Colorado Voters Defeat Tax Hike; Denver Voters Nix Mandatory Sick Time

Yesterday, Colorado voters overwhelmingly defeated a measure (Initiative 25) that would have increased taxes to raise over $3 billion for education.   Denver voters also soundly defeated a measure (Initiative 300) that would have required businesses to provide all employees with paid sick leave.

This year, Colorado was the only state with an initiative to increase income taxes on the ballot.

The proposed tax increase was defeated by a vote of 64 to 36 percent.  It would have temporarily increased the state income tax rate from 4.63% to 5% and the sales tax from 2.9% to 3% - the rates that were in effect in 1999.   The initiative would have directed all of the increased revenue to education, resulting in an estimated $536 million in additional funding in each of the next five years. The funds would have only been used in public schools and the state’s higher education system, and could not be used to supplant existing funding, and would have begun in 2012 and expired at the end of 2016.

Over the past three years, Colorado has made over $700 million in cuts to K-12 funding, and an additional $228 million will be cut for 2011-12. 

State Senator Ronnie Heath, sponsor of the measure, had billed it as a workforce development issue:  "Coloradans know that educated children and an educated workforce are critical elements to attracting the types of jobs and companies to Colorado that we need to be successful," Heath said.

After its defeat, Sen. Heath told supporters that "it's clear the people of this state aren't ready right now to tax themselves to solve this problem. But I hope the people of this state will come together and say, 'We need to make some changes. We need to find a way to finance our education in a different way.'  If we have accomplished anything, we have set that conversation in motion."

The business community in the state largely opposed the measure, arguing that any tax increase would inevitably lead to job losses.  Regina Thomson, head of the Too Taxing for Colorado campaign, celebrated the measure's defeat, telling the Denver Post:  "For taxpayers to have increased taxes on both their sales tax and income tax is just not fair. Few people can afford it, as it would stifle Colorado's recovery."

In September, CSG senior researcher Jennifer Burnett told Bloomberg News that nationally, there have been signs that voters were angry about service cuts that result from tax reductions.  For example, in 2010 Massachusetts voters rejected a measure to reduce the sales tax, and Colorado voters defeated a proposition that would have lowered income tax rates and vehicle levies and fees.   

The Denver sick leave initiative was also defeated by a margin of 64 to 36 percent.  While supporters argued that the lack of paid sick leave for workers poses both a public health risk and an economic problem due to lost productivity, the measure was strenuously opposed  by the mayor and the city's business community, who argued that the measure would have had serious impacts on small businesses. 

Specifically, the measure would have required that businesses provide all full and part-time employees with one hour of paid sick leave for every 30 hours worked.  Sick leave would have been capped at nine days per year for large companies and five days for businesses with less than ten employees. 

In July, Connecticut became the first state in the nation to require certain businesses to offer paid sick leave to their employees.  At the time, only Washington, D.C. and San Francisco had such laws.  In September, the Seattle City Council approved similar legislation.  Proponents are now pushing for paid sick leave in New York City and Massachusetts.  Milwaukee voters approved a sick-leave bill in 2008 that was later overturned by the state Legislature (SB 23), and earlier this year Philadelphia Mayor Michael Nutter vetoed a bill passed by the city council.