TABOR facing face-lift at 25

Quarter-century-old Taxpayer’s Bill of Rights could be adjusted to “work for Colorado”

Twenty-five years ago, Colorado voters approved the Taxpayer’s Bill of Rights, a constitutional provision that put a spending limit on government and gave voters the power to approve tax hikes.

The one-of-a-kind measure, known as TABOR, upended the state’s lawmaking landscape and soon became a political third-rail in the Capitol, one lawmakers touched at their own peril.

Now, with mounting state spending needs, two Republican lawmakers are defying the warning.

State Rep. Dan Thurlow of Grand Junction and Sen. Larry Crowder of Alamosa want to ask voters in November to change how the TABOR cap is calculated — a move that would allow the state to spend hundreds of millions more each year on priorities such as transportation, education and health care.

Scheduled for its first hearing Monday, House Bill 1187 would decrease the likelihood and amount of taxpayer refunds in future years, but it would maintain voters’ power to vote on tax measures.

“It’s not out-of-the-box thinking to say let’s take a proposition to the voters and see after 25 years if it’s really doing what we want it to do,” said Thurlow, a second-term Republican.

“I’m not against TABOR,” he added. “I’m just trying to make TABOR work for Colorado.”

The bill’s sponsors say the time

“The people of Colorado think that TABOR was written on the stone tablet by Moses and handed directly to George Washington. So we are not getting rid of TABOR en masse.” State Sen. Lois Court, a Denver Democrat and leading TABOR critic

is now for a new approach because lawmakers promised to find more money for road construction and still owe school districts $830 million to fulfill another constitutional requirement, even as critics suggest the state has a spending problem.

“I think it’s time we look at being a little more responsible,” Crowder said.

Under current law, TABOR caps the tax revenue the state can spend each year based on growth in statewide population and the Denver-Boulder-Greeley consumer price index. Any tax dollars collected above the cap must go back to taxpayers, or lawmakers can ask voters to keep the money.

The proposed legislation would change the formula to a five-year rolling average of personal income growth. Any surplus revenue over the limit would still be refunded to taxpayers.

If approved by lawmakers this session and by voters in November, the measure would allow $133 million in additional spending for the 2017-2018 fiscal year and an ex- tra $209 million for the following budget year, according to a legislative analysis. If it fails, that money is slated for taxpayer refunds.

The total refund for the 20172018 fiscal year is projected to reach $279 million and increase to $287 million the next year.

An evolving mood toward TABOR

The prospect of sending money back to taxpayers is enticing to Colorado lawmakers in both political parties. But the bill’s sponsors suggest it is better spent improving classrooms and highways, which the state’s voters are demanding.

“I’m not saying it will solve all those problems,” Thurlow said in a recent interview. “But it will open up a rational process where we can then make decisions. Should we spend it on roads? Should we chip away at the negative factor (in education)? Should we spend more on higher education? All those things we don’t really address in a rational way.”

The re-evaluation of TABOR began again in 2015 with the first refunds in recent memory and the formation of a bipartisan organization that hosted a statewide listening tour to gauge interest in making changes.

Neither effort made it to the finish line, as the political will to amend a Colorado institution first approved in 1992 never materialized.

“The people of Colorado think that TABOR was written on the stone tablet by Moses and handed directly to George Washington,” said Sen. Lois Court, a Denver Democrat and leading TABOR critic. “So we are not getting rid of TABOR en masse.”

The fact Republican lawmakers are leading the latest effort is another signal that the mood is evolving at the statehouse. “I don’t think there’s anything too sacred to talk about,” Crowder said.

The Democratic-controlled House is supporting the bill.

“Our budget issues are real. The fiscal thicket is real. And we have to figure out a way to bring people together, Republicans and Democrats, to hopefully support a solution for the state,” said House Speaker Crisanta Duran, D-Denver.

But the obstacle is the Republican-led Senate, which defeated efforts in prior years to exempt the hospital provider fee from TABOR’s formula, despite support from Crowder that gave it enough votes to pass a floor vote.

Senate President Kevin Grantham, R-Cañon City, called the new bill “an interesting concept” but also expressed skepticism.

“We have to look at the end result of what this bill will do,” he said in a recent interview. If it allows more spending, he said, “I hear money out of taxpayers’ pockets.”

Comparison of spending limits benchmarks

The underlying difference in the formulas is how they measure the economic indicators.

The current TABOR standard of inflation plus population growth is more strict, essentially accounting for the demands from an increasing population and the cost of providing additional services.

The proposed benchmark of average personal income growth is a more flexible measure of economic direction, which supporters suggest is a better measure for state revenue. A rolling average would also protect against sudden increases or decreases.

More than 30 states impose a tax or expenditure limit and more than half use personal income as a benchmark, according to the Denver-based National Conference of State Legislatures. A half dozen use a population and inflation standard.

Colorado’s current system makes the most sense to Jon Caldara, a leading TABOR defender at the Independence Institute, which advocates for limited government.

He argued that indexing the growth of government spending to population and the cost of purchasing goods and services is “a more stable and more accurate way to do it.”

He disputed the personal income standard, saying that “just because you’re making more money doesn’t mean your rent should go up.”

Another sticking point: The measure changes the law implementing TABOR rather than the constitution amendment itself.

Penn Pfiffner at the TABOR Foundation suggested that maneuver is constitutionally questionable.

“If you can find a way to use a statute to change the constitution, I’m worried about all sorts of mischief,” he said.