NO on 1A - Preschool Sales Tax - Inappropriate Boondoggle

Jeanne Faatz, the only Denver City Councilperson to oppose this ill-formulated, ill-advised, innapropriate raise in Denver's sales tax to fund what amounts to a "vouchering system" for pre-schools (anywhere in the Denver metro area) utilizing Denver sales tax dollars, provides a better reasoned argument than I can provide. An opion piece from the Denver Post's, David Harsanyi follows:

A Word From Jeanne Faatz

Preschool Sales Tax Increase: Just Say “No”

Mayor Hickenlooper is urging an increase in sales tax to subsidize preschool tuition for all 4-year-olds. This proposal will be on the ballot this November.

The Mayor and I agree on one thing. Early childhood education is important for children. My mother, a first grade teacher, earned her doctorate and started the first Head Start program in my home town. As a teacher myself and a former state legislator, I successfully advocated for assistance for our at-risk children through the Colorado at-risk preschool program.

For me, this debate is not about whether preschool is good. This debate is about higher taxes, the role of city government, and a flawed mechanism for program delivery.

Higher taxes

I oppose this tax increase proposal. The proposal calls for a .12% increase in sales tax. Denver’s sales tax, now 3.5%, would increase to 3.62%. The total sales tax collected in Denver, including state tax, RTD, etc., would rise to 7.72%. It will raise $12 million annually.

I am not looking for ways to increase the tax burden of our citizens. This tax will cost a family with an annual income of $70,000 approximately $50 a year. A median income family of $53,616 (2004 statistics) will pay about $33 more annually.

An increase in sales tax adds to businesses’ cost of operating. It also makes some of our retail businesses less competitive. In my Southwest Denver council district, I have a shopping center (Southwest Commons) directly across the street from Southwest Plaza in Jefferson County. This new tax would require our Denver businesses to collect 7.72%, while consumers could shop at Southwest Plaza and pay only 5.1%. The problem is already bad. This proposal makes it worse.

Expanded role for city government

Subsidizing preschool tuition isn’t the primary role of our city government. We have many responsibilities we aren’t adequately meeting now – streets, safety, parks, etc. We should take care of Job One before we even think about expanding the role of government.

Subsidies for illegal immigrants

This program provides universal coverage. All 4-year-olds with parents or guardians who are Denver residents qualify. One major problem with this approach is that it provides a benefit to residents regardless of their immigration status. This is an optional decision of the city administration and city council. It is allowed but not mandated by federal and state laws.

My constituents want non-emergency services for illegal immigrants curtailed. This proposal adds benefits. For instance, families with annual incomes below $50,000 will receive over $5,000 in subsidy for each 4-year-old.

The poor subsidizing the rich

Universal eligibility raises another philosophical issue. Subsidies are handed out on a sliding scale. There is no top income limit. The tax increase seems regressive when you consider that a poor or middle class family with older children, for example, will be subsidizing tuition for a millionaire’s 4-year-old child.

Flawed program

There are numerous technical flaws in the proposal. A non-profit corporation will be formed (incorporated by whom, the ordinance doesn’t say). Proponents call this a public-private partnership. I don’t. Why?

* This “private” concern doesn’t exist yet. It has no track record of competence to justify entrusting it with $12 million a year.
* This “private” concern has no obligation to bring money to the table for the program.
* This “private” concern will be governed by a board of directors and a board of advisors, all political appointees, appointed by the Mayor, confirmed by City Council.
* This “private” concern is supposed to be an independent contractor. Where is the “arms length” relationship if government makes the appointments to all the governing boards?

This program is not as cost efficient as advertised. While “administrative costs” are capped at 5%, many areas I’d consider administrative are outside the definition. Communication, marketing, consultants – none included in the cap. In fact, there is no guarantee of how much money will actually go to children’s tuition.

Issues raised at public hearing

One concern raised at the city council public hearing was the use of public money for private and parochial education. All licensed child care facilities – public, private, faith-based or home-based -- can participate. Another issue was the practicality of having the program’s Board of Directors monitoring the quality of facilities, another component of the program, throughout the metro area or even farther away. This program allows Denver tax money to go to preschools located anywhere in the state.

Just say “NO”

The voters should say “No” to this specific proposal. The issue is not whether we care about children or value preschool. The issue is whether we should raise our taxes, expand our city’s role, and annually entrust $12 million of our dollars to a flawed program.

Let’s ask the Mayor and his team of advisors, who stepped forward to examine children’s needs, to step back and devise a better solution to this problem. The Denver Preschool Program and the accompanying tax are not ready to become law.

Preschool doesn't need government
By David Harsanyi
Denver Post Staff Columnist
Article Last Updated:09/07/2006 03:46:06 AM MDT

One fundamental problem with government is that the only solution it seems capable of providing is even more government.

This November, Mayor John Hickenlooper's well-meaning proposal to hike Denver's sales tax to help fund preschool education will be on the ballot.

"I believe that Denver needs more quality preschools," explained Councilwoman Judy Montero.

She's right. The operative word is "quality" and it's the best reason to keep government out of the preschool business.

California voters recently rejected a universal preschool tax - which, to be fair, was a plan Karl Marx might have embraced - and Denver residents have twice in recent years said no to a preschool tax.

So why then was Jeanne Faatz the only Denver city councilor to oppose the plan this time around?

"I find a number of things I don't like in it. One is the tax implication. I was surprised that they were going after a sales tax," she explains.

"And I am very concerned about expanding the tuition subsidy. We have so many needs looming in front of us. We're still trying to catch up on the recession."

Well, we could always raise taxes again next year. Just a little ... really. Then just a little again next year - and so on.

Faatz contends that Denver is already burdened with "enormous" capital needs. And she can't recall a single constituent calling to register a complaint about preschool funding.

Faatz then proceeded to rattle off about a half-dozen programs and subsidizes available on the state and federal level for "at-risk" kids - "at-risk" a euphemism for "poor."

"Not only is it unwise to start down the path of expanding Denver government, but there are other groups operating on this level, helping kids," she explains.

Faatz also maintains that the funding mechanism for this tax hike is unfair: Why should poor people subsidize the preschool of the rich? By raising sales taxes - a tax everyone pays - that's exactly what would happen.

But a component that seems most harmful is the proposed "quality-improvement" system.

You know, there's already a brilliant "quality-improvement plan" in place. It's called parenting. And as a parent, I sure don't want a government-mandated council deciding what "quality" education entails for my kids.

We can all witness what a government-run monopoly in public education in poor neighborhoods has done in the "quality-improvement" department. Why allow the inevitable red tape and inflexibility to infect preschools?

Faatz also wonders why Denver would hand over $12 million to a group without a proven track record.

The council that will manage the money will be comprised of political appointees. And political appointees - whatever their intentions - always carry political baggage.

"Here you have a program with no track record of results, with no history. What political agenda is going to be played out?" asks Faatz. "When something isn't exactly the the way we want it, we create a new bureaucracy as treatment. If there is anything specific that needs an adjustment, a specific problem, I'm all for fixing it."

Geez, Faatz must really hate those poor little rosy-cheeked children.

"We all love children. I was a teacher. I am mom. My daughter is a mom. ... But this program is fatally flawed," says Faatz. She has other concerns, including that illegal immigrants can get stipends and the preschool subsidy can be taken to schools outside Denver.

There are positives as well. The plan calls for the stipend, like a voucher, to follow the child not the school. Perhaps one day, such vouchers will find their way into the K-12 system and poor children will be allowed to escape failing schools.

It will be interesting to see if Denverites once again see through the inevitable heart-wrenching "for-the-children" campaign tactics employed by proponents.