Colorado voters on Tuesday agreed to give up $3.7 billion in tax refunds over the next five years in a historic move to ease the nation's strictest limit on state spending.

Fifty-three percent of voters supported Referendum C.

But a companion measure to let the state borrow $2.1 billion apparently failed, with 49.6% of the votes in favor, and 50.4% opposed, with a small number of precincts still to report. The narrow margin could trigger an automatic recount.

A divided vote could let both sides declare victory in the bitterly fought, multimillion-dollar campaign that was marred with voting problems in El Paso County, where voters faced ballot shortages at some polling places.

"I'll take a split decision," said Jon Caldara, leader of the opponents to Referendums C and D. "I'd rather take the whole match, but more importantly our kids and grandkids are not going to be straddled with billions in debt."

A victory on Referendum C restores Republican Gov. Bill Owens' touch with voters, who had rejected most of his causes and candidates during the past two years. But it also leaves him vulnerable to charges that he betrayed his party's commitment to fiscal conservatism.

"It's a vote for fiscal responsibility," Owens told a cheering crowd of supporters at the Pinnacle Club in Denver. "Once again, the voters of Colorado showed they're in charge and voted for the future of the state of Colorado."

Caldara said Referendum C passed because of the proponents' superior resources.

"I walked into this with my eyes open. They had the money, they had the politicians, they had the media," he said.

Opponents have threatened to challenge the ballot measures in court.

Referendum C passed the legislature with the bulk of its support from Democrats, led by state House Speaker Andrew Romanoff, D-Denver.

"I think there are two messages," Romanoff said. "One is that bipartisanship works. People want to see Democrats and Republicans working together. And, two, the economy matters. People want to invest in the economy, health care, roads and bridges. They want to bring good jobs to this state."

Referendum C suspends a provision of the state constitution's Taxpayer's Bill of Rights to let the state keep an estimated $3.7 billion in revenue that would otherwise be returned to taxpayers over the next five years.

Nonpartisan state budget officials estimated most taxpayers will be giving up an average of $491 over five years. The state will use it for roads, schools, health care and pensions.

Referendum D would allow the state to borrow an additional $2.1 billion to jump-start 55 road projects, pay off a legal settlement to fix crumbling schools in poor districts, and cover an unpaid pension bill to firefighters and police officers.

The vote allows the state to patch a huge hole ripped into the state budget since 2001, when the state started cutting $1 billion in spending.

State officials had predicted doom and gloom if C failed. In the final weeks of the campaign, the governor's budget director released a memo that indicated the state would close 11 state parks, raise tuition at state universities, cap the prison population, end instant background checks on firearms purchases, cut funding for health care for the poor and eliminate inspections of ski lifts.

And that was just a start. The budget office identified only $255 million of the $365 million that state officials expected to cut from next year's budget.

Some backers of the referendums said the outcome restored their faith in the democratic process, which has whipsawed lawmakers with conflicting constitutional mandates.

TABOR, added to the constitution in 1992, placed a strict cap on how much taxpayer money the state could keep and spend.

Amendment 23, approved in 2000, automatically boosts spending for public schools. Amendment 35, which passed last year, increased tobacco taxes and put the money into health care programs.

"My confidence in the voting public has been re-established," said state Sen. Norma Anderson, R-Lakewood, "because they recognize the needs for the services that government provides."

The battle over Referendums C and D blossomed into one of the most expensive issue campaigns in state history, with supporters tapping home-grown business executives for millions, while opponents collected nearly $2 million, mostly from mystery donors.

Backers said they raised more than $7.5 million while opponents reported collecting about $2 million.

Following this summer’s vote to dissolve the Florence County School District, questions arose about the fiscal health of other districts around the state. Is Florence the first of several to close due to financial strains? Are there key problems that, if not addressed, might lead to eventual dissolution of other school districts?

In a first-of-its-kind study, "At-Risk School Districts: Warning Signs," the Wisconsin Taxpayers Alliance (WISTAX) identifies five key factors that could push other districts toward a fate similar to Florence’s:

• declining enrollments;
• student sparsity, or few students per square mile;
• stagnant or declining revenue limits;
• declining fund balances; and
• rapidly rising property values and declining state aids.

Declining enrollment is an increasingly common problem for school districts, particularly in the southwestern and northern parts of Wisconsin. In 2004-05, 239 school districts had fewer students than the year before. And, according to WISTAX, 51 of the state’s 426 school districts saw enrollments decline for at least five consecutive years.

Declining enrollments affect a district primarily through its revenue limit. Because these limits are based on student counts, fewer students can translate into stagnating or declining district revenues. And, because districts have many fixed or semi-fixed costs, such as utilities, debt service, administration and transportation, district costs can continue to rise while revenue limits cap allowable revenues. While 51 districts had declining student counts for at least five consecutive years as of 2004-05, 10 of these districts reported enrollment drops of 20% or more from 1999-2000 through 2004-05. Among the districts with the largest declines were Beecher (-25.2%), Butternut (-22.6%), Florence (-22.2%) and Granton (-22.0%).

WISTAX researchers also noted that declining first-grade enrollments are an indicator of future drops in total student counts. Among the districts with the largest five-year drop in first-grade counts were Cassville (-48.9%), Wabeno (-46.0%), Glidden (-44.7%) and Boulder Junction J1 (-42.9%).

According to WISTAX, a second factor related to enrollment is district density, or the number of students per square mile. Many of the districts with declining enrollments have relatively few students per square mile, which can play a role in district financial health through high per student transportation costs. Statewide, 29 districts had fewer than two students per square mile in 2004-05; five had fewer than one. The statewide median (half higher / half lower) was 8.5. Districts with fewer one student per square mile had per student transportation costs ($935) of nearly 2.5 times the state average ($383) in 2004-05.

While some districts with declining enrollments have been able to pass referenda to exceed state-imposed revenue limits, others have not. As of 2004-05, 16 districts had revenue caps below their 1999-2000 levels. Among the districts with the largest declines were Herman #22 (-13.5%), Butternut (-9.4%), Maple Dale-Indian Hill (-7.2%) and Shullsburg (-5.5%). Another 19 districts saw their revenue limits grow less than 1% per year during the period.

Faced with costs that exceed revenues, districts have several options. They can reduce expenditures, use their fund balances to cover ongoing expenses or ask voters to approve an increase in their revenue limits. While total statewide fund balances continue to rise, an increasing number of districts are drawing down their balances annually. A total of 114 districts had lower fund balances in 2003-04 compared to 1999-2000. Many reduced their balances to less than 10% of spending (statewide average was 14.8%). Among the districts with large declines and small 2003-04 balances were Prairie du Chien Area (a drop of -17.8 percentage points to a balance of 0.8% of spending in 2003-04), Florence (-14.2 points to 2.9%), Oconomowoc Area (-10.6 points to -6.4%), Independence (-10.4 points to 1.5%) and Augusta (-9.9 points to 4.5%).

The WISTAX report also cited rising property values and reduced state aid as a contributing factor in the Florence situation. Districts with rapidly rising property values tend to lose state aid, and more of their school funding is placed on the property tax. While statewide per student property values rose 46.2% from 1999-2000 through 2004-05, 24 districts saw their per student values more than double. Among the fastest growing districts were South Shore (183.4%), Bayfield (134.6%), Butternut (131.1%) and Luck (128.9%).

WISTAX researchers noted that these factors are only warning signs, and what matters most is how districts deal with factors such as declining enrollment and revenue limits. Among the district administrators contacted for the new study, many felt their districts were not likely to share Florence’s fate. The most-common theme was that the district had responded early to falling enrollments and tightening revenue limits with spending and staff reductions. Some districts were able to reduce costs by making more flexible use of staff.

As a final note, the WISTAX study points to things that could be done at the state level to further assist these districts. Assisting sparsely populated districts with transportation costs, either through revenue-limit exemptions or increased state aids, is one approach. The state could also provide incentives to consolidate services with other districts. The state may also consider funding or rewarding innovation, such as traveling teachers, so that shrinking districts do not have to reduce programming.

For a free copy of The Wisconsin Taxpayer titled "At-Risk School Districts: Warning Signs": write WISTAX, 401 North Lawn Ave., Madison, WI 53704-5033; e-mail wistax@wistax.org; visit www.wistax.org; or phone 608.241.9789.

According to the Wisconsin Taxpayers Alliance (WISTAX), the only public school staff category not to show increases in 2004-05 was administration, where 13 administrator positions were cut statewide. This marks the third straight year in which Wisconsin public school administrators declined in number. Of the 649 net new public school employees in 2004-05, 253 were support staff and 131 were teachers.

Since 2001-02, Wisconsin school districts have cut more than 100 school administrator positions. Public school administrators numbered 3,514 statewide in 2004-05. They made up just 3.3 percent of total Wisconsin public school staffing.

The Assembly Republican agenda will focus on new medical malpractice caps, tort reform, Voter ID, and punishing sex offenders. In a press conference last week, Majority Leader Mike Huebsch, and Reps. Debi Towns and Brett Davis laid out the plan for the remaining fall session days.

The Supreme Court ruling that overturned previous medical malpractice caps leave the health care consumers of Wisconsin vulnerable to skyrocketing costs because of the amount of insurance doctors must carry, Huebsch said. The new malpractice cap bill, which will be introduced tomorrow, will limit the awards to $450,000 for adults and $550,000 for children. There is no cap proposed on economic damages, Huebsch pointed out.

Similarly, he said another recent Supreme Court ruling regarding lead paint liability has put state businesses in peril. He said the Republican tort reforms, the Job Preservation Act and the Main Street Protection Act, to be introduced Nov. 1, will not only preserve jobs but "overturn some dangerous decisions the Wisconsin Supreme Court has made."

The Republicans say they're tired of losing out to Gov. Jim Doyle's veto power when it comes to Voter ID, so they'll try taking it straight to the voters.

Towns talked tough on the issue, saying the state has been "nationally embarrassed by voter fraud."

"The majority of people in Wisconsin don't want out-of-staters and dead people to decide who their elected officials are going to be," she said.

She also said, "There are two types of people who oppose Voter ID legislation: those abusing the election process and committing fraudulent acts, and number two, elected officials who benefit from their activity."

Asked by a reporter what category that puts Doyle in, Towns responded, "I don't know, if he's not willing to stop it, he's willing to condone it."

The constitutional amendment will come to the floor of the Assembly on Nov. 1 (it passed on first consideration 57-36).

Davis said the Republicans would be proposing legislation to require a 25 years to life sentence for those who rape or molest children, and one to require lifetime GPS monitoring for sex offenders.

"A lifetime sentence for the worst offenders and lifetime monitoring for other offenders is the best way to guarantee our children's safety," Davis said.

The crime bills will come to the Assembly floor between Nov. 8-10. Huebsch said concealed carry legislation will most likely come before the Assembly by the end of this session or early in the next session, and that Assembly members are still working out details of a TABOR proposal, but was confident there will be a vote on the issue before this session ends.

The Senate voted 23-10 to pass on first consideration a constitutional amendment (SJR 33) that would limit the use of the governor’s veto pen. The proposed amendment would prohibit partial vetoes from creating new sentences by combining parts of two or more sentences in a bill. The veto amendment would need to pass both houses of the Legislature in two consecutive sessions before being voted on in a statewide referendum.

The Senate Committee on Health, Children, Families, Aging and Long Term Care has unanimously recommended passage of SB 313, which increases the reimbursement for school medical services under the Medical Assistance program. The SAA strongly supports this bill.

SAA members David Perrodin, Assistant Director of Special Education for CESA 5, and Tom Potterton, Director of Special Education for CESA 12, provided the key testimony in securing the committee’s support for the bill (see Perrodin Testimony and Potterton Testimony). Thanks David and Tom!

Former State Sen. Chuck Chvala, D-Madison, pled guilty to two felony charges Tuesday after a plea agreement was reached between Chvala’s attorneys and Milwaukee County Assistant District Attorney David Feiss at the Dane County Courthouse.

By striking the deal with Feiss, Chvala gave up his right to have a jury trial, which had been scheduled for Oct. 31. Under the terms of the plea agreement, Chvala admitted guilt to one count of misconduct of public office for having state employees do campaign work, and also pled guilty to a second felony of fraudulently exceeding campaign-contribution limits. A sentencing date will be scheduled sometime in December.

Last Wednesday, Assembly Speaker John Gard (R-Peshtigo) named Rep. Debi Towns (R-Janesville) to the state Building Commission replacing Rep. Vrakas. The 11-member commission includes six legislators, the governor, a citizen member appointed by the governor, and three non-voting advisory members. Towns’ term on the board will run through 2007. Rep. Towns is chairperson of the Assembly Committee on Education.

AB-425. Distribution of school and school district performance reports. Am. 1 adopted, voice vote. Passed, voice. The SAA strongly supports this bill.

The Assembly Committee on Education Reform recommended each of the following bills for passage.

AB-698. Increases authorized enrollment of the charter school established by the UW-Parkside. The SAA opposes this bill.

AB-631. Creation of the Tribal Charter School Authorizing Board and establishment of charter schools by the board. The SAA is monitoring this bill.

AB-730. Allows additional independent charter schools to be established by UW institutions. The SAA opposes this bill.

SB-206. Transportation for pupils participating in the open enrollment program. The SAA is monitoring this bill.

Assembly Committee on Education will hold a hearing on the following bills of interest at 10:00am on Tuesday, November 15th in Room 417 North, State Capitol.

SB-322. Mailing copies of school district reorganization orders issued by the School District Boundary Appeal Board. SAA support.

SB-323. State aid paid to consolidated school districts. SAA support.

SB-324. Allows school boards to charge a fee for transporting certain pupils to school. SAA support.

AB-690. Provision of instruction in human growth and development. SAA monitor.

SB-286. School district human growth and development programs. SAA oppose.

AB-803. Deadline for school districts to determine, and to notify municipalities of, their tax levies. SAA support.

AB-804. School attendance officer’s duties. SAA monitor.

Thanks for listening and, as always, thank you for your efforts on behalf of Wisconsin school children. For up-to-date reports on legislative activities, please visit the SAA’s website at www.wsaa.org.