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League of Women Voters of Boulder County
Empowering Voters. Defending Democracy
Serving the People of Boulder County, Colorado

MiP Team Forum

The Poison Pill of TABOR Refunds
Carolyn Elliott

Hi everyone,

State Senator Chris Hansen of Denver, and Rep. Dominic Moreno from Commerce City explain the harms of TABOR on our State budget. All Coloradans will receive a refund check, instead of those funds going towards sorely hurting public services, because of the federal pandemic relief monies increased the State revenue. Other states are tending to the economic harms from the pandemic, but Colorado is strapped into the constrictions of TABOR, which require refund checks. Enjoy reading!

TABOR refunds have stunted Colorado’s progress

By Chris Hansen and Dominick Moreno

Guest Commentary

On his first day in office, President Joe Biden announced the $1.9 trillion American Rescue Plan, and called upon the nation to “build back better than before.”

In Colorado, however, there’s a problem. We have a major obstacle that is keeping us from truly building back better: the Taxpayer’s Bill of Rights (TABOR). While the federal American Rescue Plan Act has shored up Colorado’s budget in the near term, we are still far from having enough money to overcome the long-term budget deficit created by TABOR.

Despite the money received from the federal government, Colorado remains paralyzed by the most restrictive tax system in the entire country. Years of artificial limits and underfunding in key areas have left a lasting legacy we will deal with well after the federal funding goes away. By our estimates, the state government remains approximately $40 billion dollars short of adequately funding state programs, infrastructure, and services since 1993 — all because of TABOR.

To begin, what is TABOR?

TABOR is a constitutional amendment created by a ballot initiative in 1992. It prohibits different tax rates for low-income families and dictates that the state’s budget can only increase by the rate of inflation plus population growth, and any additional revenue the state collects gets returned to taxpayers.

At face value, this may seem logical. If you look a little deeper, however, you will find an issue that has forced our fiscal situation to deteriorate and has been driving a steady decay in state services since TABOR’s passage. Inflation, as defined by TABOR, means “the percentage change in the U.S. Bureau of Labor Statistics Consumer Price Index for Denver-Boulder.” The Consumer Price Index is a measure of the prices paid by consumers for a normal basket of consumer goods and services: food, clothing, etc.

The state government, however, doesn’t spend its money on these basic consumer goods. The state spends its money chiefly on labor, construction materials, and health care. Whereas the normal consumer basket benefits from global trade, the state basket is largely labor-based and is made up of goods and services that, for the most part, can only be bought here in Colorado. If it costs less to make a shirt in Asia than in the U.S., we’ll have it made in Asia. But, Colorado can’t hire people in Asia to staff our schools.

This is Colorado’s TABOR poison pill. The inflation rate used by TABOR has grown at a fraction of the real rate of inflation that the state of Colorado has had to pay for its goods and services. As a result, we are slowly losing our ability to provide the necessary services for Coloradans.

Let’s take K-12 education as an example. In 1992, the year TABOR was approved, Colorado was 35th in the nation in K-12 spending as a percentage of personal income. By 2012, the state ranked 47th, according to the U.S. Census Bureau’s report Public Education Finances. In 1992, Colorado ranked 30th in providing teachers a competitive living wage. In 2020, we ranked last in the nation according to Great Education Colorado.

Nearly 30 years after its passage, TABOR continues to stunt our state’s progress and impede our ability to effectively invest in vital services for the people of Colorado, hamstringing the state’s ability to prepare for periods of economic downturn, effectively diminishing the state budget in real terms.

In troubling financial times like we just experienced, we should be able to dip into our emergency funds and provide our state with the support it needs — just like other states can.

This coming year, taxpayers will see rebate checks, but those will come at the expense of better funding for public services that reduce costs for all of us. In addition, TABOR has reduced budget flexibility, which harms our state’s credit rating, thus increasing the interest costs for any state government debt.

The long-term shortfalls associated with TABOR also make it clear that doing permanent, across-the-board income tax cuts will only add insult to injury. Sure, everyone wants services and doesn’t want to pay for them, but we all know that is not sustainable and to cut taxes without being honest about the harm it does to our schools and universities is disingenuous at best.

The question for the state government is how to, in spite of TABOR and unending ballot pushes for severe and permanent cuts, invest in hardworking Coloradans all across our state and give them an opportunity to succeed. We will continue to pursue innovative solutions to keep schools funded, roads maintained, and invest in future economic growth – because that’s exactly what the voters have elected us to deliver.

Chris Hansen is a Colorado state senator from Denver. Dominick Moreno is a state senator from Commerce City.

As you can see, some insidious disinformation backed by dark money continues to infiltrate the minds of voters about the true harms of TABOR. Let's stay informed!

Carolyn Elliott

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