The SanityPrompt

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Tuesday, June 28, 2005

TABOR in Colorado

Background:
An increasingly popular conservative tactic against state governments is termed the Taxpayers Bill of Rights or TABOR. It doesn't actually stipulate any rights. What it does is limit the growth of tax revenues year over year and require that all tax increases in the state, be they state taxes or municipal or county levies, come before the voters in a referendum. TABORs actually spell disaster for state and local governments and represent an effort to starve the public sector (When tax revenues start to grow, governments must return the excess over inflation and population growth back to the taxpayers). Most problematic, this requirement that revenues grow only as fast as inflation does not take into account that in recessionary times, state revenues actually shrink. Hence, if a lean year cuts revenues by 10% over the prvious year, then it can take several years before TABOR allows them to return to pre-recessionary levels. This phenomenon, called the ratchet, has decimated public services in Colorado and led to sharp cutbacks in the higher education sector, as well as serious increases in college tuition.

The Issue:
Voters in Colorado will now be able to vote on a plan to help get the state out of this mess by keeping what it would otherwise have to return to taxpayers for the next five years. The surpluses together might amount to $3 billion depending on what happens to the economy. So voters have a chance to help bail out the state if they are willing to forego the small returns they might otherwise get annually. The conservative governor and Republican state legislators, who have seen first hand how difficult it is to operate within the confines of this poorly thought out piece of policy have struck a deal with Democrats and support the referendum effort. But this has brought Colorado in the crosshairs of the anti-tax, anti-government conservative movement. They see no crisis and don't want to watch efforts to pass TABORs in other states derailed by the sorry image of voters coming out against something they supported a few years ago. So they are starting to pour into the state to campaign against this effort, and Colorado finds itself as ground zero once again in the the Conservative Wars.

DenverPost.com
: "It will be more than four months before Colorado voters decide whether to suspend the state tax refunds due them under the Taxpayer's Bill of Rights.

But defenders of the crown jewel of small-government conservatism known as TABOR are rushing into the breach with an urgency that could foretell an intense autumn for an off-year election.

Shortly after Gov. Bill Owens and Democratic leaders at the Capitol announced in March that they would pursue a ballot measure putting TABOR refunds on hold for five years, a flurry of bumper stickers flew through the building. 'No Refund for You,' they said.

Radio ads sponsored by the Independence Institute recently hit the air, describing the proposed TABOR hiatus as 'a forever tax increase.' "


Note the (non-)clever use of falshood to characterize the TABOR reform effort -- "a forever tax increase." Rates will not change one iota. If a person's income is essentially flat (as most peoples are these days) their taxes won't rise one iota. Only when you live in conservative fantasy-land does foregoing a refund for a few years constitute a tax increase. As the linked Denver Post article makes clear, conservatives are prepared to pull out all the stops to fight this. Dick Armey is expected in state soon in his new incarnation as antitax God for FreedomWorks. To get a sense of the stakes here, consider that longtime TABOR supporter Governor Bill Owens has challenged Armey to a debate. That gives a sense of how desperate the situation is. Owens has been villified on the Right. Governor Wannabe Bob Beauprez has come out against the reform effort (as he has to to get the GOP nomination). But any statesmen worth their salt who has served in government knows that without change, the state is in an impossible situation (I happen to think that coming out against the reform is a crucial mistake that can be used against him in the general election -- anyone who opposes it should explain where they will cut spending and why they think it's justifiable to be cutting hundreds of millions in spending at the same time that the state returns hundreds of millions to taxpayers).

If the referenda fail, then public higher education will rapidly lose all state funding and essentially become fully privatized -- whatever the tuition rates everyone can settle on. If tuition growth remains restricted, this will be the end of public higher education as we know it. The institutions' ability to retain and attract prominent faculty will vanish and unless the schools embrace radical changes in mission and form, layoffs and a complete dismantling of what prestige remains will be next. Yes, it may sound extreme but some schools will close. Conservative officials should be forced to suggest which ones should close.

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