Yesterday, Colorado voters narrowly approved Referendum C, which allows the state government to keep and spend the TABOR surplus over the next five years. Voters narrowly rejected Referendum D, which would have allowed the state to borrow up to $2 billion for certain transportation and education projects.
The result in Referendum C is a good example of how scare tactics can obscure the ability of the public to make sound fiscal decisions. TABOR opponents blamed it for reducing state funding for roads, health care, higher education, and the like. But in doing so, they ignored the true culprit: Amendment 23, which requires Colorado to increase education funding every year regardless of tax revenue growth. In fact, all of Colorado’s alleged fiscal ills emerged after the voters approved Amendment 23 in 2000.
Amendment 23—not TABOR—is the true fiscal villain in Colorado. TABOR certainly does reduce the size of the fiscal pie as Colorado grows out of recession (the so-called “ratchet effect”), but Amendment 23 demands that education get a bigger and bigger slice, no matter how big the pie is. In fact, K-12 education consumed 40.7 percent of Colorado’s general fund revenues in 1996, but it will consume 43.3 percent in 2006. This effect is particularly acute during a time of recessionA recession is a significant and sustained decline in the economy. Typically, a recession lasts longer than six months, but recovery from a recession can take a few years. , when taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. revenues fall, as they did in Colorado a few years ago.
As lawmakers in other states move forward with “ratchet-less” TABOR proposals, they should remember the true issues involved in the Colorado TABOR debate, and not fall for the same scare tactics that were so successful in Colorado.
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