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Location: Nashville, Tennessee, United States

2/26/2003

Blaming TABOR
The Daily Camera, the newspaper in the ultra-liberal Colorado enclave of Boulder, is wrongly blaming that state's Taxpayers Bill of Rights for the state's budget woes. TABOR caps the growth of revenue to a reasonable level based on inflation and population growth, and requires surpluses be returned to taxpayers. TABOR does not specify how such surpluses be returned, and for the first few years of TABOR surpluses, the state used one-time rebates.

Then, a few years ago, some stupid legislators in Colorado - mostly Democrats - theorized that, with the economy humming along and TABOR surpluses mounting, they should just cut taxes permanently, so that surplus revenue wouldn't flow into the capital only to have to be sent back to the taxpayers. It was logical, except for one thing: it was based on an expectation that the economy would always produce surplus revenue.

Now, the economy is in a funk and revenue is not growing fast enough to produce a surplus. And, because of another provision of TABOR, the legislature can't raise taxes without approval by voters in a statewide referendum. Such approval is unlikely in the midst of an economic slump, of course. So some tax-loving legislators and liberal editorialists across the state are blaming TABOR.

That's silly. The tax-referendum provision of TABOR was not a secret. Legislators who chose to reduce taxes permanently based on flimsy economic projections viewed through permanent rose-tinted lenses - rather than one-time rebates that would not have lowered tax rates in future years - are to blame for the state's lack of sufficient tax revenue now.

The worrisome thing is, those who oppose TABOR on general principles (because they prefer higher taxes and bigger government) are using Colorado’s budget woes to undermine TABOR, even though TABOR is not really at fault here. There’s a lesson there for legislators and activists proposing a Tennessee version of the Taxpayers Bill of Rights amendment to the state constitution: that amendment should include provisions that specify surplus revenue be returned through one-time rebates or temporary tax rate reductions, to prevent a fiscally myopic future legislature from responding to a one-time surplus with a permanent tax cut that would set the state for a future fiscal crisis that would undermine support for TABOR itself.