On KOA, Caldara falsely claimed state cannot legally spend Ref. C money beyond a certain limit

On his January 9 Newsradio 850 KOA broadcast, Jon Caldara dispensed misinformation about the voter-approved Referendum C. He repeated the claim that the 2005 measure was “promised” to state voters as costing a fixed amount, and he falsely asserted that the legislation is “pouring” so much money into the state's budget, “they legally can't spend it all.” In fact, a legislative staff report states that the budget restriction Caldara cited does not prohibit spending but forces Referendum C funding “into other areas” such as transportation and capital construction.

After reiterating his previous misleading assertion that Referendum C was “promised” to Colorado voters as costing a fixed dollar amount, Independence Institute President Jon Caldara on his January 9 Newsradio 850 KOA broadcast claimed, “Referendum C is pouring all this money into the budget, [and] they have much more money than just 6 percent growth a year. Matter of fact, there's so much money, they legally can't spend it all.” Caldara was referring to Colorado's Arveschoug-Bird limit, which restricts the growth of appropriations from the state's general fund to 6 percent over the previous year's general fund spending. However, as the Colorado Legislative Council (CLC) Staff explained in its Report on Referendum C Revenue and Spending for FY 2006-07, any Referendum C funding exceeding Arveschoug-Bird's 6 percent spending growth limit has been legally “forced into other areas,” namely, “transportation and state capital construction projects.”

Furthermore, as Colorado Media Matters has noted repeatedly, the 2005 Colorado Blue Book explicitly stated in its fiscal analysis of Referendum C that the $3.7 billion figure it cited was an “estimate” -- not a “promise” -- of the revenues the state could retain under the measure, and that the “exact amount of the spending increase could be higher or lower, depending on the economy and the amount of money collected.”

From the January 9 broadcast of Newsradio 850 KOA's The Jon Caldara Show:

CALDARA: You remember Referendum C, don't you? You remember Referendum C, where they promised that it was going to cost, originally it was 2.7 billion, then 3.2 billion, and then 3.7 billion by election day. That's what we were going to give up when it comes to our, when it comes to our tax refunds. We would have gotten that back. Right? Right. But we're giving that up. We said “yes” to that because we wanted the money to go to higher ed, health care, K through 12, those three things split evenly. Well, isn't it wonderful when the state of Colorado says something is going to cost taxpayers x amount, you can pretty much double it. Because that's exactly what Referendum C did.

In fact, in approving Referendum C, Colorado voters authorized the state “to retain and spend all state revenues” through 2010, suspending the spending restrictions imposed by the Taxpayer's Bill of Rights (TABOR) on state coffers. [emphasis added]

Later in the program, Caldara referred to the Arveschoug-Bird limit to claim that so much Referendum C money is “pouring” into the Colorado budget, the state “legally can't spend it all”:

CALDARA: Colorado has a great law, and it says that our operating budget can only grow by 6 percent a year. It caps it off at 6 percent a year.

CALLER: Mmm-hmm.

CALDARA: And now that Referendum C is pouring all this money into the budget, they have much more money than just 6 percent growth a year. Matter of fact, there's so much money, they legally can't spend it all. So what they're going to try to do in the same sort of way that they did it with this mill levy freeze, I wouldn't be surprised if they try to change what's known as the Arveschoug-Bird amendment -- the 6 percent limit -- and say, “Oh, we have the right to change that, because it's a statute.” No, it's not. It's the same thing as this mill levy freeze; it brings more money into government, and therefore you need to ask permission. And we'll see if they get away with that.

However, as the CLC Staff report explained, much of the Referendum C funding for FY 2006-07 did not infuse additional money into the state's budget:

First, the state would have faced a significant budget shortfall had Referendum C not passed. Therefore, in many instances the Referendum C money that has been spent is not new money to the programs, rather it maintained the programs and prevented them from undergoing cuts. It is money the programs may not have received without Referendum C, but it is not additional money when compared with the prior year. It is impossible to enumerate this impact because it would require knowledge of what budgetary actions the state would have taken had Referendum C failed.

Moreover, the report described the mechanism by which Referendum C money in excess of the spending limit may be legally appropriated outside of the General Fund:

Second, passage of Referendum C did not amend other requirements in law that limit the spending of state money. The most relevant of these is the six percent Arveschoug-Bird spending limit. This limit prohibits General Fund appropriations growth of greater than six percent in any given year. Therefore, no matter how much additional money is provided through Referendum C, any money above the six percent limit is forced into other areas. Currently, the beneficiaries of those laws are transportation and state capital construction projects. While these areas may have received money that would not have otherwise been available, they did not receive funding directly from Referendum C. [emphasis added]

In fact, a 1995 formal opinion of then-Colorado Attorney General Gale A. Norton stated that the “transfer of funds from the general fund into the capital construction fund does not violate the Arveschoug-Bird limitation.”