By Jason Kosena
THE COLORADO STATESMAN
In Colorado politics, it’s all about TABOR… again.
As the state grapples with the fallout over the nation’s worst economic downturn since the Great Depression, swords are being drawn both to defend and attack the 1992 amendment to the Colorado Constitution called the Taxpayer Bill of Rights.
Democratic lawmakers are working overtime in an attempt to undo part of or all of the amendment. Republicans are bolstering their defenses in preparation for an epic struggle to safeguard the cornerstone of their economic philosophy.
But although a battle clearly is shaping up, no one knows when the first shot will be fired. Some people say a referendum will come by 2011. Others are banking on a comprehensive constitutional amendment in 2012.
Nor does anyone know whether the state’s voters will embrace or reject a change to the state’s formulaic tax policy. Uncertainties aside, however, the new focus on TABOR at the Capitol has drawn a line in the sand and forced partisans on both sides to their corners.
Nuts and bolts
In 1992, Colorado voters passed TABOR, effectively triggering a vote on any tax hike that would increase government revenue at a rate faster than the combined rate of population increase and inflation.
TABOR also provides that any additional revenue collected by the state beyond TABOR limits be passed back to taxpayers in the form of a refund.
Most budget experts agree that TABOR had little impact on the state’s ability to budget throughout the ’90s, as Colorado’s economy rose with the Internet. The age of easy budgeting ended in 2001 as the economy suffered under the combined effects of the Sept. 11 attacks and the bursting of the tech boom bubble.
Because TABOR limits were based on the previous year’s revenue limit, although Colorado’s economy began recovering from the recession, and tax revenue returned to pre-recession levels in 2002, TABOR limits allowed the state’s General Fund to increase by only the combined rate of population increase and inflation — and 2001 was a recession year.
This “rachet effect” created devastating budget cuts for many state services in 2001, including large-scale reductions in budgets for higher education, transportation and social services.
Although TABOR defenders contend that the ratchet effect and revenue limits didn’t create the budget shortfalls in 2002 and 2003, its detractors banded into a broad, bipartisan coalition to put Referendum C on the 2005 ballot.
Ref C, supported by the Chamber of Commerce, organized labor, some Republicans, most Democrats and lots of unaffiliated voters, called for a five-year “time out” from TABOR’s revenue limits. It also eliminated the “ratchet effect” by basing TABOR limits on the state’s highest revenue point during the previous five years instead of basing it solely on the previous year’s tax collection.
Even the passage of Ref C wasn’t enough, however, to untangle Colorado’s fiscal knot — thanks in part to another constitutional amendment passed by voters in 2000. Amendment 23 further tied the Legislature’s hands when its supporters, primarily Demo-crats, rallied support for the concept that TABOR limits were making it impossible to adequately fund K-12 education.
In what many of its supporters saw as an end run on TABOR, Colorado voters passed Amendment 23, which requires K-12 spending to be increased by at least inflation plus 1 percent each year for 10 years, and then by at least inflation thereafter.
Amendment 23’s formulaic approach to funding K-12 education, many experts and former lawmakers say, along with the revenue limits set by TABOR, morphed into a system that gutted the ability of the General Assembly to make budgeting decisions during difficult economic years. Lawmakers were forced, instead, to budget under the constraints of conflicting constitutional amendments.
In 2009, K-12 education consumed 43 percent of the state’s General Fund, and because Amendment 23 requires annual increases to K-12, that percentage is only expected to grow. The result, lawmakers say, is a state Constitution that allows very little flexibility to increase revenue and very few places to make cuts in order to balance the books. Higher education, social services and transportation end up taking most of the lashes when the Legislature is forced to brandish its whip.
The battle on TABOR begins
As bruising budget cuts emerged from the Capitol almost monthly in 2009, lawmakers began to talk about the possibility of eliminating or substantially changing TABOR.
Democrats passed legislation this spring to create a bipartisan interim committee to study the state’s long-term fiscal stability and to determine possible future options.
No one at the Capitol is willing to say that the committee was created to write a ballot initiative for voters in 2011 or 2012. But some lawmakers clearly are hoping that the panel’s members — which include conservative thinkers from the Independence Institute, the Colorado Union of Taxpayers and the business community — will form the foundation of a coalition to redraft Colorado’s budget situation — much in the same way citizens weighed in on Ref C in 2005.
“We have to go out around the state and educate people about what TABOR is doing,” said Rep. Mark Ferrandino, D-Denver, a Joint Budget Committee member.
“If you look at Ref C and how it passed, that is how it happened,” Ferrandino said. “I think the same types of conversations have to happen. We have to talk about how TABOR, Gallagher and Amendment 23 work and how they are collectively dictating the future. In order for anything to pass on the ballot, we have to have a conversation about our Constitution and about how we need to amend it in order to have the flexibility to give our state what it wants.”
But what, exactly, does the state of Colorado want when it comes to government services? And how willing will voters be to overturn TABOR, which many see as the only thing keeping state officials from robbing them blind?
Republicans at the Statehouse are not shy about answering either question. Much as the Democrats have created a committee to look at the fiscal problems being created by TABOR, Republican lawmakers, led by Sen. Kevin Lundberg, R-Berthoud, are using the Republican Study Committee of Colorado to hold hearings at the Capitol that look at why Colorado is better off with TABOR in place.
The pro-TABOR committee’s first meeting was held at the Capitol on Oct. 23, and included a barrage of testimony asserting that TABOR has been effective not only in limiting government growth, but also in helping Colorado avoid much of the financial pain felt by states that lack revenue limits.
“The meeting was to clearly make the case for TABOR,” Lundberg said. “This issue is within the context of the (long-term fiscal stability) commission right now. And, we are studying long-term fiscal stability, as well. And TABOR is the cornerstone of any policy that will promote that. From what (members of the fiscal stability panel) have told me, the interim committee has promoted expanding the role of government.
“It’s a big-government and limited-government discussion,” he continued. “And TABOR is at the center of that discussion. Is it the appropriate way to go about long-term fiscal stability? They are convinced it isn’t. And we are convinced it is.”
Rep. Kent Lambert, R-Colorado Springs, the newest GOP member on the Joint Budget Committee, agrees.
Lambert, who is known as a staunch fiscal conservative, said he believes the rumors that Democrats are planning to launch a ballot initiative to undo TABOR completely — and not just trying dismantle it one piece at a time. Lambert added that those efforts are beginning to backfire as voters frustrated with high taxes and over-reaching government grow wary of Democratic initiatives.
“There have been efforts every year to undo TABOR ever since it was implemented,” Lambert said. “It’s a constant way of tactically growing government. We have seen it every year since 2006, and even going back further than that, with Ref C.
“I can’t speak for every member of our Republican caucus, but with all of the efforts like Amendment 59 [an unsuccessful 2008 initiative aimed at undoing large parts of TABOR] and with the School Finance Act of 2007, we are hearing from our constituents about their frustration,” Lambert said. “And because of the growing desire of Democrats to entirely eliminate TABOR, I believe people are wanting to defend it now, more than ever.”
A slow dismantling of TABOR?
During last week’s Republican Study Committee of Colorado meeting on TABOR, former Rep. Doug Bruce, the author of TABOR, spent an hour detailing his view of how “a bunch of leftists” — including state officeholders and most of the Colorado Supreme Court — has tried to dismantle TABOR in recent years.
Slowly and methodically, Bruce outlined the efforts of “elected and unelected socialists and our corrupt state judiciary” to drain meaning from the original 1992 initiative. Examples cited by Bruce included the mill levy freeze passed by the Legislature in 2007 and upheld by the Colorado Supreme Court in 2009; legislative fee increases, which Bruce called “tax increases” — including the FASTER bill passed this year — and the elimination of Arveschoug-Bird, which kept a 6 percent spending cap on the General Fund.
Matt Arnold, director of Clear the Bench Colorado, also testified that TABOR is being systematically disassembled, asserting that the Colorado Supreme Court’s decision on the mill levy freeze not only allowed for the property taxes of Colorado residents to remain high but also opened the door for additional breaches of TABOR.
“Buried in that ruling was language effectively eliminating previous constitutional protections for a large list of existing tax credits and exemptions,” Arnold said. “It was literally hours after the ruling that a new tax proposal — which eventually became House Bill 1342, the tobacco tax increase — was proposed.”
Rather than creating a new tax on tobacco, HB 1342 eliminated a long-standing state sales tax exemption on tobacco sales in Colorado. The result, nonetheless, was increased state revenue from tobacco sales.
Lundberg, who chairs the Republican Study Committee of Colorado, said his group is working to outline what they believe to be the facts of TABOR. He said the panel also will continue to undermine what he called the “political rhetoric” coming from Democrats who contend that a further dismantling of TABOR, including a possible ballot initiative, is needed.
“We are clearly putting the facts on the table and showing that TABOR is good for the people of Colorado and has created a healthy economic environment for the state over the last two decades,” Lundberg said. “We’re not just trying to get the word out with a sound bite or two. Friday was a six-hour discussion with the best and the brightest experts on this issue. We are going to continue bringing up the points they made and continue making the case for TABOR with the people of Colorado.”
A new party with a new song
The fight to keep TABOR in place could get a lot more emotional for Republicans in 2011 than it was in 1992.
Although the Republican Party of the 1990s was rooted in low taxes and fiscal conservatism, GOP lawmakers at the Capitol during the ’70s, ’80s and ’90s tended to be more moderate, said Colorado State University political science professor John Straayer, who has been following legislative politics in Colorado since 1968. Straayer said the Republican lineup in the 1990s included such middle-of-the-road state lawmakers as Don Ament, Norma Anderson, Gayle Berry, Tillie Bishop, Ken Chlouber, Gigi Dennis, Lewis
Entz, Jeanne Faatz, Russell George, Dorothy Gotlieb, Tony Grampsas, Sally Hopper, Steve Johnson, Bill Kaufman, Martha Kruetz, Elsie Lacy, Marcy Morrison, Tom Norton, Paul Schauer, Bill Schroeder, Matt Smith, Bill Swenson, Jack Taylor, Steve Tool, Shirleen Tucker Dave Wattenberg, Jeff Wells, Dottie Wham and Tambor Williams.
Today, Straayer said, moderate Republicans have been replaced in the Statehouse by ideologues who make TABOR “a religion” — and who will passionately fight any effort to alter the gospel.
“The Republicans of a decade or two ago were fiscally conservative, but not to the point of making TABOR a religion so fundamental as to be worth squeezing much of the public sector out of existence,” Straayer said. “Intended or not, the mantra of today’s Republican legislative contingent is to revere TABOR and resist taxes and fees to the point where we will soon become famous for eliminating public higher education, and starve both transportation funding and help for the medically and disabled dependent population to near a bottom line, approaching zero.”
Straayer — a frequent visitor to the Capitol during legislative sessions who is often seen in committee hearings and in the gallery — said he believes the ghosts of Colorado Legislatures past would be disappointed if they could sit in on current sessions.
“I think General Assembly members of decades back would cringe at what they’d see today, and much of that is traceable to term limits which, to use a family analogy, has removed the grandparents from the house and replaced them with youngsters,” Straayer said. “With TABOR, Amendment 23 and other initiated and now constitutional measures, we have effectively destroyed true ‘representative government’ through direct democracy. From the perspective of the values of our nation’s framers, this is the triumph of radicals, not conservatives.”
One GOP moderate, former lawmaker Steve Johnson, who spent many years on the Joint Budget Committee before being elected to the Larimer County Board of Commissioners in 2008, agreed with Straayer that the moderate wing of the Republican Party has been dismantled in Colorado.
“The believers in the right wing of the party don’t care about the facts,” Johnson told The Colorado Statesman by telephone from Tampa Bay, Fla., this week, where he is speaking to Republican lawmakers about TABOR’s impact on Colorado.
“They just want to do the Grover Norquist model of government and look good for the taxpayers to get votes,” Johnson said. “When we get government small enough that we can drown it in a bathtub, then we are done. That is the ideology right now. And it’s unfortunate, because the party has made TABOR the litmus test for membership.”
Although the idea of limiting government to the point of eliminating it entirely may sound extreme to some, interviews with some of Colorado’s currently elected officials verify that some Republicans in Colorado want to significantly diminish the role of state government.
JBC newbie Lambert said the conversation about government has focused too often on how the state is going to pay for a myriad of services that it currently provides to residents. When budgets get tight and cuts need to be made, he said, people attack TABOR as the problem and never look for other solutions, such as rethinking the role of government.
“Does K-12 education have to be done by the government? Some would say ‘yes’ — but we have a myriad of examples like private schools and home schools that show us that that doesn’t have to inherently be done by the government,” Lambert said. “What those examples show us is that there may be other ways for education to be done that doesn’t fall into the model of the public schools.”
Lambert said he believes a vast majority of Coloradans believe public education is an important service of government, which is why Amendment 23 passed. Nevertheless, he offers that belief as an example of a long-held idea about the role of government that can be challenged.
“What about prisons?” Lambert asked. “We have evidence that shows prisons can be run more efficiently by private companies. And, under that model, we wouldn’t be forced into letting dangerous criminals back onto the streets (as Gov. Bill Ritter is doing) in order to solve a budget crisis. We have to start having the conversation about the difference between things that we should do and the things that we want to do.”
Lundberg agreed, saying TABOR’s limitation on government effectively promotes liberty.
“TABOR encourages a healthy economic environment and promotes liberty, because whenever the government steps in with another program and another tax, it erodes the prerogative that the individual citizen has over their lives,” Lundberg said. “TABOR keeps that in balance, because the inevitable process of government is to promote more control over citizens’ lives. And when that happens, their freedoms diminish.”
Other lawmakers, however, see an entirely different role for government.
Rep. Lois Court, D-Denver, said, when run correctly, government can help people and businesses build personal and commercial success. She said the devastating budget cuts Colorado has been forced to make in recent years have had a very real and painful impact on the people of the state.
Nevertheless, Court added, the pain caused by those cuts could eventually demonstrate the fallacy of TABOR and limited government.
“I am hopeful that this drumbeat of ‘cut, cut, cut’ will force people to realize that you cannot do more with less. You do less with less,” Court said. “I am hopeful that by the time a ballot initiative comes forth, we will have faced enough years of ‘cut, cut, cut’ that the people will realize that this a reality — and the reality is not good.”
“The monster question facing Colorado today, a question which many 2010 candidates would like to sidestep, is what Colorado will be for our children and grandchildren,” he said. “The Douglas Bruces of the world have one answer — an answer which leads to a fulsome strangling of revenues and consequent diminution of public programs.
“Coloradans today might want to ask themselves which they prefer — drive revenues below sea level in the name of limited government, or support a moderate fiscal policy which keeps our colleges, universities, highways and health systems operating for the next generation?” Straayer concluded.
Coloradans, it appears, might have the opportunity to answer that question soon. Maybe even in 2011.