IB-2005-F (October 2005)
Author: Linda Gorman
What does Referendum C do?
Referendum C authorizes the state to increase spending each year by letting it keep the excess tax revenues that the TABOR Amendment would otherwise require be refunded to taxpayers. Ref C lets the state do this for the next five years. It also increases the allowable government spending base to the highest state revenue levels received between FY 2005-06 and FY 2009-10 plus $ 100,000,000.
Why the extra $100,000,000? Why not? Like everyone else, the people elected to the legislature enjoy spending other people’s money. But before the legislature can spend other people’s money, it must first take it from who have earned it.
The TABOR Amendment was designed to protect taxpayers from the unfortunate fact that everyone likes to spend but no one likes to cut costs. This goes double for elected officials, because those who spend public money receive all kinds of accolades from the people getting the cash. As a result, government has a natural tendency to expand. There is always another program, another bike path, another subsidy, or another facility that would be really nice to have as long as someone else is paying. To curb the expansion and let people make their own spending decisions, TABOR limits total state government spending to last year’s expenditures plus the percentage population increase and the percentage inflation increase. Government is not allowed to grow just because people have had a good year. When state government revenues are higher than the TABOR limit in good economic times, TABOR requires that the excess revenues be refunded to taxpayers.