TABOR: The Growing Taxpayer Bill of Rights Movement and Economic Incentives for Industry

A governing.com report blast one of the major grassroots initiatives spreading across the country: the Taxpayer Bill of Rights (TABOR) movement. "When citizens put their hands directly on the tax levers, it often gets much harder for states to pay the bills. California, whose Proposition 13 became the poster boy for hobbling ballot box measures, is just one name on a list of states that are choking on tax policies put in place by voters. Washington, Oregon and Colorado are just a few of the others confronted with adequacy problems thanks to these measures. These maneuvers not only have been influential in changing individual taxes but also in paralyzing state legislatures and local governments."

Once again, the governing.com special report is filled with propaganda and very little evidence to support its conclusions. A case in point is Colorado. Within the community of state and local governments, Colorado is known for having a state TABOR. As such, it has been an experimental laboratory, exactly as the framers envisioned with our federalist form of government, for showcasing to other states the economic impacts of a TABOR. Contrary to the governing.com report, Colorado has enjoyed economic growth rates since passing its TABOR that exceed the national economic growth rate.

Colorado added a TABOR to its constitution circa 1992, and the measure remains very popular with Colorado residents today. Under a Bill of Rights, Colorado has refunded a billion dollars of surplus revenue to its citizens. Beyond its effectiveness at controlling government expansion, the Colorado "Bill of Rights" has proven a definite plus for Colorado's economy.

Colorado Governor Owens suggested to California's then Governor-elect Schwarzenegger that California should make "a Taxpayer Bill of Rights its highest priority, because it works." News about Governor Owens phone call to Arnold Schwarzenegger made the national news in the print media and was featured on evening network news broadcasts. If the TABOR were such a terrible straightjacket on the state government of Colorado, as governing.com claims, why would the incumbent governor recommend it to his fellow governors?

Tennessee Draft TABOR. The TABOR in Colorado has been such a success that numerous states are now considering similar constitutional amendments. During the 2002 gubernatorial campaign in Maryland, the liberal-leaning Baltimore Sun opined in an open editorial to both major party candidates that Maryland should consider adopting a TABOR. Georgia already has a TABOR, although Georgia's TABOR is limited to property tax assessments. In Tennessee, state Sen. Jim Bryson has introduced a bill to add a TABOR to the state constitution. If adopted, Bryson's bill would (1) cap (except in emergencies) increases in state spending to a formula which factors in: inflation, population growth and tax increases previously approved by voters; (2) require future increases in state tax rates to be approved by the public in referendums; and (3) refund excess state revenues above this cap back to state taxpayers.

Bryson's bill can be viewed at http://www.legislature.state.tn.us/bills/currentga/BillCompanionInfo.asp?BillNumber=SJR0088. More information is available at Senator Bryson's website (www.SenatorBryson.org ), at the Tennessee Taxpayer Bill of Rights website (www.TNTABOR.org), and at the Tennessee Tax Revolt website (www.tntaxrevolt.org).

State Sen. Bryson traveled to Colorado in October 2003 to see first hand the effects of Colorado's TABOR on that state. While there, he met with the Colorado senate majority leader and the deputy director of the governor's budget office to learn whether the TABOR was good or bad for Colorado's state government. "Both thought it had made the state more efficient and more responsive to the people of Colorado," Bryson said.

Tennessee vs. Colorado Economic Growth Rates. In a head-to-head comparison, Colorado under a TABOR has consistently beaten Tennessee's economy. In the 1990s, Colorado per capita income grew at a rate of 51%, compared to 38% growth in Tennessee. The number of jobs increased 32% in Colorado, compared to 17% in Tennessee. Colorado's gross state product increased by 79% compared to 49% in Tennessee.

In referring to Tennessee's tendency over the last two decades of passing tax increase after tax increase, Bryson noted in a recent speech in Oak Ridge, Tennessee, "Enough is enough. The Tennessee Legislature has overridden spending controls within the Tennessee State Constitution in eleven of the last nineteen years. We need to address this problem systematically."

Bryson observed that Tennessee spending has grown substantially faster than taxpayer paychecks over the last few years. Tennessee personal income has risen at an average annual rate of 5.5%, edging out inflation that grew at 3.3%. However during the same period, Tennessee spending increased at an average of 7.6% per year, according to Bryson. In addition, Tennessee's rainy day fund for real emergencies is currently very low.

Had a TABOR been in place, the Tennessee spending growth would have been held to just 4.5% per year and the state's emergency reserve would have been increased to (and maintained at) 5% of revenue, according to Sen. Bryson. He also emphasized the value of a TABOR to government efficiency. He pointed to the protracted waste of time and wrangling that Tennessee's last Governor and legislature spent over the best way to raise taxes. In the end, a billion dollar tax increase was passed, which raised sales taxes to 9.75% in many areas of Tennessee. A TABOR would have brought this matter to a conclusion much faster. It also would have provided substantial incentive to government officials to find less expensive alternatives.

"A Taxpayer Bill of Rights helps government face its tough decisions," said Sen. Bryson. "People walk into my office every day with proposals for new state programs."

Tennessee Cities With Interest in TABORs. The town of Spring Hill became the first community within Tennessee to adopt a local TABOR earlier this year, following the example set by a few towns and counties in Nevada. According to local officials, the Spring Hill measure brought with it an almost immediate economic boost in a manner very similar to that seen in Colorado. The idea of moving to a location where citizens are allowed to vote on tax increases proved to be a potent marketing advantage for the town.

"Beyond its potential economic advantages, a 'Bill of Rights' also brings important accountability benefits to citizens," said Martin McBride, Spokesperson for the Oak Ridge (Tennessee) Accountability Project. "The act of having to explain a tax increase directly to the pubic really helps government officials focus better. It reminds them that tax money is a precious commodity and it motivates them to work to make government more effective and more efficient. This in turn lowers costs, builds citizen trust, and fundamentally strengthens American government."

Advice for Connecticut. Connecticut needs to study and compare its economy to that of Colorado under a TABOR. If the numbers are as unfavorable as those for the head-to-head comparison in Tennessee, then Connecticut could do well to broach the idea of a TABOR in its state legislature, capitalize on the groundswell of public support the proposal would likely engender, and create a business and economic climate in which businesses would associate Connecticut with reasonable and evenhanded taxes. CCM can take the lead in this effort by sponsoring a series of town hall meetings with roundtable discussions on the advantages and disadvantages of a TABOR. More than finding some new scheme to extract money from the state and local governments, the CCM would do itself and its citizenry an enormous favor by enabling citizens to participate more directly in the government's spending plans at the state and municipal level.

The rest of this article can be found at http://riskmgmt.biz/lawnews/ctbudget.htm

Dr. Michael A. S. Guth, Ph.D., J.D., is a consulting economist, legal brief writer, and law newspaper Editor-in-Chief. He writes a variety of articles on constitutional law, elder care, consumer credit card debt, appellate court term reviews, and law and society. See http://riskmgmt.biz/ for an introduction to his legal work, and http://riskmgmt.biz/lawarticles.htm for a listing of many of his articles. Dr. Guth writes legal articles and briefs for other law firms, and he assists pro se parties (those without a lawyer) in preparing documents they can file in court such as motions pertaining to child custody, visitation interference, and child support defense.

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