Praise from the Left Coast
Kevin Drum, a/k/a/ "CalPundit," likes the Taxpayers Bill of Rights concept, but the California blogger offers a twist:

The basic idea of TABOR is flawed because it essentially means that state employee salaries are frozen forever in real terms. If we had adopted this kind of rule in 1970, teachers would still be getting paid about $15,000 a year today. A better idea, I think, is to limit state spending to a percentage of gross state product (GSP, the state equivalent of national GDP), with perhaps a small amount of wiggle room allowed by a super-majority vote. This allows everyone to benefit from economic growth, while still keeping a clear cap on spending.

I'm not so sure I agree with his contention that TABOR freezes teachers' salaries - or spending on any other government program - forever in real terms, as CalPundit says. I think policy choices have as much or more impact on teacher pay as TABOR does. But that's almost beside the point. I welcome debate over the proper measure to tie revenue growth to - the real issue ultimately remains putting some sort of restraint on the growth of taxation and government spending via the state constitution, and giving the taxpaying public more control.

My research shows that, since the adoption of the TABOR amendment in Colorado in 1993, Colorado's per-capita spending by government has accelerated rapidly. Much more rapidly than Tennessee's. The reason is that TABOR creates a stable tax environment and, in boom years, leads to tax cuts - and a stable tax environment and periodic lowering of taxes helps the state's economy grow faster and the state's people grow wealthier. I document that in fine detail in my TABOR white paper, available online in a PDF file thanks to South Knox Bubba.

An excerpt of my research: From 1990 through 2000, Colorado increased per-capita state spending by 139 percent, the third-largest increase among all 50 states, while Tennessee increased per-capita spending by 76 percent. In 1990, Colorado's government spent $2,504 per person. Tennessee spent about 50 percent more than that - $3,753 per capita. By the end of the decade, Tennessee spending per capita had risen to $6,593, and Colorado’s had increased to $5,992. Tennessee state government now spends just 10 percent more per capita than does the government of Colorado.

One other point: TABOR provides a remedy for the effect CalPundit cites, and Coloradoans used it to address the very issue of public education funding. In November 2000, Colorado voters approved a ballot question asking for roughly one fourth of TABOR surplus revenue over the next ten years to be set aside for increasing spending on public K-12 education. Essentially, the amendment, effective 2001, altered the TABOR formula and allows for extra revenue growth earmarked for education, and increases per pupil spending by at least inflation plus one percent for the next ten years and by at least the rate of inflation thereafter. The money was dedicated to several uses, including class size reduction, technology upgrades, and performance incentives for teachers.

Again, it is policy choices that drive teacher pay. TABOR doesn't lock teacher pay or government spending at a lower level. It merely forces legislators to prioritize.

UPDATE: Keven, a/k/a/ CalPundit, writes, "My basic problem with population growth + inflation is that as population grows, the number of teachers will grow at the same rate (assuming class size stays the same). Thus you have no choice except to keep their salaries constant (in real dollars) unless you cut other stuff."

I'm not so sure that's true. First, it assumes the growth in population will mirror the pre-growth demographics of the state, with the same percentage of families with school-aged children, the same wealth distribution, etc. But that's not a given. In Colorado, per-capita disposable income has soared since TABOR was enacted. I have not data, but you'd have to assume that as the population becomes wealthier a higher percentage of people will be able to afford private schools for their children. But demographic questions aside, CalPundit hasn't addressed one basic fact of Colorado since TABOR: state government spending has not just grown, it has grown per capita.

Once again: From 1990 through 2000, Colorado increased per-capita state spending by 139 percent, the third-largest increase among all 50 states. According to this inflation calculator, which is based on federal Consumer Price Index data, inflation from 1990 through 2000 totaled 34 percent. Factor that in and Colorado still increased per-capita spending by government by roughly 100 percent. The state spent $2,504 per capita in 1990, but in inflation-adjusted 2000 dollars that would've been about $3353. But Colorado actually spent $5,992 per capita in 2000 - an inflation-adjusted real increase of 78 percent.

That's $2,639 more per capita, after factoring inflation. Surely there was money in there for teacher pay increases. - and remember, that's a per capita increase so it already takes into account population growth. If those teacher pay increases did not beat inflation, that is because lawmakers made other choices, not because the TABOR formula didn't make the money available.

MORE STUFF: CalPundit’s basic complaint with the TABOR formula (inflation + population growth) is that it prevents the government from benefiting from economic growth and using the extra revenue to fund increases in teacher pay (or, presumably, increase spending on other perceived needs.)

Economist Dr. Barry Poulson, a professor of economics at the University of Colorado in Boulder, said the following in one study of TABOR’s impact:

“That the TABOR Amendment has slowed the growth of state spending is now well documented. But TABOR has also had the effect of stabilizing state spending over the business cycle. The result is what economists refer to as consumption smoothing in state finance. Consumption smoothing is important because it permits the government to maintain stability in the provision of government services without discontinuous changes due to cyclical changes in state revenue.

“It is often argued that the TABOR Amendment requires a decrease in state government relative to the private economy. This argument is a major source of misunderstanding, because it ignores the consumption smoothing impact of the TABOR Amendment over the business cycle. To the extent that TABOR is a binding constraint, as it has been over the past five years of rapid economic growth, state government will grow less rapidly than the private sector. But during periods of recession and slower economic growth … TABOR is a less binding, and possibly a nonbinding, constraint. In recessions state government is likely to grow more rapidly than the private sector.”