The Journal Editorial Report | June 24, 2005 | PBS
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briefing and opinion
June 24, 2005

Nice Concept, Needs Work
TABOR cartoon
"Legislative eye for the ugly guy." Mike Keefe, DENVER POST

Colorado is known for its quality of life, from the scenery, to the sense of opportunity found in one of our fastest growing states.
TABOR
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"We have a good quality of life here," says resident Jerry Screws. "Utopia is impossible, but we really have a good situation the way it is."

Residents also enjoy one of the nation's lowest tax rates. Much of the credit goes to a law that makes sure state government does not tax or spend too much. It is called the Taxpayer Bill of Rights, or TABOR.

Because of a strict funding formula, the budget cannot go up more than the inflation rate plus the rate of population growth. If government needs more money, voters have to approve all tax increases.

"It kept us throughout the 1990's from overspending like California did, so when our recession hit, it was actually more modest because of TABOR," says Colorado governor, Bill Owens. The Republican governor says TABOR earned its reputation as the gold standard among fiscal conservatives.

"We've had to be more efficient than some of my colleagues in other states," says Owens. "I've had to govern under a pretty tight reign."

politics
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Governor Owens' reign has been so tight the state courts were forced to eliminate one out of eight jobs. State funding for higher education is down 21 percent in four years and there is less highway construction, most expenditures have been cut. The governor says as the economy recovers from the recession and the state takes in more tax revenues, it should be able to restore services, but there is an unanticipated problem with TABOR. "As we recover, we're not allowed to recover quickly enough to continue to meet state needs," says Owens.

"Another factor is the way Colorado voted to fund K-12 education. To protect the schools from the TABOR spending limits, Amendment 23 was passed. It guarantees annual increases for education -- even when revenues are down -- leaving less money for everything else."

The squeeze that we have seen in the General Fund, which is only one small part of the entire budget has not been caused by TABOR, it's been caused by Amendment 23," says Jon Caldara of the Independence Institute, a Colorado think tank. Caldara says TABOR is not the culprit and that service cuts could be avoided through greater efficiencies. "TABOR has been scapegoated, there's no question about it," says Caldara. "TABOR has saved Colorado's fiscal fanny."

Colorado is trying to get more money for services by using a provision within the TABOR law. In a referendum this November, voters will decide whether the state should be allowed to keep a surplus of more than $3 billion anticipated during the next five years and make a one-time increase in the spending cap. If passed, the state would keep the money instead of refunding it to taxpayers.
future
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Wade Buchanan, the director of the Bell Policy Center, which is pushing Referendum C, says the tax law must be more flexible. And if Referendum C does not pass? "Big picture, we will try to do what is important for government to do with less and less and less money every year," says Buchanan. "At some point, things are going to start to give."

Colorado's Taxpayers' Bill of Rights was the first of its kind. Today the state still has the strictest limits on spending in the nation. Any attempt to change the law here is loaded with symbolism.

"Many other states are looking at the Taxpayers' Bill of Rights," says Caldera. "I think there's a sense that if we can make TABOR look bad in Colorado, if only we can make it look like a failure, we can put out the fires that are burning all over the country as more and more tax activists and politicians say, 'You know we need what Colorado already has.'"

The referendum has a broad base of support, including college students. Asked if he thought it was fair to expect taxpayers to forego their refunds to help lower his tuition, CU Boulder student body president, Joe Neguse, said yes. "It is not just about me paying less in tuition," says Neguse. "It may be their kid in 15 years. It may be their mom getting Medicaid. It is about the whole mosaic of how the state runs, and what this state provides to its citizens. That's why when you talk about TABOR, it is so confusing because these are services that everyone uses."
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Business leaders also want a change in TABOR. "The business community always likes low taxes, but not to the point that the key investments can no longer be made in the things that make business thrive: a highly educated workforce, great public facilities and good roadways," says Tom Clark of the Denver Metro Chamber of Commerce.

"What's going on here with TABOR is really a battle between two fundamentally different views," says Wade Buchanan. "On the one side are the forces behind TABOR who have believed that government really needs to be a smaller and smaller part of what we do. On the other side are folks who say government has a role to play -- has an important role to play, whether government can be an effective partner. That is really what's going on. Those are the sorts of challenges."