Colorado Supreme Court Won’t Tell Legislature How to Allocate Tax Dollars

Last week, the Colorado Supreme Court was invited to hurl the state into a constitutional crisis. Wisely, it said, “No thanks.”

While the court’s decision in Dwyer v. Colorado is undeniably good news for basic principles concerning separation of powers, it raises more fundamental questions about what our constitution can actually guarantee.

In 2000, the voters of Colorado added Amendment 23 to the state constitution. It requires the Legislature to increase “statewide base per pupil funding” each year by the rate of inflation. Because of the recession, the Legislature could not both increase base funding and maintain other education funding.

In addition to a base level of funding for all school districts, the state provides supplemental funding based on other “factors” such as a district’s size, cost of living, and number of at-risk students. With declining tax revenue, the Legislature decided to implement a “negative factor” that decreased factor funding while increasing base funding to satisfy Amendment 23. As a result, base funding increased while overall education funding declined.

This decrease in overall education spending led parents and several school districts to sue in Dwyer, claiming the “negative factor” violated Amendment 23 and demanding the court order the Legislature to increase educational funding.

Their claims always faced two insurmountable obstacles: plain English and fiscal reality.

Unfortunately for the plaintiffs, Amendment 23 clearly says the state only has to increase base per pupil spending. The plaintiffs were compelled to argue “base” does not in fact mean base, but instead means “total.” If it means total, then spending could not decline from the previous year’s level. The court declined to be drawn into this game of postmodern linguistic gymnastics. It simply said base funding means base funding, “because this is exactly what Amendment 23 says.”

The plaintiffs faced even more fundamental fiscal obstacles. In the real world, limited resources force the state Legislature to make tough choices about allocating tax dollars in many areas. Among them are roads, police, prisons and parks, along with K-12 education.

Only the Legislature has the capacity to make the kinds of budgetary tradeoffs required for the rational allocation of tax dollars. The plaintiffs wanted the court to tell the Legislature to either ignore those other obligations or to mandate a tax increase in violation of the state constitution.

Of course, the Dwyer litigation’s real target might have been the Taxpayer’s Bill of Rights (TABOR), which requires voter approval of tax increases. Twice in the past four years, huge majorities of Coloradans have rejected education tax increases.

Ruling for the plaintiffs in Dwyer would have required the court to tell the people of Colorado they are not in fact sovereign. One suspects Coloradans would not have responded favorably to the court declaring TABOR was unconstitutional.

Even setting aside TABOR, Amendment 23 raises questions about what we can expect from our constitution. The amendment demands that education spending increase regardless of economic reality. States, however, cannot print money and thus cannot run long-term deficits. Also, like many states, Colorado is constitutionally required to have a balanced budget.

In a federal system, states compete with each other to offer an attractive basket of goods and services to residents and businesses. A state with a regulatory and tax structure less attractive than other states’ can expect to see its taxpayers move to more inviting climes. This competition, in turn, forces states to spend tax dollars more wisely. But most importantly, states cannot control recessions. Regardless of TABOR limitations, economic slowdowns sometimes will cause revenue declines.

These limitations on states all point to the folly of mandating specific spending levels and the even greater folly of mandating specific levels of increased spending. Mercifully, Amendment 23 allowed for some legislative flexibility to reallocate dollars from factor funding to base funding. But one day an economic downturn might prevent the legislature from increasing base funding, forcing the state to violate the constitution.

In the abstract, mandating increased spending on popular programs is always attractive. But constitutions, as James Madison said, should not contain provisions that require their own “usurpation.”

In short, constitutions should not write checks the government might not be able to cash. Littering our state charter with such mandates is poor constitutional hygiene.

– Joshua Dunn

This first appeared in the Greeley Tribune.

Last Updated

NEWSLETTER

Notify Me When Education Next

Posts a Big Story

Business + Editorial Office

Program on Education Policy and Governance
Harvard Kennedy School
79 JFK Street, Cambridge, MA 02138
Phone (617) 496-5488
Fax (617) 496-4428
Email Education_Next@hks.harvard.edu

For subscription service to the printed journal
Phone (617) 496-5488
Email subscriptions@educationnext.org

Copyright © 2024 President & Fellows of Harvard College