Opinon: School time at the Colorado Legislature
State Senator Rollie Heath
has proposed temporarily increasing various taxes here in Colorado to address a
critical funding shortfall in K-12 education. His proposal actually just
returns some taxes to previous rates, and would generate an estimated $1.63
billion in additional revenue, averaging somewhat over $500 million per year
for three years.
Although these funds are
very important, what`s more important is that this proposal misses a huge
opportunity to permanently improve school funding and, at the same time, reduce
taxes on ordinary Coloradoans. The Legislature, without going to the ballot,
could remove the prohibition on the use of school impact fees that is in the
state statutes, and grant the power to school districts to impose such fees. Then
school districts could either impose school impact fees on new development (no
TABOR ballot vote on the fees is required, but issuing bonds would still
require a vote), or try to get their voters to pass tax increases to cover the
cost of the new school buildings needed because of such new development.
Colorado taxpayers, being no fools, would be unlikely to choose tax increases
over impact fees, with the end result that all school districts would impose
such fees.
How much could be
collected using school impact fees? I was involved in an impact fee study done
by the Boulder Valley School District in the early 1990s, so I went back and
reviewed the material. It appears that the cost for the schools plus land per
new detached residential unit back then was in the $7400-$8000 range, and about
half that for attached units (there are fewer pupils per unit.) To get current
numbers, I used the nearly 50 percent increase in the CPI since 1994, when the
study was done, but raised it a bit to 60 percent, since it appears that
construction costs have increased more rapidly than general inflation. So now,
in rough numbers, new school costs are around $12,000 per detached residential
unit, and $6,000 per attached unit.
Currently there are about
2.2 million housing units in Colorado, and growth has averaged about 1.75
percent/year. Obviously, housing has been overbuilt in recent years, but if the
average growth rate continued over the next 10 years, cost inflation continued
at 2.8 percent/year, and assuming half detached and half attached units, by
2022 the state`s school districts could be collecting nearly $1 billion per
year through impact fees. (Credit given for payments on still-outstanding bond
issues and mandatory land dedications could lower this slightly.)
Developers of new housing
have to compete with existing units in the housing market, so they are unable
to simply pass on impact fees as price increases. Thus, impact fees would force
them to reduce the amount that they are willing to pay for raw land. Since some
developers would be caught with overpriced land, the Legislature should require
such fees to be phased in over 3-5 years.
This approach would fit
right in with Rollie Heath`s temporary tax increases. For the first few years,
the tax increases would help the educational system stay afloat. Then impact
fees would crank up just as the taxes expired. Then the Legislature could go to
the voters and point out, “We are relieving you from the ongoing burden of
paying to build new schools, so how about raising taxes to actually improve
education in Colorado?”
Some of you might ask as
to why school impact fees haven`t happened already. That`s an interesting
question, and the answer appears to be the undue influence that developers have
at the Legislature — as lobbyists (they have a huge presence), as elected
officials themselves, and through connections with our representatives.
Then why haven`t counties
imposed school impact fees? Both Boulder and Douglas counties tried, but in
1994, a Douglas County judge determined that these counties were never given
this power by the Legislature and do not have home rule powers like many
cities. However, the Colorado Supreme Court, in its review of the case, seemed
to grant, albeit somewhat backhandedly, the power to counties to turn down
development if the school facilities were inadequate. But as far as I know,
this leverage has not been used.
So — how about it,
legislators? Do your temporary tax increase, but impose permanent school impact
fees. Save us all a bunch of money and improve the schools too.