Senate Bill 200, PERA Reform, and the Real Cost of Public Pensions

On November 17, 2022, Kim Monson explored how Colorado legislators plan to use TABOR refunds to benefit public pension retirees while everyday taxpayers bear the cost, then welcomed longtime sponsors Karen Levine and Lorne Levy to discuss real estate and mortgage opportunities in a challenging market.

Public Pensions and the TABOR Shell Game

Start listening at 31:26 – Hour 1

Joshua Sharf, Senior Fellow in Fiscal Policy at the Independence Institute, warns that a proposed bill would provide a $700 refundable tax credit to public pension retirees at the expense of other taxpayers. The legislation, which impacts PERA and municipal pension recipients, would come directly out of TABOR refunds that belong to all Coloradans.

Sharf explains the complex history of Senate Bill 200, the 2018 reform that restructured PERA to achieve full funding by 2047. While the reform curtailed cost-of-living adjustments during a period of rising inflation, Sharf notes that private sector workers face the same inflationary pressures without special legislative relief. The proposed bill would bypass the citizen oversight committee where Sharf serves, demonstrating how legislators prioritize public employee interests over broader taxpayer concerns.

The fiscal impact runs approximately $200 million annually, money that would otherwise return to taxpayers through TABOR refunds. Sharf advocates transitioning from defined benefit to defined contribution plans, noting that the current structure allows legislators to do favors for public employees at taxpayer expense.

“It’s been a real pleasure being on, and come visit us over at Independence Institute over at Complete Colorado.”

Joshua Sharf, Senior Fellow in Fiscal Policy, Independence Institute

Real Estate Opportunities in a Shifting Market

Start listening at 59:26 – Hour 2

Karen Levine, award-winning realtor with Remax Alliance, and Lorne Levy, mortgage expert with Polygon Financial Group, discuss how current market conditions create opportunities for savvy buyers. With 1,600 homes taking price reductions in the last seven days and interest rates showing slight improvement, Levine sees a window for those ready to act.

Levy explains the power of buy-down mortgages, where sellers contribute credits to reduce the buyer’s interest rate for the first two or three years. A 2-1 buy-down, for example, reduces a 6.5% rate to 4.5% in year one and 5.5% in year two, making monthly payments more manageable during the transition period. The strategy reflects the industry adage: marry the house, date the mortgage.

The discussion turns to reverse mortgages as both a retirement tool and estate planning vehicle. For homeowners 62 and older, a reverse mortgage can tap home equity tax-free, providing funds for living expenses or gifts to children without the monthly payment obligations of traditional home equity lines. Levy highlights the reverse mortgage for purchase option, allowing seniors to downsize or even upsize using equity from their current home.

“There’s opportunity out there. And I’m looking at in the last seven days, 1,600 homes have taken price reductions. So there’s opportunity out there. And rates improved over the last week because the inflation number dropped a little.”

Karen Levine, Realtor, Remax Alliance

Proposition 123 and the Threat to Middle-Class Housing

Start listening at 77:42 – Hour 2

Levine expresses concern about Proposition 123, which passed narrowly and fast-tracks government-subsidized housing projects over private development. The measure takes money outside TABOR accountability, creates new bureaucracy, and imposes deed restrictions that prevent subsidized homeowners from benefiting from market appreciation. Rather than addressing the government policies that made housing unaffordable, Proposition 123 expands government control over housing stock.

A caller named Scott from Colorado Springs raises the concern that such policies could increase homelessness by making traditional homeownership less accessible. Kim connects this to the broader pattern of victim mentality and dependence that government programs often create, contrasting it with the private charitable work of organizations like Denver Rescue Mission that require accountability from those they serve.