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Tax and Spending Reduction

Hijacking TABOR with a baseball bat

By Bluegrass Institute

Attacks on policies that limit government spending bring to mind words attributed to the baseball great Yogi Berra: “This is like déjà vu all over again.”

Colorado’s Taxpayers’ Bill of Rights (TABOR) is a success because it has successfully limited the growth of spending and has returned surplus revenues to taxpayers. TABOR has refunded $3.2 billion to its taxpayers and strengthened the Centennial State’s fiscal health.

Yet some policymakers want to dismantle the policy, pointing to a $234 million shortfall during the next two years. These big-government spenders are irked because TABOR mandates that $345 million be returned to taxpayers during the next biennium.

On the surface, lawmakers’ resistance appears to be reasonable. After all, if the state is facing shortfalls, the first thing to go is taxpayers’ refunds. Right?

But that’s not the whole story. The shortfall was created in 2000 when Colorado’s teacher unions successfully lobbied in favor of Amendment 23 – a mandate requiring education spending to increase faster than TABOR’s spending limit.

A similar situation occurred in California after the Gann Limit was enacted in 1979. The measure resulted in rebates of more than $1.1 billion to California taxpayers in 1987.

California’s teacher unions countered by getting Proposition 111 – which weakened the state’s spending limit – passed. What followed is similar to the pattern of events in Colorado. Spending careened wildly out of control because of the absence of spending limits. As a result, the state now faces painful fiscal surgery.

Despite opponents’ success in other states, a TABOR would be a good deal for Kentucky. Had such spending limits been in place and enforced, Frankfort’s politicians would not have been able to spend at unprecedented levels like they did during the 2005 legislative session.

Who knows? Kentucky taxpayers could have even received a rebate by now.

Sources

“16 States Consider a Taxpayer Bill of Rights; Colorado In A Bind” by Kathleen Hunter, Arizona Capitol Times

“Reforming TABOR in Colorado” by Michael New, Cato Institute

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