n a special article last week, experts and politicians on both sides of the aisle answered key questions about The Taxpayer’s Bill of Rights, or TABOR.
Through answers to four questions, experts introduced readers to the basics of the constitutional amendment, how it factors into the state budget, how enterprise funds can move around TABOR and what the tax law requires voters to approve.
The state’s unique tax law likely will become a point of conversation and contention during much of this year. Some in government see TABOR as too restrictive a way to govern Colorado’s budget and others argue it keeps excessive spending in check.
Officials have cited TABOR as a reason for proposed cuts in the next state budget, a state group is looking to see if people would vote to change parts of the constitutional amendment and state Democratic lawmakers want to try and work around parts of the tax law with enterprise funds.
Some parts of TABOR aren’t as unique to Colorado as they may sound. To address that idea and more, here is the second of two articles — researched with politicians and experts on both sides of the political spectrum — offering some important questions about TABOR and their answers:
How many other states have TABOR, or tax codes with TABOR-like elements?
Other states don’t have anything exactly like TABOR, but elements similar to the tax law exist in other states’ tax codes.
“No other state has the inflation-plus-population limit with mandated taxpayer refunds for money collected in excess of the limit, and there are no other states that eliminate the ability of elected officials to increase taxes or make tax policy changes that result in additional revenue,” said Carol Hedges, executive director of Colorado Fiscal Institute.
However, plenty of states have some kind of tax and expenditure limitation. In fact, all states except for Vermont have some kind of fiscal limitation, said Rob Natelson, senior fellow in constitutional jurisprudence at the Independence Institute in Denver.
For example, some states — such as South Dakota, Nevada and Michigan — require forms of voting before raising taxes, he said. Other states have revenue limitations based on a number of different factors.
What’s the benefit to TABOR?
TABOR gives Colorado voters direct control over tax increases, so it keeps many decisions at a local level and forces officials to prioritize spending.
The tax law keeps government in check, said Sen. John Cooke, R-Greeley. It essentially lets Colorado voters tax themselves, he said.
If people want better roads or more money to hire teachers, they can decide to tax themselves at a higher rate.
Requiring a vote of the people also means TABOR creates an additional layer of government review that can help create more thoughtful public policy, Natelson said.
Limiting taxes also helps the economy, he added.
The constitutional amendment simply slows government revenue growth, absent express voter approval to have it grow even faster, said Douglas Bruce, author of TABOR.
“The only issue is whether taxpayers get back some of the overpayments taken by greedy government,” he said in an email. “There are no cuts. Some programs simply don’t grow as fast as the big spenders wish they could.”
What challenges does TABOR present?
It restricts revenue growth, contains undefined language and requires government to go through the process of voter approval.
The tax code’s revenue limitation formula doesn’t account for all the right factors, said Rep. Dave Young, D-Greeley, a member of the state’s Joint Budget Committee. The formula doesn’t factor in the productivity or complexity of the state’s economy.
“Our (economy) is more complex than just population and inflation,” he said.
TABOR also doesn’t allow Colorado to modernize its tax code, said Chris Stiffler, Colorado Fiscal Institute economist. It takes some taxing options — like a graduated tax — off the table. And getting voter approval for all changes can often be a long process.
Undefined language in TABOR — specifically the definition of a tax — creates issues with interpretation, especially pertaining to fees, Natelson said.
The constitutional amendment could use some reform. In addition to cleaning up language issues, the tax law needs to include more reasons for the public sector to support it.
“In order for a constitutional change to last it has to become — and remain — broadly acceptable,” Natelson said. “It probably could be improved in a way so as to accomplish its purpose while reducing the unmitigated opposition it creates.”
What’s something about TABOR most people don’t know?
Many agree that what most people don’t know about TABOR is TABOR itself.
In a Colorado Fiscal Institute study, only a third of people said they knew what TABOR was, Stiffler said. Of people who said they knew of TABOR, quite a few said they thought TABOR was a shopping mall in Denver, he said.
A lot of people living in Colorado now weren’t around or of voting age in 1992, when TABOR passed, and many people are unfamiliar with the constitutional amendment, Stiffler said.
“There’s a lot of nuances to it; it’s really complicated,” Cooke said. “I think most people don’t realize how complicated.”