Out of Control Policy Blog

Firestorm over Colorado's TABOR

The New York Times ran a piece on Sunday on the growing battle among conservatives over the future of Colorado's Taxpayer Bill of Rights (TABOR). If you're not familiar with TABOR, here it is in a nutshell:

    [Colorado's TABOR] does three things: it imposes firm spending caps (which grow only to reflect population and inflation), returns any excess revenues to taxpayers and allows only voters, not legislators, to override the caps.

    Both sides agree that the measure reined in the budget. The growth in per capita spending fell to 31 percent in the decade after the cap from 72 percent in the decade before, according to the Independence Institute, a Colorado group that favors it.

    Supporters say the cap ignited the subsequent economic boom, with low taxes luring businesses. They also say it kept the state from overspending when flush only to face painful cuts later. "Tabor saved Colorado's fiscal fanny," said Jon Caldara, the institute's president.

Back to the battle...on one side, you have Republican Governor Bill Owens proposing a ballot measure to suspend TABOR spending limits for five years to address the state's "fiscal crisis." On the other side are influential, national conservatives like Dick Armey (former House Majority Leader and current FreedomWorks chair) and Grover Norquist (Americans for Tax Reform president).

    That constitutional cap on state and local spending, imposed in 1992, has been so effective in curbing government growth that tax opponents are making it the centerpiece of a national campaign. Similar measures are headed for the ballot this fall in California and perhaps Ohio, and parallel efforts are under way in more than a dozen other states.

    For some, the long-term targets include Washington, where many on the right are troubled by the rivers of red ink that have continued to flow despite Republican rule. "It's the ultimate goal of what we're trying to do," said Grover Norquist, president of Americans for Tax Reform. "We want constitutional limits on the size of government."

    But even as the Colorado measure galvanizes antispending groups elsewhere, it is dividing them at home, prompting a right-on-right fight that is luring outside combatants and drawing blood.

    On one side is Gov. Bill Owens, the two-term Republican once promoted by National Review as a conservative of presidential timber. Arguing that the strict provision has forced a fiscal crisis, Mr. Owens is championing a ballot measure that would suspend the limit for five years, allowing the state to spend an additional $3.7 billion. Otherwise, he warns, the cap may be repealed.

    On the other side are former allies who call the governor a tax-raising apostate discrediting the law he claims to protect. In addition to Mr. Norquist, they include the editorial page of The Wall Street Journal and the former House majority leader, Dick Armey, a leader of an antitax group called FreedomWorks.

Why is this important? Because advocates are pushing for TABOR-esque measures in several states -- Ohio, California, Maine, Arizona, Kansas, Florida, Maryland, Missouri, Oklahoma, North Carolina, South Carolina, Texas and Virginia, according to the Times. Despite the surging momentum nationally, a major setback in Colorado would likely dampen voter support for tax and spending limits in other states.

According to the Heritage Foundation:

    The negative effects of Owens's tax increase–for that's exactly what it is–are manifold: it will take money out of taxpayers' pockets ($600 from every man, woman, and child in Colorado), set a bad precedent (if the cap can be suspended once, politicians will inevitably try again later), and countermand the point of TABOR (forcing politicians to prioritize government spending within a defined budget). Moreover, successful passage of Referendum C would undoubtedly dampen nationwide enthusiasm for constitutional spending limits, preventing citizens of other states from enjoying the benefits that have accrued to Colorado taxpayers since 1992.

For more on TABOR and Colorado's budget deficit, see this February 2005 Reason study, which outlined a way for Colorado to balance its budget without raising taxes or gutting TABOR.

Leonard Gilroy is Director of Government Reform


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