For 13 years, the state’s conservative politicians have held the Taxpayer’s Bill of Rights as sacred as Sunday services and the Pledge of Allegiance. But as TABOR slows state government’s recovery from the recession, some are now calling for a timeout from the amendment’s requirements.
Liberals would like to do away with TABOR altogether, but that isn’t in the cards.
Moderates, true to their colors, are in the middle – appreciating the discipline that TABOR brings to government but wary of diminishing state services and any threats to the vitality of Colorado’s lifestyle and business climate.
Plenty of Coloradans relish the idea of a TABOR tax refund, but Referendums C and D are forcing citizens to wonder: “At what cost?”
Republican Gov. Bill Owens is leading the campaign for C and D, asking voters to employ provisions of TABOR that allow for a pause on state revenue limits. He is a pro-TABOR conservative who seeks to avoid budget cuts that will be so draconian Colorado will be left behind even as the state’s economy recovers from the recession.
Opponents, led by former Texas congressman Dick Armey and Colorado House GOP leader Joe Stengel, see no risk of a fiscal crisis and no need to dilute TABOR restrictions.
Since TABOR limits the amount of money the state can collect and spend, state programs in the 1990s didn’t grow as fast as elsewhere. TABOR didn’t cut government spending or revenue collections, mind you, but slowed its growth, causing Colorado’s standing among other states to drop.
When the recession of 2001 hit, state revenues plummeted, forcing deep cuts in a traditional down cycle for government. But TABOR then made it much harder for state spending to recover to pre-recession levels. Next year, government could be cut by $400 million if Referendum C is defeated. The modest spending growth of the ’90s will seem like the good ol’ days.
TABOR author Douglas Bruce contends that smaller government is always best and that TABOR forces government to be more efficient, but on Nov. 1 Coloradans will be asked, essentially, if TABOR is shrinking state government too much.
Voters will be asked in Referendum C to override TABOR so the state can keep $3.7 billion in revenue it already collects. Otherwise, TABOR will cause the state to have both a surplus and a deficit next year.
Business leaders fear if Referendum C isn’t approved, state funding for higher education will evaporate, eventually drying up the state’s pool of educated workers and chilling the economy. The actual number of state dollars going to higher education – not counting tuition – is less today than it was a decade ago, and heading south.
Colorado is a wealthy state in terms of personal income, and its people pride themselves on wanting only the best for their children and themselves, yet some fear the state is now being left behind.
For people like Bruce, that’s OK. For people like businessman and GOP fundraiser Bruce Benson, it’s not.
The booming ’90s
Colorado had one of the country’s strongest economies in the 1990s. Per capita income jumped from 17th highest in the nation in 1992 to sixth within 10 years. The poverty rate declined from 11.7 percent to 9.3 percent between 1989 and 1999. Our population grew at an annual 3 percent clip, combined with an average 3 percent inflation rate. So state government was allowed to grow about 6 percent per year – a seemingly suitable rate.
State taxes were in the middle of the pack when TABOR was approved. In 1991, Colorado ranked 25th in tax burden, with residents paying 10.1 percent of their income in state and local taxes, according to the Tax Foundation. The national average was about 10.5 percent.
By 2003, Colorado had dropped to 9.3 percent.
In 1997, the state was collecting more than it was allowed under TABOR, and the first TABOR refunds went out. With rapid growth, the state could fund its basic needs and residents were pleased with the extra cash in their pockets.
“It slowed the rate of growth at a time when government would have grown too fast,” says Owens. “It made us more effective managers. It gave the legislature and the governor an excuse to say ‘no.”‘
Slowly, and quietly, though, state programs were being diminished by the tighter spending restrictions.
Rankings drop
The Bell Policy Center, a liberal-leaning think tank concerned about TABOR’s impact, put together a report in 2003 to make the case for TABOR reform. It and other reports have detailed how Colorado’s ranking in critical public functions plummeted in recent years.
Between 1991 and 2000, state and local per-pupil funding of public schools fell from $299 above the national average to $697 below. The state fell from 26th to 32nd in per-pupil spending.
As a response to TABOR, education supporters came up with Amendment 23 in 2000, which protects K-12 by mandating small annual spending increases. Even so, Colorado spends $331 per-pupil less now than at 1988 levels, and the state received a grade of “C” on its adequacy of K-12 funding in Education Week’s annual review of education in 2002. Colorado ranked 42 out of the 50 states.
Based on spending per residents’ income, the state dropped from 34th in the nation in 1992 to 47th in 2004 in providing support for higher education.
As a portion of the general fund, the share of money for higher ed dropped from 25 percent in the 1970s to 10 percent now.
Colorado colleges and universities take in millions more today than in 1992 when TABOR passed, but the revenues include sharp tuition increases forced by state funding drops. Total state funding for higher education grew at the second slowest rate in the nation – averaging an almost indiscernible 1 percent annually.
Colorado’s roads also have deteriorated. In 1994, 65 percent of our roads were in poor condition, according to the Surface Transportation Policy Project. By 2001, 73 percent of the roads in the state’s urban and suburban areas were considered poor.
Colorado is last in the country in on-time immunization rates, according to the Center on Budget and Policy Priorities.
So are other states passing us by?
Sure, says TABOR author Bruce. “In their headlong rush toward socialism, they’re racing toward the cliff faster than we are,” he said. “Instead of going toward the cliff at 65 mph, we’re going at 35. First thing you have to do when you’re racing toward the cliff is take your foot off the accelerator.”
However, Colorado is now left with a state government that has raised fees for services to make up for revenue losses, and also borrowed money from treasury accounts not designed to be slush funds.
TABOR restricts local governments, too, and many have gone to voters for a waiver. Since 1993, there have been 482 TABOR changes proposed by Colorado municipalities and voters have approved 88 percent of them, according to the Colorado Municipal League.
Recession caused problems
TABOR may be demonized by many, but most everyone agrees it saved Colorado from a major bloodletting when the recession reduced revenues by 16 percent. Colorado collected $8.9 billion in revenues in 2001, but TABOR’s formula allowed the state to keep only $7.9 billion, with $1 billion returned in refund checks. When revenues dropped the next year to $7.8 million, the state only had to reduce spending by $196 million versus $1 billion.
That recession, however, also prompted the state’s current problems with TABOR.
“Had there not been a recession, we wouldn’t have to go to the ballot” with Referendum C, Owens said. “TABOR hasn’t been responsible for any cuts until this year. All of those cuts were because of down revenue. TABOR is now becoming the problem.”
While TABOR likely can’t be fully credited for Colorado’s good times in the 1990s any more than it can be blamed for Colorado’s budget crisis of the early 2000s, it has slowed Colorado’s recovery from the recession. The state is now locked in at a lower revenue limit, and it will take years under TABOR’s conservative growth formula to get back to where it was in 2001.
That doesn’t deter Bruce. “It’s the Taxpayer’s Bill of Rights, not the Bureaucrats’ Bed of Feathers,” he says.
Yet Owens looks at it this way: Colorado ranks 50th in the country in terms of taxes paid per thousand dollars per capita. That’s a good thing, but … “This has helped the private economy, but when you’re already 50th, to have us, in comparison to the other 49 states, unable to recover from the recession, it means we’re going to be playing with one hand tied behind our back when it comes to future growth,” Owens said.
For outsiders, the debate may look like the normal ebb and flow of government, with good years and bad years. But TABOR makes it harder for the state to get back on its feet in good years. That’s at the heart of Referendum C.
Dan Haley (dhaley@denverpost.com) is a member of the Denver Post editorial board.
