Colo. wrestles with proposals on tax limits

Voters divided on measure to suspend TABOR for ve years

DENVER — Colorado Gov. Bill Owens may be risking his political future by asking voters on Tuesday to loosen the state’s 13- year-old Taxpayer’s Bill of Rights, the nation’s toughest limitation on taxes and spending.

wens, an original supporter of the limits who has been mentioned as a possible presidential candidate, has angered some Republicans by joining Democrats in campaigning for the overhaul.

Denver Mayor John Hickenlooper, a popular Democrat in a city hit hard by budget cuts stemming from the measure known by its acronym, TABOR, has also put himself at risk. He is afraid of heights, but strapped to a skydiving instructor he jumped out of an airplane for a television commercial to illustrate the state’s plunging fortunes. The instructor’s image was removed from the commercial, making it appear as if Hickenlooperwas diving alone.

The unusual political alliance shows the stakes in a hardfought campaign battle that is one of the most expensive in the state’s history. The two sides could spend $8 million combined.

Colorado voters will decide on two measures that would suspend TABOR for ve years. If approved, taxpayerswould forgo about $500 each in tax refunds to give the state an additional $3.7 billion. The state would also be allowed to borrow $2.1 billion to pay for roads, school buildings and other TV advertisement: Denver Mayor John Hickenlooper parachuted from a plane to illustrate the state’s plunging nances. He made the jump with an instructor, whose image was deleted from the ad. projects. Polls here showvoters nearly evenly divided.

If Colorado votes to suspend TABOR, “ it’s certainly going to have a cautionary effect in other states,” says David Bradley, a policy analyst at the liberalleaning Center on Budget and Policy Priorities.

After California voters approved the landmark Proposition 13 in 1978 to cap property taxes, a majority of U.S. states have enacted some type of limits on taxes, spending or both. According to the National Conference of State Legislatures, 30 states have restrictions: 23 on spending, four on taxes and three on both.

While both sides in the Colorado ght see Tuesday’s vote as a watershed for the state’s future, the results here could in@ uence tax battles in other states.

The Policy states Center on Budget and Priorities says 23 other considered TABOR- like proposals in 2005. None was enacted, but California voters will vote Nov. 8 on its version, which would limit spending to the average growth in revenue over the previous three years. A number of states, including Ohio and Nevada, will probably vote on similar proposals in 2006.

Colorado’s TABOR is the most restrictive, says Daniel Smith, a University of Florida political scientist who specializes in state tax and spending limits. It can be changed only by a constitutional amendment and slows revenue growth even during economic recoveries.

TABOR, approved by voters in 1992, caps the annual growth in what the state can keep from taxes and fees to the percentage increase in in @ ation and population. State revenue collected above that limit must be returned to residents. And voters must approve all state and local tax increases.

Those who want to overhaul TABOR — 1,000 groups including city councils, labor unions and businesses — say it has eroded the quality of life that once made Colorado one of the nation’s most attractive places to live and do business.

TABOR prevents higher state spending even in boom economic times. Here’s how it works: When economic conditions worsen and revenue falls, that lower level becomes the base to determine how much money the state government can collect the following year. That went into effect after the 9/ 11 attacks and a sharp downturn in Colorado’s high- tech economy.

“ The impact of TABOR before the recession was largely bene cial,” says Owens, whose two terms as governorwill end after next year’s election. “ But after the recession, TABOR has been very damaging.”

Since 2001, when the recession hit and TABOR tax refunds ceased, the state has cut spending by about $1 billion. Hardest hit: higher education and services for the poor. Without changing the law, supporters of the two ballot measures say, tougher budget cuts are on the way: $400 million next year in a state budget of about $15 billion.

“Colorado could very well become the rst state where we cease supporting higher education,” says Katy Atkinson, a Republican strategist now serving as communications director for the campaign to pass the two measures.

Nonsense, say TABOR supporters, who include leaders of the national tax-cutting movement like Grover Norquist, president of Americans for Tax Reform, and former U.S. House majority leader Dick Armey of Texas, now co- chairman of FreedomWorks, an advocacy group.

“ The chicken littles will always scream we have no money,” says Jon Caldara, president of the Independence Institute, a Golden, Colo.- based free- market think tank. “ The Colorado budget is the highest it’s ever been in history, and the general fund will continue to grow.”

TABOR “ saved Colorado’s scal fanny,” says Caldara, who heads one of several anti-overhaul campaign committees called “ Vote no; It’s Your Dough.”

State Rep. Joe Stengel of Littleton, the House Republican leader, says the combined effect if the two measures pass would represent “ the largest spending spree and debt spree in state history.” He says Colorado could easily survive coming budget cuts by making the state employee retirement system less generous and implementing other ef ciencies.

Dewey-Obenchain Films

By John Jaques, The Pueblo Chieftain, via AP Supports proposal: “ The impact of TABOR before the recession was largely bene cial. . . . But after the recession, TABOR has been very damaging,” Gov. Bill Owens says.