CPA hired by tax opponents in Colorado Springs proposed taxing churches, military
Colorado Springs has $252.1 million at stake in the Nov. 3 election, for which ballots start being mailed Monday.
As city streets disintegrate, with 60 percent of them rated "poor," Ballot Issue 2C asks voters to approve a 0.62 percent sales tax increase. It would generate $50 million a year for five years, all of which would go to private contractors who bid to rebuild and repair roads.
In Ballot Issue 2D, the city seeks permission to keep $2.1 million that exceeds revenue limits under the Taxpayer's Bill of Rights, rather than refund about $11 to each household. That money would be spent to repair park trails, many of which were badly damaged by this summer's record rainfall.
But 2C is the big enchilada, and support appears strong - primarily because everyone knows how atrocious city streets have become.
William Mutch, of Springs Citizens Building the Future, said the group has been going door-to-door, speaking with voters and businesses to drum up support for the tax.
"The response has been very positive," Mutch said in an email. "When people learn that the tax is only 10 bucks (a month) and is only for five years, our support skyrockets."
Mayor John Suthers has said the tax is expected to cost each city household about $100 a year, with 40 percent of the tax revenue paid by non-residents.
Colorado Springs resident Laura Carno launched I Am Created Equal three years ago and spearheaded the 2013 recall of state Senate President John Morse.
Now IACE is denouncing the push for a sales tax increase.
IACE and Americans for Prosperity, which is backed by David and Charles Koch, insist the city has enough money to fix its roads without the tax increase.
"Any politicians raising taxes anywhere - prove to me that that is the only way," Carno said. "It is our money. When voters say no, government tightens their belts like we have to."
She points to a report by a certified public accountant, hired by AFP, who said the city budget has enough money to rebuild roads without raising the sales tax.
"I don't think I need to have any financial acumen to be a taxpayer saying they have not proven to me that they need to do this," Carno said. "I am not a CPA. I am not an expert. My big fear is that they haven't proven it to us."
In a video on iaceaction.com, Carno tells city officials, "It's your job to sharpen your pencils." Then she tells listeners, "Every dollar they spend is a dollar you and I earned."
Before diving into campaigns for former Mayor Steve Bach and state Sen. Steve King, she spent 14 years as vice president and regional sales manager for Household International, her LinkedIn account shows. She was there into 1999, and touts her work "aggressively addressing performance issues," increasing sales and implementing "corporate culture changes."
Household International, which provided consumer loans and credit cards in the U.S., Canada and the United Kingdom, was cited by 46 state attorneys general for predatory lending. It settled for $486 million in 2002.
By then, Carno was a vice president and production manager in home equity operations for Wells Fargo, where she worked from June 2001 to April 2008.
Wells Fargo was among the five largest U.S. mortgage servicers to reach a landmark $25 billion settlement in 2012 for "abusive practices" in mortgage lending, according to U.S. Attorney General Eric Holder.
Suthers then was Colorado's attorney general, and his office cooperated in the investigation.
"I did many different things in project management," Carno said. "Never was I in a position to be in charge of any national policies in banking."
Americans for Prosperity, meanwhile, has virtually limitless money to fight the tax increase. So far, its biggest move has been to hire the CPA to review the city's budget. CPA Steven Jay Anderson, of Edmond, Okla., did not come to Colorado Springs or request information from city officials when he reviewed the city's 2014 consolidated annual report and other documents.
His 23-page report reflects several basic misunderstandings of the city budget.
For example, he urged the city to recover more than $20 million in property taxes lost through exclusions. But only churches, nonprofits and the military are excluded. If they were taxed, it would add only $4.3 million to the city's $20 million in property taxes this year, Mayor John Suthers said.
"Do you think the citizens of Colorado Springs would vote to tax churches and nonprofits? We'd be the only jurisdiction in Colorado that did that," he said.
Anderson also recommended that $8 million in retiring SCIP bonds be spent on infrastructure. It was designated for that purpose months before he suggested it. The CPA also said the city should cut its reserves by more than $20 million to spend on roads. That would leave the city with 9 percent in reserves, far lower than the recommended 25 percent.
But Anderson told The Gazette, "I will say that every one of these (recommendations) is doable. I did do my due diligence. This isn't my first rodeo."
Anderson's profile says he was budget director for Kansas under Gov. Sam Brownback, "turning a negative balance of $27.4 million . into a surplus of over $700 million." He left that job in 2013 "to spend more time with my family."
He had called for lower taxes, reduced spending, privatization of more services and increased use of toll roads in Kansas City. He also pushed to eradicate the state income tax.
Today, Kansas is "just scraping by financially," reports Duane Goossen, a senior fellow with the Kansas Center for Economic Growth and a former 12-year state budget director who served seven terms in the Kansas House.
The massive income tax cuts Anderson recommended took effect in 2013. The state had $3.237 billion in receipts as of Jan. 31 - $65 million lower than on the same date in 2014; $434 million lower than in 2013; and $355 million lower than in 2012, the Star said.
Its income tax receipts were at $1.328 billion - $90 million lower than in 2014; $468 million less than in 2013; and $316 million lower than in 2012, the Kansas City Star also reported.
"The state's income tax cuts were easily the most significant factor in the continuing decline in overall state general fund revenues," the Star said.
Back in Colorado Springs, city Chief Financial Officer Kara Skinner repeatedly has warned the City Council that finances in 2016 will be squeaky tight.
"If this tax does not pass, the city will not have the funds to maintain its existing roads, which will hurt both residents and tourism," City Council President Pro Tem Jill Gaebler said.
BOTH SIDES OF THE ISSUE
Campaign Money on Colorado Springs Ballot Issue 2C, the proposed sales tax increase.
FOR: Springs Citizens Building the Future
- Collected nearly $180,000 as of Oct. 1.
- Donations include: Schmidt Construction, $50,000; and $10,000 contributions each from Church Community Builder Inc., a church software firm; the Colorado Asphalt Pavement Association; the Colorado Springs Auto Dealers Association; the state PAC of Martin Marietta Aggregates, provider of building materials; and the Housing and Building Association of Colorado Springs.
- Money spent as of Oct. 1: $72,597, mostly on campaign management, polling, strategy and advertising.
AGAINST: I Am Created Equal
- Collected $4,000 as of Oct. 1.
- Donations not disclosed because IACE is a 501(c)(4).
- Money spent as of Oct. 1: $1,951.01. Paid $1,850 to Rock Chalk Media in Grand Junction for video production and Drudge Report ads; reimbursed $101.01 to Laura Carno for Facebook ads.
CON: Americans for Prosperity
- Hired CPA to review city budget and write 23-page report. No financial disclosure provided to city Clerk's Office.
For information on candidates and ballot issues, go to gazette.com/voter-guide.