The Truth about TABOR

May 01, 2005

The American Heritage dictionary defines desperation as "recklessness arising from despair." And judging by the reckless rhetoric coming from some opponents of the Taxpayers' Bill of Rights (TABOR) amendment, it's clear that they consider TABOR a major threat to their big-government ways and are desperate to preserve their endangered chunk of the state budget at almost any cost.

In short, the Taxpayers' Bill of Rights is a state constitutional amendment that would limit the annual growth in government. Under a Taxpayers' Bill of Rights amendment, state spending and debt could not grow faster than the rate of annual population growth plus inflation. Surplus revenue received above this amount would accrue in budget stabilization and emergency funds, and a portion would be returned to taxpayers. Tax increases or spending above the amount of the Taxpayers' Bill of Rights limit would require voter approval.

It's a very smart, reasonable idea, and it's had an overwhelmingly positive impact in the one state where it has been fully implemented - Colorado. But to hear opponents describe it, you'd think TABOR causes everything from natural disasters to male pattern baldness. As Oklahomans consider the prospect of a Taxpayers' Bill of Rights amendment here, it's important to cut through the desperate scare tactics and learn the actual facts about how it has worked in Colorado.

The fact is that since Colorado enacted its Taxpayers' Bill of Rights in 1992, the state has experienced one of the strongest economic growth rates in the country and has provided taxpayers with more than $3 billion in tax rebates and refunds.

Colorado is experiencing a budget challenge this year - and it's almost entirely due to Amendment 23, a state constitutional amendment that mandates annual increases in spending on state K-12 education programs. Fortunately, Oklahoma doesn't have a constitutional amendment that mandates big spending increases, so Oklahoma shouldn't have the same budget crunch.

While Amendment 23 is the main cause of Colorado's current fiscal challenge, Colorado's version of the Taxpayers' Bill of Rights isn't perfect, either. And that's exactly why the TABOR legislation proposed in Oklahoma includes key improvements that will help Oklahoma achieve even better results than Colorado.

One key improvement to the Taxpayers' Bill of Rights being proposed here in Oklahoma is the inclusion of budget stabilization and emergency funds that will help Oklahoma better deal with economic downturns. In periods of rapid economic growth, when revenue exceeds the TABOR limit, surplus revenue would be deposited into the emergency fund and the budget stabilization fund. When the cap is reached on those funds, surplus revenue is then returned via tax cuts or tax rebates. In periods of recession, when revenue is falling, money is then transferred from the budget stabilization fund. Colorado doesn't have these rainy day funds.

Another important improvement proposed to the Taxpayers' Bill of Rights in Oklahoma is the elimination of the so-called "ratchet-down" effect. In Colorado, when revenues dropped during the last recession, the TABOR spending and revenue limit dropped to that lower level and will grow from there - even after the economy has recovered and revenues have bounced back.

That's not the way it will work in Oklahoma. When revenues drop during a recession, the new "rainy day" funds created by Oklahoma's TABOR allow the TABOR spending and revenue limit to remain at the pre-recession high-water mark, and kick back in only after revenues recover to pre-recession levels.

These key differences between the Colorado TABOR and the proposed Oklahoma TABOR mean Oklahoma's TABOR will provide the state stronger economic growth, more tax relief, and restrained government spending - without any of the minor side effects Colorado has experienced. In fact, in a recent study published by OCPA and the Americans for Prosperity Foundation, I demonstrate that had this modified TABOR been enacted in Oklahoma in 1992, Oklahoma taxpayers would have received more than $581 million in tax relief - and also amassed more than $317 million in rainy day funds to help deal with economic downturns.

So the next time you see a big-government supporter desperately point to Colorado as a reason to oppose TABOR here in Oklahoma, be sure to ask that person if he is deliberately ignoring the facts, or merely ignorant of them.

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