Since 1992, the Taxpayer’s Bill of Rights (TABOR) has relied on a simple premise: Government should ask permission before it takes more of the public’s money and spend only what it needs. And for more than three decades, that idea has made Colorado unique, remaining the only state where voters, not politicians, automatically get the final say on new taxes.
But a law is only as strong as its loopholes. And thanks to decades of creative political maneuvering, TABOR looks more and more like Swiss cheese every day.
The ‘fee’ workaround
One of its biggest loopholes is the increased use of “fees.” TABOR requires voter approval on tax increases but says nothing about government-imposed fees. As a result, Colorado’s fee revenue has more than tripled since 2008, growing faster than the state’s general fund, making Colorado one of the most fee-dependent states in the country.
Lawmakers have also abused “enterprise funds” as another carve-out to evade TABOR restrictions. Enterprises are government-run businesses — such as public hospitals, colleges, or other similar entities — that generate no more than 10 percent of their revenue from state or local grants. Statewide, enterprise revenue has grown from under $1 billion in the mid-1990s to more than $23 billion today. That’s about half of the entire state budget — and none of it is subject to the voter-approved TABOR revenue cap.
Sadly, the court system has slowly but surely authorized these disingenuous workarounds, gradually eroding TABOR’s effectiveness at reining in government excess.
TABOR critics are quick to appeal to emotions, painting pictures of “underfunded” libraries and school districts and blaming TABOR for their shortcomings.
But these images of austerity don’t track with the numbers. While Coloradans have approved only a small handful of statewide tax initiatives since 1992, they have also approved thousands of local tax questions. One analysis found that voters have approved nearly 70% of municipal-level TABOR measures.
Strengthening TABOR
Fortunately, most Coloradans don’t buy into the misinformation. TABOR remains popular with voters. A Magellan Strategies poll found a plurality of Coloradans — 45% — favor TABOR, with only 22% viewing it unfavorably. These attitudes persist with questions about abolishing TABOR, with only 36% supporting a repeal and 48% opposing it. Nearly two-thirds of Coloradans approve of TABOR giving them the final say on tax increases or bond measures.
So, why not give Colorado voters even more of a say over fiscal policy? Let’s not just preserve TABOR; let’s make it stronger.
First and foremost, it’s long past due that we close the fee and enterprise loopholes. These are money-extracting efforts by the government — and a tax by any other name deserves as much public scrutiny.
Colorado must also set reasonable limits on what’s known as “De-Brucing.” While voters can approve new taxes, they can also vote to allow governments to retain overcollected revenue earmarked for refunds. The problem, though, is these votes are often permanent and lack sunset clauses. Limiting all such measures to a set number of years would provide taxpayers with a timely escape plan in case their local economy faces unforeseen challenges down the road.
Part of this long-term planning would also require tightening TABOR’s ballot language requirements. By law, TABOR ballot measures must include how much “shall taxes be raised” (except written in all caps) in the first year. Let’s broaden these to five-or ten-year projections, forcing voters and government officials to think beyond the immediate fiscal year.
Let’s also expand TABOR to address excessive government reserves. According to Census data, Colorado local governments hold more than $6 billion in cash, security holdings, and other reserve funds. Assuredly, government should set aside “rainy day” funds, but hoarding money while also taxing Coloradans should have its limits. Colorado taxpayers deserve a ceiling — say 15% of annual general fund expenditures — on unrestricted local government reserves.
Real affordability
Politicians love to throw the word “affordability” around, with dubious sincerity. But when it comes to making life affordable, government has, at best, a shaky track record. From its excessive pandemic-era spending to industry-destroying tariffs, our spendthrift political establishment is responsible for the inflationary forces that have made life unaffordable today.
The best thing government can do, at this point, is put money back into the pockets of everyday Americans. Thanks to TABOR, that strategy is plausible in Colorado — but only if we take the necessary steps to fortify this one-of-a-kind policy.
Eric Mulder is a veteran, a small-business owner, and the Libertarian nominee for Colorado governor.
