Stateline Story

Anti-Tax Activists Again Watch Colorado

  • August 06, 2008
  • By Pamela Prah
TABOR TIMELINE

Colorado voters may get to decide this November whether to ditch for good their strictest-in-the-nation state spending cap that returned extra revenue to taxpayers, while voters in Massachusetts will consider killing the state income tax.

Meanwhile, voters in cash-strapped California will chose whether to borrow $17 billion for projects ranging from a high-speed rail system to children's hospitals.

This year's crop of tax and budget-related state ballot measures will have to compete with not just this historic presidential election, but ballot measures as contentious as affirmative action, abortion and gay marriage.

Anti-tax activists are closely watching a measure in Colorado that they say would gut the "Taxpayer's Bill of Rights" (TABOR) that became a model for strict state spending limits for conservatives nationwide. TABOR allowed the state to raise revenue no faster than the rate of inflation, plus an adjustment for population growth, and required that excess revenue be refunded to taxpayers.

Colorado voters approved TABOR in 1992, but suspended it in 2005 for five years after voters decided the limits were cutting too deeply into education, transportation and other programs.

Coloradoans may get to decide Nov. 4 whether to permanently extend TABOR's "time-out" past its 2010 expiration date under a ballot measure currently being reviewed at the secretary of state's office.

This year's measure, " Savings Account For Education (SAFE), would preserve TABOR's requirement that voters approve all tax increases, but it would scrap the provision that all extra revenue be returned to taxpayers. Instead, the measure would funnel that money into a state education fund, and also would sunset an automatic increase in education spending that voters approved in 2000.

"We learned through some tough experiences that 'constitutionalizing' our budget policy didn't work out as intended," outgoing House Speaker Andrew Romanoff, a Democrat and the lead proponent of the measure, told Stateline.org . "What we want to do in a nutshell is save the money when times are good so that we don't have to cut schools and other services when times are bad." Term limits prevent Romanoff from running again.

Anti-tax advocates, however, are hoping voters will reject Romanoff's measure. "The measure would kill TABOR," said Grover Norquist, founder of the Americans for Tax Reform, a national anti-tax group that pushed TABOR-like ballot initiatives in other states in recent years, but with little success.

Maine, Nebraska and Oregon voters all soundly rejected ballot measures in 2006 that would have capped increases in state spending. That same year, similar TABOR-like initiatives got booted off ballots in Michigan, Montana, Nevada and Oklahoma, primarily because of concerns about the validity of the signatures.

Supporters of TABOR say strict limits on state tax collections make politicians more careful with taxpayers' money and prevent spending sprees while opponents say such caps hamstring governments from funding important services.

"I think it turns out that pushing TABOR was a bad investment for those who put money in the last go-around," said Nick Johnson, who heads up the state fiscal project of the Center on Budget and Policy Priorities , a liberal think tank that opposes TABOR. "It didn't have the coattails they imagined. It didn't energize supporters," he said.

Deadlines for checking signatures and verifying measures are still underway in several states, including Arizona, Colorado, North Dakota and Ohio, so it may be weeks until voters know how many questions will make the ballot.

A TABOR-like measure to limit state spending is still pending in North Dakota while a proposal in Maine has been pushed to 2010.

Anti-tax advocate Norquist said the better strategy is to cut or eliminate taxes, not just limit spending, pointing to the measures in Massachusetts and North Dakota that respectively would abolish and cut in half the state income tax. "It's easier to explain and understand."

Pete Sepp, a spokesman for the National Taxpayers Union , which promotes limits on state spending , also pointed to the income tax measure in Massachusetts that voters narrowly rejected six years ago. "It's an uphill fight, but I think it would create a debate about the size of government in Massachusetts."

Another high-profile tax measure on Colorado's ballot would eliminate an oil and gas industry tax credit. Gov. Bill Ritter (D) is a major proponent.

Other tax measures that are or could be on the ballot Nov. 4:

  • Income tax: In addition to the measures in Massachusetts and North Dakota, Oregon voters will weigh in on whether taxpayers should be able to deduct their federal income taxes on their state income tax returns.
  • Tax swaps: Florida will decide whether to swap a higher sales tax for lower property taxes while Arizona voters could get a chance to decide whether to raise their sales tax by a penny with the money going for transportation.
  • Property taxes: Nevada voters might get to consider a property tax cap similar to California's famous Prop 13 if a measure there gets cleared. An initiative pending in Arizona would prohibit state and local governments from slapping a transfer tax on real estate. There are no real property sales or transfer taxes in Arizona and several times politicians have considered enacting a real property sale or transfer tax.
  • Sales tax: Minnesota voters may consider whether to raise the sales tax by 3/8 of one percent, with the proceeds going to protect wetlands and other environmental protection.

In California, four bond questions totaling nearly $17 billion will await voters, including whether the state should issue nearly $10 billion in bonds for a high-speed train system, another $5 billion for incentives for alternative fuel vehicles, nearly $1 billion for children's hospitals and nearly $1 billion to help California veterans who have recently returned from Iraq and Afghanistan buy homes or farms.

Bond measures have been popular in recent years. Californians in 2006 approved all five separate bonding proposals that, taken together, allowed the state to borrow $42.7 billion to build roads, levees, parks, schools, university facilities and affordable housing.

Californians' willingness to put big-ticket items on the state credit card worries some. "I'm not sure if voters get it," said Sasha Horwitz of the Center for Governmental Studies, a think tank based in Los Angeles.While the bond proposals are clear that the state will have to pay off the bonds, "it seems as though the voters think bonds are free money." He said that if the nearly $10 billion high-speed rail bond measure wins approval, budget writers will have to set aside $647 million every year for the next 30 years to pay off the loan on top of another $1 billion for operation and maintenance costs.

California is still without a budget for the fiscal year that began July 1 and speculation is that some Democrats there may push to ask voters to raise taxes to dig the state out of its $15 billion deficit.