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Taxpayer Bill of Rights (TABOR)

National right-wing organizations have launched a coordinated campaign to enact so-called Taxpayer Bill of Rights (TABOR) legislation.
National right-wing organizations—led by Grover Norquist’s Americans for Tax Reform and Dick Armey’s Freedomworks—have masterminded campaigns to insert TABOR amendments into state constitutions across the country. Their motive has nothing to do with good government—it is to energize right-wing activists and elect extreme right-wing legislators. Since 2005, TABOR has been introduced in 22 state legislatures and it could appear on as many as 12 state ballots in 2006.
TABOR is a gimmick that is designed to starve state and local governments.
TABOR is a constitutional amendment that forbids governments to increase spending beyond a rigid, arbitrary limit—the state’s rate of inflation and population growth. This mathematical formula does not address any real problem. It does not attack government waste, close tax loopholes that benefit the rich, or stop special interest payoffs. Instead, TABOR’s effect is to provide tax breaks to wealthy corporations while forcing the state to slash spending that benefits average residents—for public schools, police and fire protection, public health, transportation and programs for children and the elderly.1
Colorado is the only state that has adopted TABOR, and it has been a disaster.
Thirty states (AL, AZ, CA, CO, CT, DE, FL, HI, ID, IN, IA, LA, ME, MA, MI, MS, MO, MT, NV, NJ, NC, OH, OK, OR, RI, SC, TN, TX, UT, WA) have laws that restrict the growth of revenue, spending or both. But Colorado’s TABOR is by far the most draconian. Since its enactment in 1992, TABOR has had a disastrous effect on Colorado. Two studies found that Colorado’s finances were the worst-managed in the country due to TABOR.2
TABOR increases unemployment.
Economic studies show that any private sector jobs that may be created by cutting taxes will be more than offset by the loss of public sector jobs caused by corresponding reductions in spending.3 That theory became reality in Colorado, which suffered a net loss of 68,000 jobs between 2001 and 2004.4 Only three states lost a larger share of employment during the 2001 recession.5
TABOR exacerbates economic downturns and thwarts recovery.
It is most important for states to spend in times of fiscal hardship, both to provide services to residents and to jumpstart the economy. But TABOR limits spending when recessions drive revenue down. When economic growth resumes, TABOR prevents government spending from returning to pre-recession levels—even when the revenues are available. This is called the “ratchet-down” effect. Since the recession, Colorado lost over $1 billion dollars that would have been available if revenue growth had kept pace with inflation.6
TABOR cripples public schools, higher education and health care.
As a result of TABOR-forced cuts, Colorado dropped from 35th to 49th in the nation in K-12 school spending as a percentage of personal income.7 Higher education funding cuts prompted officials to recommend a 40 percent increase in tuition to cover the shortfall.8 The number of uninsured low-income children in Colorado doubled under TABOR—the state now ranks 50th in children’s health coverage.9
TABOR weakens policymakers’ ability to respond to emergencies and plan for the future.
TABOR’s formula eliminates the potential to launch new programs that enjoy public support, such as reducing class size. TABOR also hinders states’ attempts to adapt to federal mandates like Real ID and No Child Left Behind that require additional spending. And without sufficient emergency funds, states cannot be prepared for natural disasters or other unanticipated problems.10
In November 2005, voters in Colorado suspended TABOR’s revenue caps.
Frustrated with the state’s fiscal crisis and its compounding effect on public services, Colorado voters approved a 2005 ballot initiative that suspended TABOR revenue caps until 2010 and permanently modified other TABOR requirements. Citizens, business leaders and even Republican Gov. Bill Owens had grown increasingly wary of TABOR’s chilling effect on education, health care, public safety and transportation—factors that created a less competitive business environment.11

This policy summary relies in large part on information from the Center on Budget and Policy Priorities.

Endnotes
  1. David Bradley, Nicholas Johnson and Karen Lyons, “False Promise of Prosperity,” Center on Budget and Policy Priorities, November 3, 2005.
  2. American Legislative Issue Campaign, “Low Road: TABOR – A Taxpayer Bill of Wrongs,” April 2, 2004.
  3. Robert Lynch, “Rethinking Growth Strategies: How State and Local Taxes and Services Affect Economic Development,” Economic Policy Institute, 2004.
  4. Center for American Progress, “Issue Brief: Taxpayer Bill of Rights,” December 12, 2005.
  5. “Low Road: TABOR – A Taxpayer Bill of Wrongs.”
  6. Center on Budget and Policy Priorities, “Colorado’s Fiscal Problems have been Severe and are Likely to Continue,” March 17, 2004.
  7. The Rocky Mountain Collegian, “Budget Storm Predicted: TABOR is keeping a cloud over Higher Ed.,” March 10, 2004.
  8. David Bradley and Karen Lyons, “A Formula for Decline,” Center on Budget and Policy Priorities, October 19, 2005.
  9. Center on Budget and Policy Priorities, “The Flawed Population Plus Inflation Formula,” January 13, 2005.
  10. Bill Chaloupka, “TABOR Pains,” American Prospect Web Exclusive, October 13, 2005.
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