By Dr. Barry Poulson

In his last State of the State message Roy Romer had some unkind words for Colorado voters. When voters approved the Tabor Amendment, he said, they "didn’t have a clue" about all its implications. At the Governor’s behest, the legislature is getting to send a request to the voters asking the voters to let the state government keep money which the Tabor Amendment says should be refunded to the taxpayers.

Referring to Colorado voters as myopic is pretty strong stuff for an elected official, but we must remember that Romer is only a part time Governor these days, and as a term limited elected official perhaps he feels that he can insult voters with some impunity. What Romer has revealed is not only an indifference to voters, but also a myopic view of our constitution. It is worth reviewing a little of our constitutional history to set the record straight.

In Colorado our State Constitution is patterned after the Federal Constitution: with a due process clause for defining individual property rights; a tripartite system of government; and a clearly defined role for local government vis a vis the state government. Our state constitution is even more explicit than the federal constitution in constraining the growth of government, and this is particularly evident in our fiscal constitution. The original state constitution limited the power of the state government to tax and spend, requiring a balanced budget. The counterpart to the balanced budget provisions was a specific limit on the total debt that could be incurred and carried over into the next fiscal period.

Over the years Colorado citizens have amended the Constitution to impose limits on the fiscal powers of government. Colorado was one of the first states to impose a tax and spending limit. In 1978 a cap of 7% was placed on the growth of state spending. That limit was imposed after a decade of double-digit growth in state spending that began in the late 1960s. The 7% limit resulted in the first tax rebates to taxpayers in the late 1970s. The limit effectively constrained the growth of state government for several years. However, by the mid 1980s, Colorado was in the midst of the worst recession of the post WWII period. While the private sector contracted, the public sector expanded at an even higher rate. Legislators simply avoided the 7% limit, increasing government spending in some years at double-digit rates. There were some years in which the only growth in output and employment was in the public sector.

In the 1980s legislators increased a wide range of taxes to finance this expansion in government programs. State income taxes were boosted significantly as a result of federal tax reform in 1987. Federal tax reform closed many loopholes and expanded the tax base. Since Colorado income taxes are linked to the federal income tax base, the result was a significant windfall of increasing income tax revenues for the state. In 1987, the state replaced the graduated rate structure with a flat 5% income tax. But this was not a revenue neutral tax rate; it captured a significant share of the windfall created by federal tax reform, and imposed a heavier tax burden on Colorado citizens.

Clearly our fiscal constitution in the 1980s failed to constrain the growth of state spending and taxes. In response, citizen taxpayer groups began to organize to impose a more stringent budgetary constraint through the citizens’ initiative process. Special interest groups spent far greater amounts of money, and mobilized far more resources in opposition to these initiatives to limit government spending. Nonetheless, taxpayer groups struck the right chord with voters, winning a larger share of the votes with each successive initiative.

Finally, in 1992 two new limits were imposed to constrain the growth of state spending and taxes. A statutory provision enacted by the legislature limits the growth of state spending to 6% per year. A constitutional provision enacted through citizen initiative, the Tabor Amendment, limits the growth of government spending at all levels to the combination of inflation and population growth. Taxpayer approval is required to increase spending above the limits imposed by Tabor, and state fiscal constitution designed to limit the growth of state government.

It is difficult to identify any other single piece of legislation in Colorado history that has received more discussion and debate than out tax and spending limits. Colorado has been one of the most innovative states in imposing stringent limits on the growth of state government; however, twenty-seven states have now imposed similar limits on the growth of spending and or taxes.

The Tabor Amendment has worked exactly the way in which it was designed, giving taxpayers the final say on proposed increases in taxes. In 1992 Governor Romer supported a referendum to increase sales taxes earmarked for public education K-12. That referendum was soundly defeated by the voters. This past year citizens in Denver voted on a proposed increase in sales taxes to fund the construction of light rail, and that proposal was also defeated. Other proposals, such as an increase in sales taxes to fund highway construction, have been taken off the drawing boards because it was clear that they could not muster taxpayer support. At the local level, proposed tax increases are frequently defeated by voters. There is probably no state in the union where citizens have more knowledge of and control over tax and spending decisions than they do in Colorado.

Any consideration of fiscal reform in Colorado should begin with a recognition of the importance of our fiscal constitution, including limits imposed on spending and taxes. The Tabor Amendment reflects the will of the people to constrain the growth of government, in the same sense as the balanced budget provisions, debt limits, and budgetary procedures contained in the original constitution. To argue that the Tabor Amendment somehow does not reflect the will of the people is to deny over a century of our constitutional history. It is not easy to amend the constitution, and our representatives would do well to accept the constraints on fiscal powers embodied in the constitution.

This article, from the Independence Institute staff, fellows and research network, is offered for your use at no charge. Independence Feature Syndicate articles are published for educational purposes only, and the authors speak for themselves. Nothing written here is to be construed as necessarily representing the views of the Independence Institute or as an attempt to influence any election or legislative action.
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