March 1, 2004

TABOR Works

The Heartland Institute has published the third part of a three-part series on tax-and-expenditure-limitation laws. Lessons From 30 Years of TEL Experience reports:

It is clear that constitutional (not statutory) TELs initiated by the people (in those states that permit referenda and initiatives) are the strongest and most resistant to circumvention. Furthermore, limiting year-over-year growth in spending to population and inflation changes, as well as imposing limits on both state and local governments, provides the greatest safeguards for the taxpayers.

From these lessons the TEL design was improved, culminating in the best models in Colorado (1992) and Washington State (1993). While the Washington initiative has been circumvented by subsequent action of the state legislature (Washington law permits only statutory initiatives, which remain immune from legislative changes for only two years), Colorado’s “Taxpayers Bill of Rights” (TABOR) has been very successful. Colorado’s economy has boomed while tax cuts and surplus rebates have become the order of the day.