GO SLOW ON TABOR

Along with the California-style referendum on capping property taxes this fall, voters will be asked for their signatures to put a Colorado-style cap on government revenue collection. But just as Maine is not like California, it is not like Colorado, and the Taxpayers’ Bill of Rights must recognize the stark differences or cause more problems than it will solve.

A Taxpayers’ Bill of Rights (TABOR), which is a revenue instead

of a spending cap, was passed by Colorado voters in 1992. It amended the state constitution to restrict the amount of revenue state and local governments can retain. Any revenues in excess of the previous year’s allowable collections, adjusted for inflation and population growth, must be returned to taxpayers, unless residents vote to spend the money, which many have done in the intervening decade.

The city of Colorado Springs, for example, collected more than $33 million in excess revenues between 1992 and 1998. Of that, only $3.7 million was returned to taxpayers and $28 million was spent on capital projects with voter approval. If the money had been available for general municipal spending, 82 new police officers could have been hired or three additional fire stations built and staffed or twice as many city roads could have been resurfaced, according to a municipal report on TABOR’s impacts.

The city and county of Denver, the state’s largest, has exempted itself from TABOR as have several other smaller communities.

More dramatically, in 2000 voters statewide approved Amendment 23, which essentially exempts state K-12 spending from the TABOR limits by requiring the state to increase base per pupil funding by inflation plus 1 percentage point a year through 2010

and by the rate of inflation thereafter. Efforts have been made to also exempt higher education.

If effect, Colorado has a partial revenue cap that is being steadily weakened. That is good reason for Maine not to go slowly with this idea. Fortunately, the proposal here has the advantage of not being a constitutional amendment and of allowing for a Rainy Day Fund.

Several analyses have concluded that TABOR achieved its goals when Colorado was rapidly growing. However, when population and economic growth slowed, state and local governments quickly found themselves short of funds, with no way to climb out of the recession because future revenue collection was always tied to past collections.

From 1990 to 2000, Colorado’s population grew by almost 31 percent. (Maine eked out just 3 percent growth.) As a result of the rapid population growth, Colorado’s economy boomed in much of the 1990s. At the end of the decade, the boom ended. Employment in Colorado shrank 1 percent from 2002 to 2003, the sixth worst rate in the country. At the same time, personal income grew only 2 percent, again sixth worst in the country. Efforts to reform TABOR increased when the economy slowed. An effort to repeal TABOR this fall has been put on hold, but is likely to be back soon.

The logic is simple: When governments have plenty of money, it is easier to cap revenue growth. When money is tight, such caps get in the way and, as has been the case in Colorado, are circumvented. Under certain conditions, Maine would benefit from restrictions on raising revenue, but it likely needs more than another state’s revised

ideas to work well here.