This fall, conservatives have been following avidly the upcoming presidential, Senate, and House elections. There are other votes of considerable importance on November 4, however. This Election Day, for instance, Colorado residents will once again have to defend their state’s Taxpayer’s Bill of Rights (TABOR).
Colorado’s Amendment 59 is the latest in a long series of efforts by the Left to undermine TABOR — and it represents the most serious threat that TABOR has ever faced. To explain why, some background is necessary.
Passed as an amendment to Colorado’s state constitution in 1992, TABOR limits government spending — capping it at the previous year’s total multiplied by the rate of inflation plus annual population growth. Any increases in tax rates or in state or local debt were made subject to voter approval. And government revenues that exceed TABOR’s tight spending cap had to be returned to taxpayers in the form of tax reductions.
Between 1997 and 2002, TABOR required Colorado to issue tax rebates totaling more than $3.2 billion. Not surprisingly, Colorado led the nation in tax relief and its economy was among the strongest in the country during this time. Accordingly, TABOR is rightly viewed by many fiscal conservatives as America’s best and most effective limit on government expansion.
Also not surprisingly, the media, unions, and many elected officials have opposed TABOR unrelentingly since its inception. In every year from 1993 to 1999, a proposal on the Colorado ballot sought either to raise taxes or to increase spending in excess of the TABOR limit.
Knowing these initiatives would markedly reduce the size of their annual tax rebate, Centennial State voters soundly defeated each of these measures. In 2000, however, TABOR opponents changed their strategy. Instead of attacking TABOR directly, they succeeded in passing Amendment 23, a spending mandate on K-12 education.
Two features of Amendment 23 created significant budgetary pressures in Colorado. First, it required that K-12 education spending grow at a rate faster than the TABOR limit. This effectively forced reductions in other parts of the Colorado budget. Even worse, Amendment 23 mandated increases in education spending even when state revenues declined. Between 2001 and 2003, a combination of the September 11 terrorist attacks and a severe drought caused state revenues to decline by over $1 billion. Despite this, Amendment 23 forced Colorado to increase K-12 education spending by $450 million at the same time.
In the face of this manufactured fiscal crisis, state‐spending advocates in Colorado were quick to blame TABOR. This led to the passage of Referendum C in 2005, which suspended TABOR’s revenue limit for five years. This has allowed the legislature to spend, rather than rebate, all revenues over the TABOR limit. As such, Colorado’s growing economy has not funded tax relief as it had in previous years, but big government.
Data from Colorado’s Joint Budget Committee indicate that the legislature appropriated a total of 3.4 billion dollars above the TABOR limit between 2006 and 2008. This means that the average Colorado resident has missed out a total of $750 dollars in tax rebates during the past three fiscal years. In fact, latest projections have raised this projected tax hike from the passage of Referendum C from $3.7 billion to $6.1 billion. That number is likely to continue to grow in subsequent years. Furthermore, this increase in government revenue will increase the TABOR revenue limits when they come back into effect —resulting in a permanent increase in the size of government in Colorado.
Referendum C may have suspended and raised TABOR’s revenue caps, but they are still scheduled to return in 2010. However, on November 4, Coloradans will face the prospect of TABOR’s permanent nullification. Amendment 59 would require that all funds exceeding TABOR’s revenue limit be deposited in an account for schools — rather than being returned to taxpayers. Coloradans are being asked to surrender their tax rebates to a school system that has little improvement to show for the huge spending increases mandated by Amendment 23. Data from the state’s Department of Education indicate that high‐school graduation rates have actually declined have since 2000, and dropout rates have increased.
If Amendment 59 passes in November, it would effectively be the third time in eight years that Colorado voters required the state to increase spending on education. Still TABOR opponents probably felt that 2008 presented the best opportunity for them to eliminate TABOR’s revenue limit altogether. The 2008 election cycle is not looking particularly good for Republicans and conservatives. More importantly, the benefits of TABOR’s revenue limit have largely been invisible — the limit has been suspended since 2005 and Colorado residents have not received any tax rebates since 2002.
However, a defeat of Amendment 59 would give TABOR a bright future. In 2010 TABOR’s revenue limit is scheduled to come back into effect. The subsequent tax rebates will doubtless increase TABOR’s visibility and popularity. Furthermore, starting in 2010 the constitutionally mandated increases in K-12 education spending are reduced, which will reduce fiscal pressures. Overall, TABOR was the first state‐level fiscal limit that was both durable and effective. For a long time, it was heralded as a model by other states seeking to limit spending, promote tax relief, and spur their economy. A loss for Amendment 59 may be the first step in rehabilitating TABOR’s reputation both in Colorado — and across the country.