The Colorado Lawyer
Vol. 41, No. 5 [Page 15]
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In and Around the Bar
Colorado Reform Roundtable
The CBA, the Judicial Funding Crisis, and the CRR Statement of Agreement
by Steve C. Briggs
About the Author
Steve C. Briggs is a mediator, arbitrator, and case consultant with Judicial Arbiter Group, Inc.—(303) 572-1019, email@example.com. He is a former judge on the Colorado Court of Appeals and a former CBA President. He currently is the Chair of the State Commission on Judicial Performance and is the CBA Representative to the Colorado Reform Roundtable.
The Colorado Reform Roundtable (CRR) was formed to address the current fiscal and constitutional challenges facing Colorado government. As described in a Denver Post article in October 2009, CRR is a loose alliance founded by "10 organizations representing business, labor and nonprofit groups," which resembles "the coalition that helped pass Referendum C in 2005."1 The ten founding "conveners" of CRR were the Bell Policy Center, Club 20, Colorado Concern, the Colorado Education Association, the Colorado Fiscal Policy Institute, Colorado Forum, Colorado WINS, Colorado’s Future, the Denver Metro Chamber of Commerce, and the Service Employees International Union. In February 2010, the Colorado Bar Association (CBA) appointed a representative to CRR.
This article summarizes why the CBA became involved with CRR, beginning with the CBA’s involvement in similar endeavors in the last few years, and describes some of CRR’s activities to date. It then provides an overview of the status of Colorado’s current and worsening fiscal crisis, with a focus on the state judicial system. Finally, the article explains the CRR Statement of Agreement (Statement) and its corresponding request to its members.
CBA Involvement in Colorado’s
Fiscal and Constitutional Challenges
The CBA Bylaws state that the objects of the CBA include securing the more efficient administration of justice and encouraging the adoption of proper legislation.2 At the meeting of the CBA Board of Governors (BOG) in February 2004, the funding crisis in Colorado government was a topic of concern for the CBA because of its impact on the state’s courts. Wade Buchanan, President of the Bell Policy Center, presented information to BOG representatives about initiatives that were being drafted to address some of the unanticipated problems created by the so-called Taxpayers’ Bill of Rights (TABOR).
In 2005, the CBA Executive Council adopted a resolution in support of the proposed Economic Recovery Act. The proposed ballot initiative would amend TABOR and allow more revenues to be generated and retained. For political reasons, the campaign did not go forward at that time.
In the same year, however, a bipartisan coalition was formed to campaign for the passage of Referenda C and D. Referendum C would suspend the TABOR revenue limits through 2010 and end their downward ratchet effect on the budgets. Referendum D would have allowed state government to borrow approximately $2 billion for maintenance and repairs for school and college buildings, transportation projects, and police and firefighter pension funds. The CBA supported the campaign on the basis that, even though the proposed TABOR amendments would direct the additional funds to government functions other than the courts, the remaining funds would be freed up to assist in part with the judicial funding crisis. In the 2005 election, Referendum D was defeated, but Referendum C passed. As expected, in the next fiscal year, more funds were made available to fund the courts.
Over the next several years, however, an economic downturn worsened the state funding crisis, including funding for the courts. In addition, the relief from the TABOR revenue limits provided by Referendum C was to expire at the end of fiscal year 2009–10. Without further action, the revenue limits again would cap any additional funds that an economic recovery might generate.
As a result, in 2008, the CBA supported Amendment 59, known as "SAFE." Amendment 59 would have provided permanent relief from the TABOR revenue limits by permitting Colorado to use funds that otherwise would have been refunded to taxpayers to fund a savings account for education. The expected result again was that the use of the excess funds for education would relieve pressure to cut funding for other purposes, including the Colorado courts. Amendment 59 did not pass.
During the same time, tension among several of the ballot-initiated constitutional provisions—such as TABOR, Gallagher, and Amendment 23—was contributing to the fiscal crisis. It was becoming apparent that any long-term solution to the fiscal crisis needed to include a revision to the Colorado Constitution that would make it more difficult to amend it with ballot initiatives requiring only a simple majority vote. In 2008, the CBA Executive Council voted to support Referendum O, a ballot initiative to make it more difficult to amend the state constitution while making it easier to enact statutes. Referendum O likewise did not pass. Similar legislative referenda died on the last day of the next two legislative sessions.
The economic downturn continued. In addition, three new ballot initiatives—Amendments 60 and 61 and Proposition 101—were submitted for the 2010 election. If passed by a simple majority vote, their combined impact would have been debilitating on the functioning of state government, including the judiciary. With the help of an expensive educational campaign, which the CBA supported, the three initiatives were defeated. In the meantime, however, the relief from the TABOR revenue limits provided by Referendum C expired.
The Spiraling Financial Crisis
To put the status of the current fiscal crisis in perspective, it is helpful to compare Colorado’s funding of various government services with the funding provided in other states. According to the most recent census data compiled by the nonprofit Colorado Fiscal Policy Institute,3 as of 2008, Colorado ranked 47th out of 50 states in total state spending per $1,000 of income. Colorado was approximately $4.89 billion behind what it would take to move to the U.S. average in terms of investment in critical public services. Specifically, measured per $1,000 of income, Colorado ranked 48th for investment in public education; 49th in covering families under Medicaid; 48th for higher education funding; and 48th for funding related to transportation and highways.4
The CBA’s focus, consistent with its objective to secure the more efficient administration of justice, is on funding for our state courts. Here, Colorado has fared little better, ranking 41st out of the 50 states per $1,000 of income.
Funding must be viewed in the context of demand for services. Looking back over the last decade, total district court filings have increased 55%, but district court civil filings, with the more complex cases, have increased 221%. Adjusted for inflation, judicial funding from the General Fund during this time has increased 29%. The funding gap has been addressed in part by increasing the cost of access to justice. Adjusted for inflation, cash funding, such as filing fees and attorney license fees, has increased 114%.5 In other words, the cost of access to justice is being placed more and more on those needing that access, including those who can least afford it.
The Interim Long-Term Fiscal Stability Commission in 2009 issued a Final Report to the General Assembly.6 The Report included a brief discussion of the judiciary. It noted that the Judicial Branch would need $46 million additional dollars over its current funding to restore the cuts that had been made and to address the current backlog in cases.
The bigger concern, however, is not the past or even the present. The greatest concern is about the future. Federal stimulus funds have ended. As noted in an editorial in The Denver Post on October 16, 2011: "Changes that would unravel incompatible fiscal directives in the state constitution are desperately needed, as are long-term stable revenue sources that would support core state missions. . . ."7
Financing Colorado’s Future—Phase 1 Findings
Recently, the CRR conveners have been analyzing the work of the University of Denver (DU) Center for Colorado’s Economic Future (Center). The Center, which provides nonpartisan information and analysis of issues impacting the economic future of Colorado, was created as part of the recommendations of the Colorado Economic Futures Panel. The Panel in turn had been created by DU to examine the fiscal health of Colorado’s state and local governments and their ability to sustain fundamental public investments appropriate to Colorado’s long-term economic vitality.
The Colorado Legislature, pursuant to Senate Concurrent Resolution 10-002, had asked the Center to conduct a comprehensive review of the state government’s revenue system. The review was conducted in two phases. The Phase 1 report, issued in April 2011, noted that:
Although the state’s short-term budget problems continue to be daunting, [DU Center’s study was focused] on Colorado’s long-term fiscal situation—the forces that will drive both revenue productivity and state government to the year 2025 and beyond. . . . The objective was to determine whether the state’s financial problems are simply a reflection of a contracting economy (a cyclical problem), a harbinger of longer-term imbalances (a structural problem), or both.8
The Phase 1 report concluded that the state’s budgetary woes are both cyclical and structural. When the economy improves, tax collections will pick up. As stated in the report, "absent major changes in policy, however, a structural imbalance underlying the fiscal workings of state government will ensure that Colorado’s budget problems persist for many years to come."9 The report states further:
Even a strong recovery and sustained job growth over the next decade and a half will not produce enough income and sales tax revenue to afford Colorado’s share of Medicaid funding and the state’s payment for public schools under current constitutional and statutory provisions. Together with the rising (although more stable than in the past) cost of the state’s prison system, the two biggest programs in the state General Fund will continue to crowd out higher education and other programs competing for the same tax dollars.10
The report concludes: "We find that our current General Fund financing system is in persistent, long-term structural imbalance. The sooner structural changes are undertaken, the less drastic these changes need be."11
Financing Colorado’s Future—Phase 2 Findings
In September 2011, the Center released its Phase 2 report.12 The report lays out options for addressing the long-term structural imbalance between General Fund revenues and expenditures. The Summary of Phase 2 Findings begins as follows:
Twelve years from now, Colorado will generate only enough sales, income and other general-purpose tax revenue to pay for the three largest programs in the General Fund—public schools, health care and prisons. There will be no tax revenue for public colleges and universities, no money for the state court system, nothing for child-protection services, nothing for youth corrections, nothing for state crime labs and nothing for other core services of state government.13 (Emphasis added.)
The Center concludes:
The enormity of this gap suggests that Coloradans consider both tax increases and spending cuts to fill it. Cutting programs to match revenues, without changing the structure of the current tax system, is unrealistic. While this study did not specifically examine how expenditures for each department could be trimmed, the degree of cuts necessary to rectify the structural imbalance likely prohibits an all-cuts solution.14
CRR’s Statement of Agreement
Having considered the Phase 1 and 2 reports and other information developed by such groups as the Colorado Fiscal Policy Institute and the Bell Policy Center, the representatives of the conveners of CRR have drafted a "Statement of Agreement" (Statement), which appears as an Appendix to this article. Representatives of the CRR members have been asked to present the Statement to their governing bodies for consideration and, if deemed appropriate, for approval. The purpose is to determine whether there is a consensus among CRR members about the structural nature of the state’s fiscal crisis and, if not, why not.
The Statement provides in pertinent part—consistent with the conclusions in the Center’s reports—that the imbalance between revenues and costs of services is partly structural and that additional revenue is needed to provide adequate and stable support for our essential public systems in the future. The Statement recognizes the continuing need to "carefully scrutinize expenditures, assess priorities, try new strategies, and insist on frugal and efficient government."
The Statement does not endorse any particular approach to addressing the structural imbalance in revenues and costs. Some have questioned why the Statement (unlike the Center’s reports) suggests no blueprint for the future. The answer is that the modest goal for the Statement is merely to recognize that a structural problem exists and to commit to work together to build consensus around a solution. It is early in the process, but several CRR members already have signed the Statement, including the Colorado League of Women Voters, Colorado Nonprofit Association, Colorado Children’s Campaign, Great Education Colorado, Colorado Association of School Executives, Bell Policy Center, CAPE Retirees, the Colorado Center on Law and Policy, and the Colorado Community Health Network.
As shown in the Center’s study, in twelve years, not only will there be insufficient funding for our courts, there will be no funding available from our General Fund. Adequate financial support for our state courts is an essential component in providing our citizens their constitutional right to access to justice. The CBA has been a leader in understanding and responding to the need for an adequately funded, independent judiciary. The CRR’s Statement of Agreement provides a small but critical next step on that path of leadership.
1. Opinion, The Denver Post (Oct. 11, 2009), available at www.denverpost.com/ci_13518401.
2. The Colorado Bar Association Bylaws are available at www.cobar.org/index.cfm/ID/451.
3. The Colorado Fiscal Policy Institute is a nonprofit, nonpartisan project of the Colorado Center on Law and Policy. See cclponline.org/fiscal_policy. See also www.cclponline.org/uploads/files/aiming_for_the_middle_2011.pdf.
4. Statistics available from the Colorado Fiscal Policy Institute, www.cclponline.org/pubfiles/AfmUPDATEpressrelease_FINAL.pdf.
5. Statistics compiled by the Bell Policy Center from data available from the Colorado Joint Budget Committee.
6. Information about the 2009 Interim Long-Term Fiscal Stability Commission is accessible through the Colorado Legislative Council website at www.colorado.gov/cs/Satellite/CGA-LegislativeCouncil/CLC/1244121596423.
7. "Editorial: Proposition 103 misses its mark," The Denver Post (Oct. 16, 2011; updated Oct. 19, 2011), available at www.denverpost.com/opinion/ci_19108657.
8. "Financing Colorado’s Future: An Analysis of the Fiscal Sustainability of State Government, Phase 1 Findings," University of Denver, Center for Colorado’s Economic Future 3, 4 (April 2011), available at www.du.edu/economicfuture/documents/CCEF_ReportPhase1.pdf.
9. Id. at 5.
11. Id. at 58.
12. "Financing Colorado’s Future: An Analysis of the Fiscal Sustainability of State Government, Summary of Phase 2 Findings," University of Denver, Center for Colorado’s Economic Future (Aug. 2011), available at www.du.edu/economicfuture/Phase2Summary_v2.pdf.
13. Id. at 1.
Statement of Agreement
Colorado faces a large and growing imbalance between the revenues it collects and the costs of the services it provides. This imbalance is structural, and it threatens the effectiveness of public systems that are essential to opportunity, prosperity and our quality of life in Colorado. These include our schools, colleges and universities, transportation system and health and safety-net programs.
We cannot simply grow our way out of this imbalance. While recent economic downturns exacerbated the problem, it will persist long after the economy recovers. Its causes are complex and include demographic, cost and structural factors. Among these are an aging population, increased poverty rates, the high rate of medical inflation and a tax system that is outdated, inflexible and increasingly ineffective.
For more than a decade, Colorado has relied mostly on constraining spending and reducing services to address this imbalance. We should continue to carefully scrutinize expenditures, assess priorities, try new strategies and insist on frugal and efficient government. But Colorado’s state spending is now constrained to the point that many essential public systems are jeopardized.
Today, after dramatic cuts in virtually every state program, additional revenue has become an essential component of a permanent fix for the state. Any effective solution should increase revenues to provide adequate and stable support for our essential public systems in the future.
We commit to work together to build consensus around a solution that meets that standard, to increase public understanding of the imbalance we are trying to correct, and to build the public will for change.
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