A Formula for Decline: Lessons from Colorado for States Considering TABOR
Updated October 9, 2009
Summary
Colorado’s so-called Taxpayer Bill of Rights, or TABOR, has contributed to a significant decline in that state’s public services. This decline has serious implications not only for the 4.6 million residents of Colorado, but also for the many millions of residents of other states in which TABOR-like measures are now being promoted.
TABOR, a state constitutional amendment adopted in 1992, limits the growth of state and local revenues to a highly restrictive formula: inflation plus the annual change in population. This formula is insufficient to fund the ongoing cost of government. By creating a permanent revenue shortage, TABOR pits state programs and services against each other for survival each year and virtually rules out any new initiatives to address unmet or emerging needs.
In November, 2005, Colorado citizens voted to suspend TABOR for five years, to stanch the deluge of harmful budget cuts. The decline in services in most major areas of state spending, including K-12 education, higher education, public health, and Medicaid from the time of adoption of TABOR until its suspension — and the consequences of those declines — provide lessons for any other states considering adoption of a TABOR.
TABOR Has Contributed to Declines in Colorado K-12 Education Funding
- Under TABOR, Colorado declined from 35th to 49th in the nation in K-12 spending as a percentage of personal income.
- Colorado’s average per-pupil funding fell by more than $400 relative to the national average.
- Colorado’s average teacher salary compared to average pay in other occupations declined from 30th to 50th in the nation.
TABOR Has Played a Major Role in the Significant Cuts Made in Higher Education Funding
- Under TABOR, higher education funding per resident student dropped by 31 percent after adjusting for inflation.
- College and university funding as a share of personal income declined from 35th to 48th in the nation.
- Tuitions have risen as a result. In the last four years, system-wide resident tuition increased by 21 percent (adjusting for inflation).
TABOR Has Led to Drops in Funding for Public Health Programs
- Under TABOR, Colorado declined from 23rd to 48th in the nation in the percentage of pregnant women receiving adequate access to prenatal care, as defined by the Centers for Disease Control and Prevention.
- Colorado plummeted from 24th to 50th in the nation in the share of children receiving their full vaccinations. Only by investing additional funds in immunization programs was Colorado able to improve its ranking to 43rd in 2004.
- At one point, from April 2001 to October 2002, funding got so low that the state suspended its requirement that school children be fully vaccinated against diphtheria, tetanus, and pertussis (whooping cough) because Colorado, unlike other states, could not afford to buy the vaccine.
TABOR Has Hindered Colorado’s Ability to Address the Lack of Medical Insurance Coverage for Many Children and Adults in the State
- Under TABOR, the share of low-income children lacking health insurance has doubled in Colorado, even as it has fallen in the nation as a whole. Colorado now ranks last among the 50 states on this measure.
- TABOR has also affected healthcare for adults. Colorado has fallen from 20th to 48th for the percentage of low-income non-elderly adults covered under health insurance.
- In 2002, Colorado ranked 49th in the nation in the percentage of both low-income non-elderly adults and low-income children covered by Medicaid.
TABOR’s interaction with other areas of the state’s budget has created additional problems. Spending for corrections, for example, has grown substantially faster than the inflation-plus-population formula of TABOR, in part due to strict criminal codes and sentencing laws. Because spending for corrections has grown rapidly, other areas of the budget have been squeezed even more in order to keep overall spending under the strict TABOR limit.
Colorado Business and Community Leaders View TABOR as Deeply Flawed
A wide range of Coloradoans — business leaders, higher education officials, children’s advocates, legislators of both parties, and Governor Bill Owens (R), among others — recognize that TABOR has limited the state’s ability to fund critical services.
- “Coloradoans were told in 1992 . . . that [TABOR] guaranteed them a right to vote on any and all tax increases. . . . What the public didn’t realize was that it would contain the strictest tax and spending limitation of any state in the country, and long-term would hobble us economically.” — Tom Clark, Executive Vice President, Metro Denver Economic Development Corporation
- “The [TABOR] formula . . . has an insidious effect where it shrinks government every year, year after year after year after year; it’s never small enough. . . . That is not the best way to form public policy.” — Brad Young, former Colorado state representative (R) and Chair of the Joint Budget Committee
- “[Business leaders] have figured out that no business would survive if it were run like the TABOR faithful say Colorado should be run — with withering tax support for college and universities, underfunded public schools and a future of crumbling roads and bridges.” — Neil Westergaard, Editor of the Denver Business Journal
Colorado business leaders and citizens banded together and successfully campaigned to suspend TABOR beginning in 2006 and permanently change some of its most damaging features. It is unclear what will happen when the suspension expires, since in most areas Colorado still has not regained the services and quality of life it lost while TABOR was in effect.
Colorado’s experience provides an important cautionary tale for other states considering TABOR-like measures.
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End Notes:
[i] David Bradley and Karen Lyons contributed to this report.
