TABOR: Bad Economic Sense

According to The Denver Post, TABOR allows state revenue to grow each year by only an amount equal to population growth and inflation - based on the previous year's budget. Unless overridden by voters, that clause will prevent the state budget from ever climbing out of the canyon into which it was hurled in 2002.

To understand why, assume the 6 percent growth limit applied to your own income. Last year, you earned $20,000, meaning this year you would be permitted to earn $21,200. But in fact, you got laid off and your income dropped to $10,000. The 6 percent limit would then mean you would be permitted to earn just $10,600 next year. You could never return to your old standard of living.

In managing money, you would never say:   “I refuse to allow myself to spend more in the future.”  The state should also have the potential to invest in education, health care, jobs or other areas of the economy. 

Here’s a simple way to look at state TABOR Formulas:

• State Spending: Maximum Spending Increase = Inflation Rate + Change in State Population.
• Local Spending: Maximum Spending Increases = Inflation Rate + Change in New Construction and Improvements and Additions to, and Reconstructions of, Existing Construction of Real Property.
• School Districts: Maximum Spending Increase = Inflation Rate + School District Enrollment.
• Voter Referendum: If the State, local government unit, technical college or school district wish to exceed the maximum spending limits, a voter referendum would have to occur.

More TABOR Horror Stories from Colorado:

Lawmakers Consider Billion Dollar TABOR Bailout -- Lawmakers are leaning toward a plan to borrow as much as $1 billion to shore up the state budget. Without the loan, called securitization, the state would have to cut spending by $194 million during the 2004-05 fiscal year, which starts July 1, and slice $393.5 million out of the 2005-06 budget.

Deficit News: It's all bad -- Legislative budget writers got hit with more bad news when their chief economist told them Colorado is now facing a $610 million deficit over the next three years. The culprit is lower-than-expected inflation. "So if you have lower inflation, then even if you collect the exact same amount of revenues, under TABOR you have to refund more," said Mauer.

Fuzzy totals complicate TABOR Problem -- Lawmakers would have to cut about $44 million more in the budget, or about $194 million total. The change also raised the three-year deficit to $610 million.

Taxpayer's Bill of Rights hobbles programs, wage competitiveness -- The TABOR revenue limit must be changed to keep state government spending on par with the economy.

Budget committee comes up with own plan to fix constitution -- Sen. Ron Teck, R-Grand Junction, said it will be difficult for lawmakers to get the two-thirds vote needed to put the plan on the November ballot and to convince voters to approve it unless the details are easy to understand.

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