July 17, 2002

Media Praise for Colorado's TABOR Plan

Here are some comments from various Colorado newspapers regarding the Taxpayer Bill of Rights...

Commenting on a similar proposed tax limitation amendment on the ballot in Washington state, the Rocky Mountain News said this on Nov. 7, 1999:

"Maybe it's time that opponents looked on the bright side. If they will give their new tax initiative a chance, they might find it actually strengthens the political process, rather than destroys it. That's clearly what has happened in Colorado since the passage of Tabor. Here, shifting responsibility for taxes from politicians to the public hasn't resulted in automatic rejection of every spending plan.

"But while Tabor hasn't straitjacketed government, it has accomplished a number of good things. It has heightened interest in elections and government policy; it has given public officials mandates they otherwise would have lacked; it has shrunk voters' sense of helplessness over the use of their hard-earned taxes; and last, but hardly least, it has strengthened the fiscal responsibility of state and local government."

"TABOR passed, of course, and the world did not end. In fact, the past eight years have probably been the most prosperous period in Colorado history." - Rocky Mountain News, Sept. 24, 2000.

The Colorado Plan

Now that more than one Tennessee gubernatorial candidate has endorsed amending the Tennessee constitution with a provision similar to Colorado's Taxpayer Bill of Rights, here is a list of resources related to Colorado's TABOR amendment...

The TABOR Amendment: Learning To Live Within Colorado's Tax & Spending Limits, by Dr. Barry Poulson, professor of economics at the University of Colorado at Boulder, Senior Fellow with the Independence Institute, and a member of the Colorado Commission on Taxation. Also available as a PDF file. Nov. 2001.

Triggering tax rebates
By Michael New, research assistant and data analyst with the Center for Representative Government at the Cato Institute. Source: Washington Times, April 2, 2002.

Limiting Government through Direct Democracy: The Case of State Tax and Expenditure Limitations
By Michael New, research assistant and data analyst with the Center for Representative Government at the Cato Institute. The full Cato study on the effectiveness of tax and expenditure limitations on state spending growth. Source: Cato Institute, December 2001. Click for the Executive Summary.

We still need fiscal discipline
By Dr. Barry Poulson, professor of economics at the University of Colorado at Boulder, Senior Fellow with the Independence Institute, and a member of the Colorado Commission on Taxation. Source: June 23, 2002, Denver Post.

A poll last summer found strong support among Coloradoans for the Taxpayer Bill of Rights.
Source: Ciruli Associates

July 16, 2002

Colorado Plan Gets an Endorsement

Tennessee Republican gubernatorial candidate Jim Henry, who has said he favors holding a constitutional convention on taxes, today endorsed the concept of a Taxpayer Bill of Rights similar to the one in place in the Colorado. Henry, speaking on Phil Valentine's talk show on WLAC 1510 AM, said he believes an income tax violates the state constitution.

Asked if he would support a constitutional amendment like Colorado's, Henry said yes, and added that he approves of how Colorado's Taxpayer Bill of Rights causes a governor to have to "sell" his programs to the public. Colorado's constitution caps the rate of growth of government spending to the rate of population growth plus inflation, and requires surplus revenue be returned to taxpayers via tax cuts or direct rebates. If legislators wish to spend the surplus, they may ask voters' permission in a referendum. The Colorado plan also requires referendum approval to raise taxes or increase tax rates - and all provisions of the amendment apply to both the state and local governments.

Colorado's TABOR, as it is called, has proven to be an effective tool to reign in government spending and tax increases in Colorado, and helped make government more accountable to the people of that state while also involving people more directly in the debate over taxing and spending. It has improved the political debate and political participation in the state while also making goverment more accountable, says the Rocky Mountain News - which a decade ago had urged voters to reject the proposed amendment.

TABOR also helps government better manage its finances long-term. Research by a University of Colorado economist found the amendment helps "smooth" the state's finances, so that it doesn't over-spend during economic booms and then face large shortfalls during an economic slowdown.

For more on the Colorado plan, scroll down to read Colorado Shows the Way, Busting the Cap, and We Won, Now What? (or click on the links).

July 10, 2002

Busting the Cap

Tennessee's constitution has had a provision capping the growth of government spending since 1978, when an amendment was approved that limits annual spending increases to the rate of economic growth. However, the cap has a major flaw: The legislature can break the cap by a simple majority vote. It is the loophole that has swallowed the law - and billions of extra taxpayer dollars...

Since the 1984-85 fiscal year, spending exceeded the cap nine times, by a total of just under $2.2 billion. The cap was exceeded twice during the Gov. Lamar Alexander years - by $446.1 million in FY 1984-85, and $100 million in FY 1986-87, and five times under Gov. Ned McWherter - $101 million in FY 1988-89, $74 million in FY 1989-90, a whopping $703.1 million in FY 1991-92, $450 million in FY 1992-93. Gov Sundquist has been just as irresponsible, proposing budgets that ultimately lead the legislature to over-spend the cap by $55 million in FY 1996-97, and $270 million in FY 1999-2000.

But this year sets a new record. Gov. Sundquist's budget request was cut some $500 million, yet he still has the dubious honor of having signed into law the single largest spending in excess of the cap in history. It goes along along with the largest budget in state history and the largest tax increase in state history - neither of which were anywhere near as large as the self-styled fiscal conservative had sought.)

As required by the constitution, the legislature passed a one-page law setting forth the amount by which the cap would be exceeded. That law, passed July 4, says: "The index of appropriations from state tax revenues for the 2002-2003 fiscal year may exceed the index of estimated growth in the state's economy by seven hundred seventy-one million dollars ($771,000,000) or nine and twenty-seven hundredths percent (9.27%).

That's $771 million in just the first year. Because each year's budget increase is built on top of the previous year's budget, exceeding the cap by $771 million this year means next year's budget will also be $771 million higher than it would have been if the constitutional spending cap had been respected. And the next year's budget. And the one after that, etc...

Over the next 10 years, this year's busted spending cap will cost Tennessee taxpayers an astonishing $7.71 BILLION dollars in additional taxes, unless something is done.

Tennesseans will not be protected from "the endless expansion of government" (to quote Don Sunquist) until the current spending cap is replaced with a more effective cap similar to the Taxpayers Bill of Rights in the Colorado state constitution. For more on that, see my recent essay: We Won, Now What?

The one-page law allowing the state to exceed the cap is here in a 1-page PDF file. You'll need Adobe Acrobat Reader software.

July 4, 2002

The Secret Surplus

State Sen. Curtis Person, a Memphis Republican representing the 1st District, has issued the following letter detailing his growing suspicion that, far from being broke, the state in fact is secreting large surpluses and unspent funds by moving them into asset accounts that can't be touched, and how Sundquist administration officials aren't willing to be very forthcoming about it.

Sen. Person writes:

Dear Friends:

Recently, I began searching for answers to accounting practices that affect the use of surplus funds. Apparently, many state departments and agencies are taking surpluses at the end of a budget cycle and transferring them on paper into asset accounts. This appears to be a standard practice and once the funds are placed in asset accounts they become investments and do not appear as taxpayer dollars in the budget for the next fiscal year. This is a legal accounting practice; however, I believe any and all surplus funds belong to you, the taxpayers of Tennessee. Surpluses should be returned to the General Fund so they can be used as revenue or rebated to you. They should, at the very least, be applied to budget shortfalls before we ask the citizens of Tennessee to pay more taxes to fund state government.

I have written two letters to our Finance Commissioner, Warren Neel, asking for specific information regarding surplus funds in accounts labeled "Designated Reserves" and "Undesignated Reserves." To date, I have not received satisfactory answers from him. I addressed this matter in a caucus meeting and twice on the floor of the Senate. Each time I asked the members to research the use of these funds. So far, my colleagues have not responded.

I inquired and received a response from John Morgan, our State Comptroller. However, it is vague and claims it will take additional time for his staff to provide answers to my inquiry.

If there is truth to the information I have received regarding the departments and agencies hoarding taxpayer funds to cushion their own excessive spending, I want a thorough, independent audit of our accounting practices with the complete report published for every citizen to read. The lack of responses and specific answers regarding reserve funds causes me a great deal of concern and emphasizes the immediate need to question accounting practices being used by the State of Tennessee.

Now, I am asking you for your help in this matter. Please contact your Senators and State Representatives and ask them to demand answers to the use of surplus and reserve funds that are in reality your money!

I have no idea how much money should be available from these account overages to apply toward funding our State. However, I do know that this money belongs to the taxpayers of Tennessee. If there is any amount at all in any reserve funds anywhere, the right thing to do is to use it wisely as you have entrusted us to do.

Sincerely,
Curtis Person, Jr.
State Senator

My Comments: First, thanks to Gail Keasling for forwarding Sen. Person's letter to me. Second: This letter needs to be spread across Tennessee, via email, fax and this web site. If you would like a copy of the letter in a Word file on Person's legislative letterhead, email me and I'll forward it to you. My email address is in the 'about this site' box in the right side column. Third: if Sen. Person is really expecting honesty and transparency from the Sundquist administration, he's likely to wait a long time.

July 3, 2002

We've won. Now what?

The income tax is dead. Three years of efforts by the governor and some legislative leaders to impose an unconstitutional income tax on the people of Tennessee have failed. Here's an interesting question: What do we do next?

A one-year increase in a variety of existing taxes balances the state budget and pays for a laundry list of unnecessary spending for this fiscal year and leaves the next governor and legislature to solve for the long-term the conjoined issues of how much the people of Tennessee will be taxed, and how much the government will spend. It also leaves a question for the anti-income tax forces: What do we do now?

For three years, we have been on defense. The Sundquist administration and its pro-big government pro-income tax allies have been on offense, driving down the field in a series of grinding short-yardage plays. They fell perhaps a yard short of the end zone. The good news is the coach - Sundquist - is retiring, while the quarterback, House Speaker Jimmy Naifeh, has endangered the loyalty of his troops with his arrogance and his deceptive tactics. Some are suggesting the back-up get the starting role. Meanwhile, key running back Sen. Bob Rochelle may well be taken down for a loss in his re-election bid.

Soon we'll have a new coach - most likely one who campaigned against the income tax and for living within our means.

It's time our side stop playing defense and devise a plan for an all-out offensive against government waste and high taxes. While we are no longer threatened by an income tax, we remain subject to nearly two dozen various taxes and fees, none of which are capped and all of which combine in most years to produce more revenue than the state has budgeted to spend. And that surplus money - funds the Sundquist administration calls "unbudgeted dollars" - does get spent. The administration spends it without going through the constitutionally mandated process of the legislature passing a law appropriating it. Not only does that violate the state constitution, which says in Article 2, Section 24, "No public money shall be expended except pursuant to appropriations made by law," it sets a higher baseline on which the next fiscal year's budget is built.

Such spending is not the only way government spending is out of control in Tennessee. In the past two decades, the legislature itself has used a legal loophole to pass several budgets exceeding the constitutional limit on spending growth by a combined $2.2 billion in the first year of those budgets. Because each subsequent fiscal year budget is based on a higher baseline, the cumulative affect of all that overspending is billions of dollars in higher spending � and higher taxes for Tennesseans, whose taxes have skyrocketed since 1978, when the spending cap was first put into the constitution.

Unless we go on offense and reverse the trend, Tennessee inexorably will become another high-tax state.

The Fowler plan offered the opportunity for a constitutional convention on taxes. It would have made it much easier to go on offense against the income tax and high taxes in general. Unfortunately it did not pass. That makes it tougher to go on offense. Tennessee also lacks the initiative-and-referendum process, a powerful tool citizens in many mostly western states have to fight back against arrogant, over-reaching government.

But go on offense we must.

Rather than sit back and enjoy the death of the income tax, we must realize that - unless we take control of the game - taxes will rise as legislators and governors of the future decide, like Sundquist did, that it's easier to break a promise than restrain spending.

So - what do we aim for?

Colorado serves as an excellent model. There, a decade ago, voters approved an amendment to their constitution that forbids the government raising taxes, or increasing spending beyond the rate of inflation plus population growth without getting the people's approval via a referendum. It's called the Taxpayers' Bill of Rights, it applies to the state as well as counties and local municipalities, and Tennessee's taxpayers desperately need the same protection.

For Colorado taxpayers, it has meant billion-dollar surpluses have been returned via tax rebates rather than used to fund pork projects and fuel faster spending growth. It also gives them a say in whether tax rates rise or new taxes are imposed. It has also lessened the power of special interests - because proposals to spend excess funds must be crafted to appeal to a majority of the electorate, rather than used to curry favor with special interests and lobbyists. The result is a government that is truly of, by and for the people of Colorado, and a government that must justify its requests to spend more and to reach deeper into people's pockets.

Amazingly, over half the time voters in Colorado have approved the higher spending or taxes the politicians have sought - but always after a spirited public debate in which those who favor the spending or the taxes must explain and defend their plans. It has created a more accountable and more efficient government - and a more engaged people. Tennesseans on the right and the left side of the political spectrum agree those are good goals, and a Colorado-style Taxpayers' Bill of Rights should gain wide acceptance among the people of Tennessee once it is explained to them.

But Tennessee will not have a Taxpayers' Bill of Rights in its constitution unless we first formulate a concrete plan for just such an amendment, explain it to legislators, legislative candidates, gubernatorial candidates and, most importantly, voters, who must be convinced that it is a key issue on which they should support or vote against a given candidate. Such will take a coordinated long-term political effort - a political action committee, well-funded by donations from Tennesseans who believe taxpayers should be protected from the endless upward spiral of spending and taxing.

Had Tennessee already had a strong Taxpayers Bill of Rights, the last three years of anguish over the income tax would never have happened. Don Sundquist, Jimmy Naifeh, Bob Rochelle and the rest of Team Income Tax would have had to ask the people to support their plan, rather than merely try to ram it through the legislature by deliberately spending Tennessee into a fiscal crisis.

It's time for a well-coordinated, well-funded effort to build support and establish a Taxpayers' Bill of Rights in the Tennessee constitution. It's time for Permanent Offense. If you'd like to be a part of a group working to establish just such an organization, or would like to help fund the effort, please contact me at the email address in the "about this site" box in the right side column.

Thank you.

Postscript: For more on the Colorado Taxpayers' Bill of Rights please read two columns of mine published last year and one published last March in the Nashville City Paper.

Finding Common Ground on Taxes - August 23, 2001
Tennessee Should Consider Taxpayers' Bill of Rights - August 30, 2001
Spending Cuts Now May Lessen Future Deficits - March 21, 2002

Lame Don

If ever a governor was a lame-duck, it's Gov. Don Sundquist, after 24 hours of exhausting, exhilarating activity in the state legislature that appears to have reduced the governor from merely politically ineffective to impotent and irrelevant. It also appears to have left the income tax dead and seals the Sundquist legacy as one of massive over-spending and a failed grab for a new tax code designed to fund what he himself described as the endless expansion of state government.

A once-very popular congressman who won the governor's mansion twice, the second time by a landslide, Sundquist now limps toward the end of a second term marked by no notable accomplishments. The state's finances are a wreck precisely because he wrecked them - spending reserves, blowing surpluses, refusing for years to reform TennCare, overcharging the federal government $450 million via an illegal nursing home tax-and-grant program, and filling his budget proposals with unaffordable pork like $27 million to build fraternity houses at MTSU and ETSU, and golf-cart crossings at state parks.

After 7-plus years of profligate spending, mismanagement and lies, the Sundquist Administraton has ended with a whimper, his grand dream of turning Tennessee into a high-taxing and big-spending state crashed on the rocks of reality: almost no one wanted the snake oil Sundquist was selling.

It was an amazing 24 hours. Tuesday, Spendquist pathetically proposed a new tax reform plan he described as a "compromise" but which was really a bait-and-switch. It would have imposed a 1% income tax come Jan. 1 - to "test" the constitutionality of it, the governor said - and voters would have been asked to vote - 2 years from now - on whether to call a constitutional convention on taxes. If they voted no, the income tax would rise to 3.5%.

But of course the income tax is already unconstitutional, and we have three state Supreme Court rulings that say so. We don't need to do something illegal to 'test' whether a stacked court of liberals will let the government get away with violating the restrictions placed on it by Article 2, Sections 28 and 29, and Article 11, Section 9, of the state constitution.

And of course there was no guarantee that Sundquist's allies-in-taxation - House Speaker Jimmy "We Vote 'Til I Get My Way" Naifeh and Sen. Bob "Work is a Taxable Privilege" Rochelle - wouldn't later push a bill to strip the referendum out of the law.

No matter - the press barely had time to report on Sundquist's proposal (which he announced with all the emotional fervor of a limp dish rag) than the legislature yawned and ignored him. Last night, Jimmy Soprano made one last stab to keep his income tax alive by lying to Rep. Frank Buck - Naifeh promised to bring the income tax up for a vote but instead adjourned the House after realizing he didn't have the votes.

But by Wednesday afternoon, Naifeh - his credibility in tatters - was reduced to admitting his income tax plan was dead. And Gov. Sundquist, according to Channel 4 news, was forced to promise he wouldn't pursue "tax reform" again for the rest of his term.

Of course, there's no guarantee the governor, who campaigned for his job by promising loudly to oppose an income tax, will keep his promise. He still has a few more months to dream and scheme and try once more for "tax reform." But the events of the past 24 hours have shown he has paid a high political price for his lying ways: No one is listening to him anymore.

Thank God it's over.