More than one Colorado political expert has said that the Taxpayer’s Bill of Rights has had more effect on state government than any other ballot measure in the state’s history.
TABOR, as the 20-year-old voter-approved measure is known, has been felt across the state during two recessions. It’s best known for restricting Colorado governments — from the state down to school districts — from increasing taxes without a vote of the people. The measure was added to the state Constitution on Election Day in 1992.
It also uses a formula to cap state spending.
TABOR is so bulletproof that it motivated many Republicans to join with Colorado Democrats in 2005 to push an anti-TABOR ballot measure, called Referendum C. The measure allowed the state to keep almost $4 billion that would have otherwise been refunded to taxpayers, and it altered TABOR’s formula to give the state an easier time in the future by easing spending caps.
But the referendum didn’t restore the billions of dollars in government revenue â€¨TABOR had cut off since 1992. Love it or hate it, you can’t dispute how TABOR has changed government over the past two decades.
Colorado’s state government refunded roughly $1 billion between 2001 and 2005 in accordance with TABOR, even though the state’s income and spending had dropped by even more than that because of the recession.
After TABOR passed, hundreds of local school districts and governments saw how the measure could affect them, and they immediately de-Bruced, allowing them to keep taxes they collected.
And that was just through 1999.
Plenty more have de-Bruced — 454 municipalities approved “TABOR revenue and spending changes” between 1993 and 2011. That doesn’t include the 175 Colorado school districts that have also de-Bruced, or special districts and authorities that have de-Bruced. â€¨De-Brucing refers to TABOR’s â€¨author, controversial Colorado Springs anti-tax advocate Douglas Bruce.
All of the school districts in the state except for three have de-Bruced to some degree, whether permanently or temporarily. Two that haven’t are Colorado Springs District 11 and the Harrison School District, D-11 Chief Financial Officer Glen Gustafson said.
Though TABOR is still a hit with conservatives, Bruce, a former state legislator and El Paso County commissioner, ironically became politically toxic to the GOP after multiple scandals. He was convicted in December 2011 of tax evasion and three other tax-related crimes involving a nonprofit he ran for 10 years.
Bruce declined to comment for this story.
The problem, as far as local governments are concerned, is that any time government spending goes down instead of up — which it began doing 10 years ago after the recession began — it can’t always recover right away.
A decade ago, state income and spending dropped precipitously during the dot-com bust. About 50,000 state employees lost their jobs. Cuts came for education, health care and Medicaid.
Tuition for state-sponsored colleges has skyrocketed — like many other government fees, tuition can go up without a public vote, making it an attractive way to raise cash.
Meanwhile, tax-based state funding for colleges such as the University of Colorado has dropped by hundreds of millions of dollars. CU’s funding went down 45 percent between the 1994 and 2009 fiscal years, and state higher education funding has gone from 35th in the nation to 49th, as of 2011. Between 2002 and 2004, the university laid off 286 people and eliminated six academic programs.
The president of CU, Republican Bruce Benson, said recently that funding for higher education would disappear over the next decade if the cuts continue.
Other budget items, such as K-12 education and health care, have also taken immense hits because of TABOR.
In 1992, Colorado spent $379 below the per-pupil national average and $988 below in 2006. Voters noticed the downturn, and in 2000, they approved Constitutional Amendment 23, that mandated K-12 funding increase every year.
But even that hasn’t solved the problem — Amendment 23 and TABOR, along with other provisions in the Constitution, have created what one analyst called a “perfect storm” in the budget.
Between April 2001 and October 2002, for example, the state had to suspend free vaccinations to protect children against diphtheria and other diseases. By 2003, Colorado was dead last in the nation on children who receive full vaccinations. In 2002, the state shut down immunization clinics and a public program that included car-seat safety education.
The state also dropped far below average in rankings for prenatal care, funding for public health agencies, the rate of Medicaid coverage, and more.
Much of that improved after Referendum C was passed in 2005 and gave the government more spending leeway, but the departments haven’t made up for their losses, because the current recession is still starving the state.
At the other end of the spectrum, the Department of Corrections has been “immune” to TABOR’s influence. Its budget ballooned by 9.6 percent between 1992 and 2008, because it is overseen by the state criminal codes and sentencing laws instead of the Legislature.
Local effects of TABOR
“It’s been devastating,” said Gustafson, Colorado Springs School District 11’s chief financial officer.
When asked about TABOR, Gustafson nearly exploded. He said that over the past six years, his district has lost â€¨$35 million because of â€¨TABOR. In response to the spending restrictions, he said, the district has slashed teacher salaries, closed nine schools, increased class sizes twice, eliminated new programs, haven’t updated technology or books, dropped maintenance hugely, and even lowered school temperatures in the winter.
“Our grounds look like crap because we can’t even afford to water them,” Gustafson said.
Colorado Springs City Council President Scott Hente said the city has suffered dramatically as well. Hente stressed that he supports requiring voters to approve tax increases but said the spending restrictions are hurting the city and the people.
“That’s fine, it’s great, it’s all well and good. But there are other aspects of TABOR that are very insidious, that have a serious impact on government,” Hente said.
The councilman said he has watched as 100 city workers were laid off, the parks department funding has been cut, and that the police and fire departments haven’t kept up with the population growth.
“To me, that’s a cutback,” Hente said.
Former Mayor Lionel Rivera, who also said he strongly supports the tax increase portion of TABOR, agreed with Hente on the spending limitations.
“If a city grows and the population increases, you need to provide more services,” Rivera said.
TABOR is also blamed for government services such as road maintenance and law enforcement not meeting demands as the state has grown.
“One of the things that is critical to every government, you have to have infrastructure, and there are times when the government is the only thing that can build infrastructure,” said Fred Crowley, an economics professor at the University of Colorado at Colorado Springs.
“When you need a new road, you don’t do it half a foot at a time. You do it eight miles at a time. And eight miles of road is going to cost you $100 million,” Crowley said.â€¨
TABOR was first presented to voters in 1988 after the now-famous tax foe Bruce wrote it (Bruce was convicted last year of tax evasion and three other related crimes).
But that year, the measure was voted down, 58 percent to 42 percent. In 1990, Bruce tried again, and TABOR was defeated again, 51 percent to 49 percent.
But in 1992, the third time was the charm for Bruce — TABOR passed 54 percent to 46 percent.
The Legislature tried to head the vote off in 1991 by passing a spending limit, titled the Arveschoug-Bird Amendment, which limited the growth of state spending to 6 percent a year. That didn’t satisfy either Bruce or voters.
The Legislature rescinded Arveschoug-Bird Amendment in 2009.
In the run-up to TABOR’s passage, the state Legislature ramped up per-capita spending a number of times, Crowley said, and people had gotten sick of it.
Anti-tax voters turned out in greater numbers in 1992 than in past elections to vote for independent candidate Ross Perot, retired Colorado College political science professor Bob Loevy said. And many opponents to the measure took for granted that voters would defeat TABOR, Loevy said, so they didn’t spend much time campaigning against it.
In 1996, a coalition led by now-state Rep. Lois Court, D-Denver, tried to get a measure onto the ballot to repeal TABOR but failed after the state Supreme Court ruled that the proposed initiative was illegal.
The problem was that it violated a law passed two years prior that requires all ballot initiatives to have a “single subject.” The state Supreme Court said that TABOR has far more than one subject, which means it would take multiple ballot measures to repeal the entire thing.
Ironically, TABOR likely wouldn’t have made the ballot if the single subject law had been in place, said Sam Mamet, executive director of the Colorado Municipal League.
â€¨TABOR in the years ahead
There’s no real telling what kind of fiscal effect TABOR may have in the coming years because so many local government agencies have de-Bruced. But it’s still going to hurt, Crowley said.
“At the rate we’re going right now, by 2050, the city of Colorado Springs will be down to about half of the services it could provide in 1992,” Crowley said.
Because of the recession and the “ratchet effect” in TABOR, any cities, counties, towns or school districts that haven’t de-Bruced will start hitting their TABOR spending limits fairly quickly.
The ratchet effect refers to how TABOR calculates spending based on prior years, including when spending has been slashed during a recession. That keeps government budgets low for years after a recession.
And once governments hit the spending cap, they’ll have to cut more and more services as the years go on, said Wade Buchanan, president of the nonprofit Bell Policy Center.
“It could be very bad for those places,” Buchanan said. “We very well may see a slew of de-Brucings in the next few years as cities and counties start to feel the effects of the ratchet.”
When Bruce wrote TABOR, Loevy said, he didn’t account for what happened during a recession — the “ratchet effect,” and how it held the state under water.
“He didn’t adjust it for economic cycles,” Loevy said.
Since Referendum C did away with the ratchet effect for the state, the state has more leeway in the years to come. What Referendum C did was jump the state limit for spending increases to a higher level than TABOR allowed for.
“That’s a significant change, and it means we’ll have a more robust recovery,” Buchanan said.
Instead of state spending increases being based on the previous year’s spending, the increase formula will always be based on the highest annual state revenue during the “timeout” period for Referendum C between 2005 and 2010. That happened in 2008, when the state brought in $11.5 billion in revenue that was subject to TABOR. (TABOR only applies to the state’s General Fund, which is less than half the state budget.)
Without Referendum C, the 2012 state budget spending could be increased by the TABOR formula of population increase plus inflation plus the 2011 state income of $10.9 billion. But because of Referendum C, the 2012 spending limit is factored by population increase plus inflation plus $11.5 billion, which would have allowed the state to spend more of its income, if it had any extra.
The result is that the state won’t be affected by TABOR anytime soon, Buchanan said, because state income won’t hit the new Referendum C limit for several years.
But Crowley warned there’s a significant danger that the downturn in local government services — such as good roads — will scare away potential businesses from setting up shop in Colorado and make other states more attractive.
“If businesses don’t come here, we’ll get stale,” Crowley said.
And Rep. Court predicted that there will be another push for a statewide ballot measure within the next decade to get rid of TABOR’s spending restrictions.
“Because otherwise, the state is going to hell in a handbasket,” she said.
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