This autumn's angriest political controversy is reaching a roiling boil in Colorado. Conservatives, especially, are arguing, with their characteristic internecine fury, about whether a change in fiscal facts should cause Colorado to change its mind about a rule restricting government spending. Come November there will be a referendum on a temporary relaxation of the state's "taxpayer's bill of rights" -- TABOR.
Adopted by referendum in 1992, it is the nation's most stringent limit on a state legislature's freedom to tax and spend. It says that spending in a given year cannot increase faster than population growth plus inflation; if both are 2 percent, spending can increase only 4 percent. Furthermore, revenue exceeding permissible spending must be rebated to taxpayers, who also must approve any tax increase.
TABOR has been spectacularly successful. Per capita spending has increased more slowly than in almost all other states, and Colorado ranks 50th in state taxes collected per $1,000 of personal income. Even though -- actually, because -- Gov. Bill Owens has cut taxes 41 times, revenue has surged, and in six of the past nine years taxpayers have received refunds, a total of $3.2 billion, about $3,000 per household.
But two events have given TABOR an unexpectedly ferocious bite. These events have revealed an unanticipated wrinkle in TABOR's mechanism.
The first came in 2000, when Colorado voters, in an episode of cognitive dissonance encouraged by the teachers unions and the rest of the public education lobby, passed an initiative discordant with TABOR. It requires spending on education in kindergarten through 12th grade to grow significantly faster than overall spending. This, combined with the growth of federally mandated Medicaid spending, means not only that the portion of the budget devoted to elementary and secondary education must grow steadily relative to the rest of the budget but also that all spending cuts must come from less than one-third of the state's budget -- basically, from higher education, corrections and human services. Those who favor leaving TABOR as it is and cutting $300 million to $400 million from the $2 billion of controllable spending are notably reticent about what they would cut.
The second event was the intersection of the recession of 2001 after the bursting of the high-tech bubble -- Colorado ranks first among the states in high-tech workers per 1,000 private-sector workers -- with a drought and 13,000 forest fires that hurt Colorado's tourism. This caused a collapse of revenue -- a 16 percent decline over two years -- unprecedented in recent history and unanticipated by TABOR's authors.
This confronted Colorado with TABOR's "downward ratchet": The budget's baseline of permissible spending was reduced to the recession-year level. This lowered spending for all subsequent years because it restricted the spending of revenue produced by economic recovery.
Owens, who has traveled to 15 states advocating enactment of TABORs, believes Colorado's law will be repealed in two years unless the November referendum prevents politically unpopular budget cuts. The referendum, of a sort that TABOR explicitly allows, would not raise any tax rate but would suspend the rebates of surpluses -- $3.7 billion -- for five years. This would enable spending to return to the pre-recession trend line.
For conservatives and other sensible people, it is doubt-inducing, not to mention excruciatingly unpleasant, to be on the same side of an argument as public employee unions, whose ravenous appetite for government growth is constant and self-aggrandizing. Explaining his temporary alliance with those unions, Owens points to a clock on his office wall. He says it comes from a Soviet submarine and that it is broken, but even it is right twice a day.
Owens resisted the legislature's demand to gut TABOR by indexing the growth of government spending to the growth of personal income rather than to population growth and inflation. Still, by advocating passage of the TABOR referendum, he has infuriated some conservatives. This in spite of his record of promoting school choice, cutting taxes, opposing other governors' attempts to grab revenue by imposing Internet taxation and using the line-item veto to cut 50 times more spending in his first five years than other Colorado governors cut in the preceding 24 years. He vetoed 47 bills this year, half of which, he says, promoted organized labor's agenda.
Those now calling Owens an apostate from the church of conservatism need to answer two questions. Is one deviation from doctrinal purity sufficient grounds for excommunication? Is a political creed that is so monomaniacal about taxation that it allows no latitude for tacking with shifting fiscal winds a philosophy of governance or an ideological fetish?