News Release

October 24, 2005

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Don't Blame TABOR for Colorado's Budget Problems
With Referendum C, state government would grow without restraint

WASHINGTON -- Next Tuesday, Colorado will vote in a special election on Referendum C, a measure which would reverse the Taxpayer's Bill of Rights (TABOR) and remove a cap on state government spending.

According to a new study by the Cato Institute, TABOR has been highly effective at controlling state government growth and has "virtually nothing to do with Colorado's budgetary woes." Instead, the state's 2001 recession and sharp revenue decline combined with a misguided education spending requirement are to blame for the ailing budget.

In the Briefing Paper "Dispelling the Myths: The Truth about TABOR and Referendum C," Michael New, a Cato adjunct scholar, and Stephen Slivinski, the director of Cato's budget studies, rebut the logic of Referendum C, claiming that with it the government would permanently grow without restraint for the next five years.

They argue, "Referendum C gives the state government the power to spend all revenue that comes into the state, without regard to the TABOR limit. If revenue estimates go up -- which is very likely -- then the state legislature can spend all of that money without asking further permission from voters. It's the equivalent of giving a blank check to the legislature for the next five years."

One of the sources of Colorado's deficit is Amendment 23, which requires a yearly increase in public education. Since the passage of Amendment 23, categorical program spending and per pupil spending increased by $818 million at a time when revenue was declining dramatically.

Briefing Paper no. 95