TABOR Did Not Fuel Colorado's Economy, Reports Say

By Price, Marie | THE JOURNAL RECORD, March 24, 2006 | Go to article overview

TABOR Did Not Fuel Colorado's Economy, Reports Say


Price, Marie, THE JOURNAL RECORD


Proponents' claims to the contrary, Colorado's Taxpayer Bill of Rights law did not boost that state's economy, according to two reports released Thursday.

One report, from the Center on Budget and Policy Priorities, claims that education and investment, not TABOR, fueled Colorado's strong economic growth during the 1990s. The other, from the Economic Policy Institute, concludes that there is limited evidence that TABOR had a positive impact in the early '90s, which was not sustained over the long term. The center and institute are both based in Washington, D.C.

A TABOR law caps growth in government spending at the combined growth rates of inflation and population, with part of any resulting savings rebated to taxpayers.

TABOR supporters say the law keeps government spending at a realistic, controlled level. Opponents say it harms critical programs and uses an inflation gauge - the consumer price index - that measures growth in a consumer-based basket of goods rather than focusing on education, transportation, health care and other programs on which government concentrates most of its funding.

Last November, Colorado voters suspended the TABOR spending cap for five years. An initiative-petition version of TABOR is pending before the Oklahoma Supreme Court. About a dozen states are considering some form of TABOR.

Officials with the two research entities said that under TABOR, Colorado dropped from 35th to 49th in public school funding as a percentage of personal income. They also said Colorado ranks worst among the 50 states in the number of low-income children without health insurance.

Don't go down this road, said Nicholas Johnson, director of the CBPP's State Fiscal Project and co-author of its report.

Colorado's experience should serve as a warning to states like Oklahoma, whose economic growth has not matched Colorado's, Johnson said.

It sends a huge caution, he said. To some extent Colorado did pretty well in the 1990s despite TABOR. A state like Oklahoma or any other state that's had economic problems and that really needs to be investing in education and infrastructure and the things that will provide economic growth for the future, it's even more clear that they can't afford TABOR.

Johnson said long-term growth is driven by the quality of a state's work force, including its education level, the quality of the infrastructure and the ability to move goods to market and a range of other factors.

TABOR just really hamstrings a state's ability to chart its own economic destiny, he said.

Therese McGuire, co-author of the economic institute report, agreed.

If the thought in Oklahoma is if we enact a TABOR-like limit we will get a boost to our economy like Colorado did, there's no validity to such an argument, she said.

McGuire is with the Kellogg School of Management at Northwestern University.

Johnson said TABOR's impact would be worse in states whose economies have been devastated, such as Michigan.

If your economy's in the toilet, TABOR's going to keep it there, he said.

Johnson said Colorado's economy was growing faster than other states long before Colorado adopted TABOR in 1992.

The claim that TABOR explains Colorado's prosperity in the 1990s, and that other states can boost their economies by adopting TABOR, isn't based on fact, Johnson said.

The center's report concludes that education and investment, rather than TABOR, drove Colorado's economic growth. …

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