State retail marijuana tax
Colorado voters overwhelmingly voted to legalize marijuana last year, passing Amendment 64 by a 10-point margin. Part of what was so enticing to voters was the fact that a special excise tax, applied only to sales of recreational marijuana, would go to fund public school construction across the state. The idea was that dollars that would normally be spent on the black market would come above ground, benefiting the public good while costing absolutely nothing for those who don’t smoke pot.
Amendment 64 called for the legislature to enact “up to” a 15 percent excise tax. And to the surprise of absolutely no one, our state representatives did opt to put the full 15 percent tax onto the ballot this year, in the form of Proposition AA. However, the legislature also decided to tack on a 10 percent sales tax on retail marijuana — something not mentioned at all in Amendment 64.
So that’s what Proposition AA does. It asks voters to approve a 15 percent excise tax on recreational marijuana as well as a 10 percent sales tax that would fund regulation efforts. The sales tax is in addition to the existing 2.9 percent statewide sales tax as well as any extra sales taxes levied on the local level. The first $40 million collected by the excise tax would go to fund school construction; any additional excise taxes would go towards regulation.
Why is the sales tax on the ballot? It’s not mentioned in Amendment 64. Here’s what happened: A series of audits showed that the Medical Marijuana Enforcement Division, the agency in charge of enforcing medical marijuana laws, was not properly regulating the industry to the degree required by Colorado law. Afraid that the hefty licensing fees and existing taxes wouldn’t cover the cost of regulating the retail marijuana industry, expected to be much larger than the medical industry, the legislature tacked on the 10 percent sales tax, which would just fund regulation, and bundled both taxes into the same amendment.
The medical marijuana industry and its supporters, which will have first crack at becoming retail stores, for the most part have favored the taxes. The Medical Marijuana Industry Group has endorsed the measure, as have marijuana advocate Brian Vicente and the Marijuana Policy Project. They in part see the taxes as part of the furthered legitimization of the industry, and for them, the taxes serve the all-important purpose of keeping away federal law enforcement. (The feds could, at any time, choose to arrest everyone involved in the marijuana industry and press charges under federal law.) This belief comes from an Aug. 29 Department of Justice memo that said the feds would respect state laws regarding marijuana if states can “provide the necessary resources and demonstrate the willingness to enforce their laws” — legalese, as explained to Boulder Weekly, for taxation and regulation.
We think that fear is grounded, and the costs of not voting for the taxes are too high. Therefore, we hesitantly endorse Proposition AA, with a one reservation. We think that the excise tax is necessary to fulfilling the original promise of Amendment 64, but we take issue with the sales tax. We think the revenue for the Marijuana Enforcement Division raised by the sales tax — estimated to be $40 million — is excessive, especially when compared to the budgets of other state regulatory agencies, like the Colorado Oil and Gas Conservation Commission ($9 million) and the Liquor Enforcement Division ($2 million). We think the sales tax should have been proposed in a different ballot issue, allowing Coloradans an up-or-down vote on each tax, rather than grafting the excessive sales tax onto the excise tax that voters already approved.
However, we don’t believe the taxes are excessive enough to the point of driving consumers into the black market, as opponents of AA have claimed. The taxes and the regulatory structure are important steps in propping up the marijuana industry and erasing the damage done by prohibition. The fights worth fighting will come down the road as we can observe how much revenue is collected and how effectively the state can regulate the industry. The industry should absolutely push for lowered taxes a few years down the road, but for now, it recognizes the symbolic importance of these taxes. And we are inclined to agree with the industry. Vote yes on Proposition AA, and Colorado can continue to lead the nation’s slow trudge towards sanity on marijuana issues.
Public education funding reform
The pros and cons of Colorado’s Amendment 66 could be illustrated in two statements. Pro — it’s a long-overdue rewrite of our K-12 school finance system plus new school funding in a state notorious for underfunding the long-term economic driver of education while demanding achievement from teachers and poorer school districts. Con — it’s a gigantic, inequitable tax increase that will drive employers away, with our hard-earned dollars going to union-driven compensation packages and an education system that hasn’t proven itself through performance statistics. Anyhow, that’s basically what you see in the commercials.
However, voters hoping to make a wise decision on A-66 should avoid think tank messaging and hit the books. This one is voluminous and moderately complex.
In a nutshell, A-66 would enact a new School Finance Act formula in Colorado for the first time since 1994, with language found in Senate Bill 213. The bill, passed last spring, weighs in at 140 pages, but we’ll do our best to give the Cliff ’s Notes version.
The new formula calls for additional per-pupil funding for “traditional” school districts and charter schools. Funding for English Language Learners (ELL) and “at risk” students — those qualifying for free and reduced-price lunch — will increase, with weighted funding for districts with high concentrations of either. Funding will increase for full-day kindergarten and preschool. SB 213 eliminates the Amendment 23 requirement from 2000 that school funding increases yearly by at least the rate of inflation, and instead at least 43 percent of Colorado’s general fund revenue will go to public schools. New funding will go to programs in categories such as special education, gifted and talented, education innovation grants, charter school capital construction and education technology.
There’s so much more to SB 213, but many people are more interested in how it will be paid for. It can only go into effect if voters approve an initiative to fund it, and A-66 calls for a twotiered Colorado income tax increase. For state taxable income of $75,000 or less, the state income tax rate would increase from its current 4.63 percent to 5 percent, which was our rate in 1999. Those earning more than $75,000 would see the same increase to 5 percent on the first $75,000, but income above that would be taxed at 5.9 percent. For illustration, those grossing $50,000 yearly would pay $97 more per year; those at $100,000 would pay $243 more; the $150,000 level would be $721 more; and $200,000 would be $1,281. It’s estimated that A-66 would raise roughly $950 million in its first full year.
Statistics aside, voters should have many real-world questions. For example, can spending more money improve educational performance?
This is a question with no easy answer, but remember, A-66 is a statewide initiative addressing a statewide system. For better or worse, many people judge performance through statewide aggregate statistics. But when you break statistics down by district or school, you’ll see wide discrepancies. Take graduation rates. Our Boulder Valley School District (BVSD) rate in 2012 was 89.7 percent, compared to 58.8 percent in Denver Public Schools. As DPS is Colorado’s second-largest district, you can see how its statistics can drag down the state’s overall rate, which was 75.4 percent.
So, part of A-66’s purpose is addressing factors that can lead to achievement gaps in our statewide system. Funding for districts with high concentrations of ELLs and at-risk students directly targets problems associated with poverty and command of language. New funding for poorer schools will help them hire more instructors in key subject areas, and better provide students with modern technological tools.
many view this as completely positive, there’s a counterpoint. Under
A-66, certain wealthier counties will not receive as much increased
funding as residents pay in, and that includes Boulder. This is
prominent in A-66 opponents’ arguments, and it’s troubled certain
otherwise ultra-staunch education supporters locally. It’s a fair point
also fair to remember that poorer districts already generally receive
greater state funding relative to local funding, since property tax
revenue in poorer areas can’t support modern school needs.
more questions illustrate the confusing statistical debate. First, do
Colorado schools even need greater funding? A-66 opponents use a
statistic from the National Education Association saying we rank 26th
in total per-pupil K-12 expenditures, while the education advocacy
group Great Education Colorado has us 42nd in per-pupil spending,
weighted for regional cost differences. Still, even 26th is in the
lower half, and 42nd ought to trouble those who are also demanding top
Second, are our schools performing or failing? As with the graduation rate statistics, breaking down aggregate numbers reveal wide discrepancies. For example, students at BVSD’s Eldorado K-8 had 90.1 percent scoring “proficient” or “advanced” in 2013 TCAP eighth grade reading tests. At Fort Lupton Middle School, not that far away, only 54.4 percent scored proficient or advanced. This might seem like cherry picking, but readers can examine TCAP scores on their own since they’re all available online. To save time, you’ll generally find that wealthy suburban districts such as BVSD or Douglas County do quite well, while many schools with lower rates will increase, but we’ll still have a relatively low state tax burden if A-66 bat. Education is a major factor in economic scores face challenges such as poverty, passes. A-66 offers long-term system success, both on the individual language differences, parents without advanced education, drugs, violence and more.
A-66. It will offer educational benefits to traditionally disadvantaged
schools and districts. Other districts and charter schools will gain
funding to hire teachers and upgrade technology. Increased kindergarten
and preschool enrollment will help more kids avoid falling behind
right off bat. Education is a major factor in economic success, both on the
individual and societal levels. Colorado income tax rates will
increase, but we’ll still have a relatively low state tax
burden if A-66 passes. A-66 offers long-term system improvements, compared to the short-term
stopgap of Proposition 103 in 2011.
values education, in spite of our reputation for not funding it, and
it’s time for us to admit that we get what we pay for.
View all of Boulder Weekly's endorsements here.