer now reach a full 10 percent of its original cost – each and every year.

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The issue arose over the state General Assembly's adoption in the 2009 session of Senate Bill 09-108, which created a "Colorado Bridge Enterprise." It has since borrowed $300 million to start a round of bridge repairs, and is charging every vehicle owner in the state a "fee" every year for their "access" to those bridges.

But analyst Tom Ryan, whose critique was published recently by the Independence Institute, said the lawmakers relied "on distortions and deliberate misdirections to subvert Colorado's Constitution and silence the voice of the people."

(Story continues below)





The state Constitution's TABOR (Taxpayers Bill of Rights) amendment, adopted by voters in 1992, requires voter approval to either raise taxes or borrow money. And that, Ryan, a financial expert with Analyst Strategy Group, is exactly what lawmakers did.

Only they called it something else.

"The bill depends on continued silence for its provisions to move forward. Under FASTER (the disputed law) Colorado families are being forced to pay an unconstitutional tax of almost $100 million annually. This tax hits everyone who registers a vehicle in the state squarely in the pocketbook – a tax that was enacted directly by the legislature without a vote of the people."

Joining him in expressing alarm over what lawmakers did, and the apparently snub to voters who approved the TABOR amendment, was Richard Sokol, a business owner and member of the advisory board of the Leadership Program of the Rockies. He holds a degree in economics from Yale and an MBA from Harvard.

"The law allows an unelected group of bureaucrats to appoint an unelected administrator and together borrow whatever amounts of debt can be backed by FASTER funds. On December 1, 2010, they did just that. And now Colorado's citizens are burdened with $300 million of newly issued debt – with the promise of more to come. … All this, and we weren't asked!"

The law was adopted by a Democrat-controlled Legislature and signed into law by ex-Gov. Bill Ritter, a Democrat. But none of the many messages left by WND with the multiple offices in the state legislature requesting a comment on the law and its alignment with state constitutional requirements was returned.

A video was created to explain the details:



Sokol explained the issue briefly:

"The Taxpayer's Bill of Rights … passed by voters in 1992 and thus enshrined in the state constitution mandates that the state 'must have voter approval in advance for … creation of any debt.' It does not prohibit the state or a district government from borrowing money; it only stipulates that citizens be asked first."

It also requires voter approval for tax increases, and there was an exception created for "enterprises," so that a towel fee at a publicly owned recreation center could be raised without a vote, or a university dorm fee could be raised without an election.

Sokol noted other state "enterprises," such as a state university, nursing home system and the like all "sell a good or service to customers, and that compete for those customers with other businesses. Only willing buyers who actually use the service pay for it."

However, he said the "Bridge Enterprise" diverges from that plan in several ways.

Under its provisions, "every person who registers a car in Colorado pays on average an extra $18 a year that is designated for the Bridge Enterprise, in addition to an extra $23 per year for road safety. The $41 annual payment is called a 'fee' rather than a 'tax,' which is nonsensical in itself. … Enterprises cannot be funded by taxes."

He continued, "Now every Coloradan who registers a car is considered a 'customer' of the Bridge Enterprise. It does not matter whether the car is driven over one of the designated bridges or not. In fact, there are large areas of Colorado nowhere near one of the designated bridges."

"And out-of-state car owners don't pay at all, even if they constantly use the bridges."

Then came the decision by the "enterprise" – actually members of the state Transportation Commission who also run the state highway department, to borrow the hundreds of millions.

Observed Sokol, "The Bridge Enterprise and CDOT do the same work overseen by the same managers." The same people are board members, the same person is executive director and the chief financial officers for the two groups? – the same person.

That person, Ben Stein, in fact, confirmed to WND that of the "enterprise" purposes – the "financing, repair, reconstruction and replacement of bridges" – the only function that could not have been performed by the state agency itself was the "financing."

A spokeswoman for the state agency, Mindy Crane, also confirmed to WND that, "We have a fair amount of people on staff who are involved in it."

But Stein defended the machinations that allow the state "enterprise" to borrow money when the state itself could not without voter approval, explaining the "general assembly passed a law; we implemented the law as passed."

He declined to express an opinion on the constitutionality of the law, or the opinions published by the Independence Institute condemning the bill as imposing a tax.

"Despite the careful wording within FASTER designating the Bridge Safety Surcharge as a fee, the assessment is in fact a tax," said Ryan. He said his opinion is backed up by that of the general assembly's own Office of Legislative Services.

He said that organization established ground rules to determine what is a tax and what is a fee. Those include evaluations on whether the charge would "reasonably restrain" government, how much is generated and how broadly the charge is applied.

Ryan noted under those standards, the bridge payments are taxes. But when the FASTER legislation was discussed, not a single lawmaker requested an opinion on how the plans would conform to, or violate, the state constitution.

"The 1989 Colorado Supreme Court decision Bloom v. City of Fort Collins held that a fee is distinct from a tax in that, 'unlike a tax, a special fee is not designed to raise revenues to defray the general expenses of government, but rather is a charge imposed upon persons or property for the purpose of defraying the cost of a particular government service.' Ever since the first publicly owned bridges were constructed in the state, bridge maintenance always has been considered a general function and a general expense of government," he said.

Ryan also note fees "are imposed on direct beneficiaries and must be proportionate to value received. Dorm residents at a state-run university are charged fees for use of the dormitory. … But the FASTER legislation makes no attempt to align the application of the surcharge to opersons directly benefitting from Bridge Enterprise projects," he said.

That's because residents of counties with no improvement projects are charged the same as residents of the Denver region, where dozens of repairs are planned.

And he noted while out-of-state residents are charged fees for using a dorm room, out-of-state drivers are not charged for using the bridges under repair.

"The state makes the absurd argument that the surcharge qualifies as a fee because it is assessed only against beneficiaries, but then defines beneficiaries to include virtually every adult living in Colorado while excluding out-of-state beneficiaries."

Stein also told WND that it qualifies as a fee in Colorado because one doesn't need to own a vehicle; he suggested a resident could take public transit, even though the districts providing public transit in Colorado are virtually nonexistent outside of the metropolitan areas.

"The proceeds are used to fund work previously performed by CDOT and funded through General Fund appropriations. The only rationale for creating the Bridge Enterprise entity and funding it through a tax masquerading as a fee was to deliberately circumvent TABOR and deny the citizense of Colorado their constitutional right to choose whether improved bridge infrastructure justifies $100 million in additional annual taxation," said Ryan.

He warned that the limits now for lawmakers to impose "millions in additional 'fees' without a vote … is limited only by the assembly's imagination."

Sokol noted that a true "enterprise" is when a customer has a choice.

"The state lottery allows someone to decide whether or not to buy a lottery ticket. The more lottery tickets he buys, the more he pays. With the Bridge Enterprise, the government has decided that all Colorado car owners pay, even those who live and work nowhere near one of the 128 bridges. It does not matter whether the car crosses one of the bridges one time, a thousand times, or not times."

He also was critical of the continuing manipulation of information to allow the program to progress. He noted that because the bridges are owned by the state, not the "enterprise," ownership must be transferred for repairs to be done. But there are limits on what the state can transfer to an "enterprise."

So what happens?

"In 2010, ownership of 77 bridges was transferred to the enterprise. … CDOT claimed that only two bridges had value, and that their combined valued was only $1.4 million. The other 75 bridges were claimed to have zero value."

Stein explained to WND that that was an accounting procedure that reduces the value of the bridges by 2.5 percent for each year of their existence.

Rubbish, charged Sokol. "Using CDOT's reasoning, our Capitol building – with its gold-plated dome – is worthless! Clearly, that is nonsense."

Lawmakers thought they had taken care of the issue at the outset.

Their law states, "The General Assembly finds and declares that a bridge safety surcharge … is not a tax but instead a fee."

"Our elected officials purposely and knowingly breached the faith they hold with citizens. The Colorado Bridge Enterprise is government without the consent of the governed. Shame," Sokol wrote.

Stein said he couldn't even speculate on what would happen should future lawmakers – or perhaps voters – overturn the creation of the "enterprise" and its new charges, given the fact that the money already has been borrowed.

Mike Krause, a spokesman for the Independence Institute, told WND it's an issue that needs exploration and resolution. His organization is non-partisan, non-profit public policy research organization dedicated to providing timely information to concerned citizens, government officials, and public opinion leaders.


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Read more: Can'traise taxes? Just call it a 'fee' http://www.wnd.com/?pageId=306377#ixzz1OPLnEjSH

But now a think tank in Golden, Colo., has published a series of commentaries from analysts in what could be the start of a campaign to highlight what lawmakers did to their constituents, or at least publicize the maneuvers so that voters are aware of why their license "fees" for a $400 homemade trailer now reach a full 10 percent of its original cost – each and every year.

bravo!