The Colorado Lesson - Colorado has an income tax, yet Colorado also has a big budget shortfall thanks to the recession, proving that not even an income tax can assure a state will avoid fiscal crises. But that's not the most important lesson of Colorado's budget crunch. The truth is Colorado's $1 billion shortfall would have been far worse if the state hadn't finally placed a firm limit on the growth of taxing and spending a few years ago, in the form of an amendment to the state constitution called the Taxpayers Bill of Rights that limits spending increases to inflation+population, and prevents tax increases without the state getting approval from the people in a referendum.

Needless to say, TABOR is wildly popular in Colorado. Needless to say, big-spending politicians don't like it - even though TABOR has permitted government to grow 5 and 6 percent a year.

TABOR has had a stabilizing effect on Colorado's finances, according to an extensive research report by Dr. Barry Poulson, an economist at the University of Colorado in Boulder. The report, Learning to Live Within Colorado's Tax & Spending Limits, was published by the Independence Institute, a non-partisan think tank in Golden, Colo.

TABOR offers a clear and sensible guide to smoothing out Tennessee's fiscal roller coaster ride.