In 1992, Colorado voters approved the Taxpayer’s Bill of Rights, a constitutional amendment designed to restrain growth in government. It took the acronym TABOR, which has extra meaning in Colorado because some of the state's history was shaped by the famous mining baron of the late 1800s, Horace W. Tabor.
TABOR applies to all levels of government in Colorado: state government, cities, counties, school districts and special districts. It is the most restrictive tax and spending limitation in the country.
Passage of TABOR came at the start of nearly a decade of record economic growth in Colorado, the Rocky Mountain region and the country. During those years, TABOR limited the amount of revenue governments could collect and spend. Taxpayers received TABOR refunds on their state income taxes, and mill levies were suppressed to prevent governments from collecting too much in property tax.
Some local governments found TABOR's restrictions too constraining, and hundreds of cities, counties, school districts and special districts successfully appealed to voters over the years for a partial repreive from some TABOR provisions.
The more serious negative impacts of TABOR came with the recession of 2001-03. Tax revenues fell, and the state government had only a 4 percent cushion to fall back on. Lawmakers were forced to make hundreds of millions of dollars in budget cuts.
By 2005, Colorado's economy was making strong gains. But TABOR's ratchet effect prevented the state government from using the growing revenues to restore cuts to vital programs. That year, legislators and former Gov. Bill Owens crafted a bi-partisan budget compromise that would give Colorado state government a five-year time-out from TABOR's revenue and spending limits. Following the voter approval requirements in TABOR, they referred the measure, called Referendum C, to the state's voters. It was approved in the November 2005 election.
While most states operate with some tax or spending limits, TABOR is the most restrictive limitation in the country, Some believe this restraint is necessary. The argument is that smaller government is always better, and that authority for making decisions about the level of taxation and spending should rest exclusively with voters.
Philosophically, these arguments are appealing. Everyone wants efficient government and a role in how our money is spent. At the same time, most of us would agree that effective government must be responsive to changing economic conditions and the needs of society and its citizens.
Under TABOR, Coloradans have had an unprecedented opportunity to set state fiscal policy through the ballot box. And under TABOR, state government has grown only slightly.
But our research also points to structural flaws in the amendment that have seriously impaired the state’s ability to set budgetary and program priorities and respond to crises, such as the recession of 2001-03. In short, TABOR has created a state government that is hamstrung by inflexible rules that make it unresponsive and less effective.
The Bell's research experts spent years studying the impact of TABOR on Colorado's budget and its programs, particularly those that are in place to increase opportunity for Colorado residents. The result was a pair of highly acclaimed reports that set the stage for the success of Ref C and for permanent budget reform.
Bell Policy Center reports and issue briefs on TABOR in Colorado:
Ten Years of TABOR (2003)
Understanding TABOR: The First Steps (2002)