Suppose you decide it's time to move out of your rented apartment. You have some money, but not enough to buy a house outright. So, like millions of other Americans, you start shopping for a mortgage.
You quickly learn that the longer the term of the loan, the more house you can buy. The payments are lower, although of course it takes more time to pay it off. With a shorter term, you can't afford as much house. It might not even be worth it.
But now suppose your employer informs you of two new rules. First, your banker, if he gives you a loan at all, can only offer a ten year mortgage.
Second, your employer tells you that once you do pay off your mortgage, he is going to cut your salary by the amount of your monthly mortgage payment because hey, you don't need it anymore, right?
That set of new rules, applied to government instead of to citizens, is Amendment 61.
Under this proposal, Colorado - alone among all the United States - won't be able to borrow money at all. Other governments (schools, fire and water districts, libraries) can ask their bankers (the public) to approve a loan. In fact, they must have an election in order to borrow. But they have to pay back the loan in ten years.
Oddly, there is no ten year bond market for public projects.
Of course, the increased annual cost of projects that must be paid off in ten years means that there won't be as many. Or they'll be much smaller. That means a big reduction in the public construction projects that employ contractors, engineers, concrete and manufacturing suppliers, and more.
Think about such projects as the Denver International Airport, which then spurred the construction of roads, which then sparked housing developments, schools, and retail developments. Growth means jobs.
But now, in the midst of a recession, we have a proposal to cut jobs.
Some governments have been paying mortgages by thoughtfully managing their cash flow. But if Amendment 61 passes, once their mortgages get paid off, they have to lower their property tax rates by the amount of their payments. To put it in personal terms again: when you look after your money intelligently, you should get a pay cut!
There are many other wrinkles. A big one for Colorado concerns what is now a routine matter for many Colorado schools. Tax money doesn't come in evenly. Mainly, it is collected during May, June, and July.
That doesn't match up to the fiscal year. Many schools now run year round. So they borrow money from the state to get through the winter and spring. They pay it back promptly. But under Amendment 61, that borrowing stops, too, unless there's an election every year. That's likely to affect the school calendar.
There's also a new provision for the percentage of debt a school district can carry. The Colorado Legislative Council estimates that 36 school districts - representing about half the students in the state - would be unable to build any new schools at all, for perhaps as long as a decade.
This has nothing to do with the need for new schools. It doesn't even have to do with the willingness of the public to pay for them. It's just not allowed.
Again, the full text of the amendment - a change in the state constitution on the ballot this fall - can be found, along with arguments for and against, by Googling "ballotpedia Colorado 2010."
Look it over.
And ask yourself: if you couldn't afford to get a mortgage anymore, if shared infrastructure were now so expensive that you just couldn't pay for it, if the big public works that help our economy suddenly ratcheted back by a third or more, who would that benefit?
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