State Budgets

The Latest Threat to the Colorado Taxpayer’s Bill of Rights

An upcoming ballot measure in Colorado would allow massive expansion in government spending and weaken the Colorado Taxpayer’s Bill of Rights (TABOR), the nation’s strongest taxpayer protection. At the tail end of Colorado’s legislative session, Governor Jared Polis signed a property tax bill that now requires voter approval. If approved, TABOR would be gutted in exchange for a small short term cut to property taxes. Known as Proposition HH, this proposal tempts voters with the promise of property tax cuts, while its real purpose is to water-down TABOR’s revenue and spending limits.

Ben Murrey, Director of Fiscal Policy at the Independence Institute described the package as a “boondoggle of a property tax plan.” According to The Center Square, it would decrease TABOR refunds by 23%.

TABOR is the gold standard for tax and expenditure limits (TELs). Since its adoption by voters as a state constitutional amendment in 1992, it has helped to restrain the growth of government and returned billions of dollars to Colorado taxpayers.

The attacks on TABOR aren’t new. The property tax “cut” is only the latest gimmicky attempt to unleash the leviathan of big government on hard-working Coloradans. As the ALEC team explained in National Review on the 30th anniversary of TABOR:

TABOR has seen no shortage of progressive attacks, which serves as an acknowledgment of the danger it presents to those who would like no constraints on government’s ability to grow. Though all states except Bernie Sanders’s Vermont have some sort of balanced-budget requirement in state laws or their constitutions, most don’t have robust protection such as that which TABOR offers.

Taxing and spending may not be out of control in Colorado, but it takes only one future generation of policy-makers to change that. In Colorado, such a generation of big spenders has been held at bay, so far, by the resiliency of the Taxpayer’s Bill of Rights. As state representative Patrick Neville put it, “TABOR is the only thing keeping us from becoming East California.”

Proposition HH, if approved, would lower the property tax rates paid by Coloradans in the short term, ostensibly providing relief. However, because revenue at all levels of government in excess of the spending growth allowed by TABOR must be returned to taxpayers, a small rate cut like this provides little relief. More importantly, Proposition HH would increase what the state is allowed to keep by 1% each year.

While it may not sound like much, over the next two years , these changes will allow the state to keep about a half a billion more than it otherwise would. In 10 years, the state could potentially keep $2 billion more each year. All of that money comes out of the TABOR refunds taxpayers receive: state legislative staff have estimated that by 2025, TABOR refunds will be reduced by 23%; in the long term they may be eliminated completely. Though the bill only authorizes these spending increases for 10 years, legislators can choose to continue them indefinitely without putting the issue before voters again, undermining the accountability mechanism of TABOR in future generations.

TABOR has succeeded in limiting growth in government spending, keeping taxes low, returning money to Coloradans, and providing transparency around tax increases. By increasing the cap on how much revenue government can keep and spend, Proposition HH strikes at the core of TABOR. Disguising this move with a short-term tax rate cut offends the transparency TABOR was designed to protect and will continue the Centennial State down the path to looking more like California.

In Depth: State Budgets

Smart budgeting is vital to a state’s financial health. The ALEC State Budget Reform Toolkit offers more than 20 policy ideas for addressing today’s shortfalls in a forthright manner, without resorting to budget gimmicks or damaging tax increases. One way to stabilize budgets over time is to embrace…

+ State Budgets In Depth