TABOR: Taxpayer Bill of Rights or Taxpayer Straightjacket?

by Nicole Cafarella

A fundamental disagreement over how state resources should be gathered and allocated is fueling policy debate across the country.  Supporters of a “Taxpayers Bill of Rights” want to shrink the size of government through a cap on state spending.  Opponents believe that such a cap would have a disastrous impact on state finances.

Specifically, the Taxpayer Bill of Rights movement, commonly referred to as TABOR, attempts to place constitutional amendments that cap state spending on state ballots.  TABOR amendments are designed to place a ceiling on state expenditures that is calculated using inflation, as measured by the Consumer Price Index, and population growth.

Grassroots efforts have been underway in a number of states to put TABOR initiatives on ballots this November.  According to the Center on Budget and Policy Priorities, 16 states have considered TABOR initiative petitions this year; half of those petitions made it through the initiative petition process.  State courts have thrown out five of the remaining eight because of allegations of signature fraud, but three states – Maine, Nebraska and Oregon – will add a TABOR referendum to their ballot this November.

Proponents of TABOR include conservative groups like Americans for Tax Reform,Americans for Limited Government and the Cato Institute.  Their claim is that TABOR amendments prevent wasteful state spending and promote the responsible use of public dollars.  Such supporters believe that, because the cap is adjusted for inflation and population growth, government spending will be able to increase at what TABOR advocates see as a reasonable rate.   The Maine Heritage Policy Center estimates that under this plan government spending will increase at approximately three percent, but it is possible that this rate will be more or less than that figure.  Moreover, according to supporters, TABOR amendments give taxpayers a greater say in how much they are taxed and ensure that any excess tax revenue is returned to taxpayers.  In order to increase a state tax or fee, TABOR laws usually require a two-thirds majority in any government body as well as a majority vote of citizens in the form of a referendum. This feature, according to proponents, gives taxpayers greater control over state budgetary matters.  Furthermore, TABOR amendments create a rainy day fund for states to draw on – a feature that advocates say will mitigate the effects of a sudden downturn in the economy, making up for what would otherwise be a state budget shortfall in the years following a recession.

Critics of this plan see TABOR methods as too restrictive.  Opponents of the TABOR movement contend that when states are not allowed to spend more than what is needed to cover inflation and population growth, they are forced into significant reductions in state services.  According to Maura Policelli, State Project Coordinator for the Center on Budget and Policy Priorities, the TABOR formula is “an extreme libertarian model designed to shrink state budgets.”  Critics find TABOR’s growth formula problematic because it does not take into account the fact that the Consumer Price Index is based on the price of goods and services that consumers purchase, not the government. Health care costs and energy costs, for example, are rising at a rate greater than that of inflation, but TABOR’s formula does not factor this into state spending limits.  Anti-TABOR groups worry that rising costs will force states to cut funding in critical government services, like public education and Medicaid, and  may spillover into other budget areas as well.  Moreover, anti-TABOR organizations contend that TABOR’s restrictions increase government inefficiency and limit the ability of local officials to do their jobs.

Anti-TABOR groups are also suspicious of the grassroots efforts to place TABOR amendments on the ballot.  According to a recent PBS investigative report, pro-TABOR grassroots organizations in Montana hired workers from out of state to solicit signatures for the TABOR initiative in Montana.  TABOR opponents claim that those who gather signatures for an initiative petition should be locally generated volunteers.  Many TABOR opponents, such as the group Not In Montana, believe that the signature-gathering process goes beyond questionable hiring practices to outright fraud.  Anti-TABOR groups in Montana filed and won a lawsuit alleging that volunteers in the state have fraudulently obtained signatures for their initiative petitions.  Moreover, the PBS investigative report found that grassroots groups at the local level receive virtually all of their funding from one source, Americans for Limited Government, a national organization whose mission is to shrink the size of government.

Anti-TABOR groups point to Colorado – the only state that has adopted TABOR measures so far – as evidence that TABOR laws have a negative impact on state budgets and programs.  According to the Center on Budget and Policy Priorities, Colorado’s TABOR law has played a significant role in the state’s decline over a range of public services, including education, public health and Medicaid.  Anti-TABOR groups, for instance, blame Colorado’s amendment for the state’s decline from 35th to 49th in the nation in percentage of personal income spent on kindergarten through 12th grade education.  They also point to Colorado’s 31 percent drop in higher education funding per resident as further evidence of the law’s negative effects.  In 2001, Colorado was forced to suspend its requirement that school children receive vaccinations against diphtheria, tetanus and the whooping cough due to a shortage in funding.  In 2005, perhaps in response to these problems, Colorado voters approved a second initiative to temporarily suspend TABOR for five years.

The debate over the TABOR referendum is particularly contentious in Maine.  The authors of this proposal, the Maine Heritage Policy Center, contend that it fixes many of the problems in Colorado’s law.  Unlike the Colorado model, Maine’s initiative creates a rainy day fund to mitigate the effects of a sudden downturn in the state’s economy.  Some have blamed the inflexibility of Colorado’s TABOR law for the state’s longer-than usual recession.  Unlike Colorado, Maine’s TABOR proposal has an expenditure limit, not a revenue limit.  In other words, the Maine proposal would limit the amount that the state is allowed to spend, rather than the amount that the state is able to collect from taxpayers.  TABOR advocates believe that this difference will remove the problems associated with a recession because revenue would be allowed to grow again with an upturn in the economy.  Through these changes, TABOR advocates hope to avoid the budgetary problems found in Colorado.

Many anti-TABOR organizations, however, say that Maine would share Colorado’s difficulties despite the differences.  The TABOR formula in Colorado uses the lower of the following two figures: the amount of revenue permitted by TABOR in the previous year or the actual revenue of the state.  Although the Maine proposal uses an expenditure limit rather than a revenue limit, critics believe that this does not solve the inherent problem of restrictions in the TABOR formula.  A rainy day fund might help to make up the difference of a budget shortfall during the first year of a recession, but expenditures from the rainy day fund do not count as expenditures in the Maine proposal’s formula.  In subsequent years, Maine would have to calculate its expenditure limit based upon expenditures from funds that were not drawn from the rainy day fund.  As a result, TABOR opponents argue that when Maine faces a downturn in the economy, it will be forced to lower its expenditures two or three years into a recession. They worry that this provision will force Maine to make enormous cuts in a number of crucial programs and services.

Many see the Maine proposal as being even worse than Colorado’s in some respects.  The Maine proposal requires a supermajority in the legislature to override TABOR, whereas Colorado only required a simple majority.  In addition, the Maine proposal limits TABOR overrides to one budget cycle, but Colorado’s TABOR law does not place a limit on the number of years that it can be overridden at a time.  Policelli sees these stricter rules as troubling because it would be extremely difficult for Maine to override TABOR during a budget crisis, especially since the parties in both legislative chambers are so close in numbers.

The TABOR movement attempts to accomplish at the state level what seems much less manageable at the national level, given current spending on homeland security and the war on terror.  It is unclear what will ultimately happen to the three states with TABOR on their ballots this November.  Both opponents and advocates will be watching these elections closely, and their outcomes will help to determine the long-term impact of the TABOR movement.

Email Nicole Cafarella at



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