Nuts & bolts of TABOR: Colorado voters approved a constitutional amendment that limits the growth of government like nowhere else.

AuthorSnell, Ronald K.

Colorado's TABOR Amendment is the most stringent tax and expenditure limitation that American voters have ever imposed on their state and local governments. It was submitted to Colorado voters by popular initiative in 1992 as a constitutional amendment to restrict the growth of government. Opponents and proponents alike agree that it has done exactly that, just as promised.

And there disagreement begins.

Opponents of "TABOR fear that it is leading to an ineffective, inefficient and ultimately irrelevant government. Proponents laud it as a model for the federal government and other states, and praise its contribution to Colorado's prosperity in the 1990s.

CONSTITUTIONAL DILEMMA

The TABOR amendment itself is only one strand of a tangle of Colorado constitutional and statutory provisions that both sides agree have generated a constitutional dilemma. Limits on revenue and spending and constitutional requirements for spending growth have created a structural deficit that could not be resolved within existing law even if the prosperity of the late 1990s were to return. TABOR, however, is the most important strand of the tangle.

So what is TABOR?

First the name. TABOR more or less stands for "Taxpayer's Bill of Rights," but plays on the name of an early Colorado silver king, Horace Tabor. His rags-to-riches-to-rags exploits resound with Coloradans, and his second wife, Baby Doe, is one of America's semi-tragic heroines. So TABOR is an evocative name for Colorado's remarkable experiment in public finance.

TABOR limits state government in the following ways.

TABOR principally limits revenue, not spending. It sets a cap on the amount of tax revenue the state can budget each year--any collections above the cap are returned to the taxpayers. The amount the state is allowed to keep in one year is the base for figuring the next year's cap. The cap increases each year by the percentage growth in state population plus the inflation rate. The amount the state can keep is known as allowed collections. The revenue received above the limit is known as the TABOR surplus and must be refunded.

If state revenues come in below the TABOR limit, the actual revenues, not the mathematical limit, serve as the base for calculating the following year's limit. Nobody thought this mattered when the constitutional amendment was enacted in 1992, because it seemed natural for revenues to grow from one year to the next. But this detail has carried an unexpected sting during the...

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