Government Spending Restrictions: The Colorado Experiment

After three unsuccessful attempts, Colorado voters, in 1992, passed an amendment to the state constitution limiting the growth in government spending. Known as the Taxpayers’ Bill of Rights (TABOR), it applies not only to state government, but to counties, cities, school districts, and special districts as well. It limits the growth in government spending to the increase in prices, as measured by the consumer price index, plus the state population expansion rate. If tax revenues in a fiscal year exceed the TABOR limit, the excess cannot be spent; it must be rebated to the taxpayers

Both sides of the debate have presented selective data to support their position regarding the impact of TABOR. So what have been some of the economic outcomes? Below is presented several important parameters describing growth in the U.S. vs. the Colarado economy between 1992 and 2005.

Job: CO 43.4 percent, US 24.4 percent
Personal income: CO 137.3 percent, US 92.1 percent
Wage/salary: CO 127.4 percent, US 93.0 percent
Per capita income: CO 82.7 percent, US 73.6 percent
infant mortality CO -19.7 percent, US -17.6 percent
Change in poverty rate: CO 5.6 percent, US -14.9 percent.

In the outcomes presented above, Colorado out-performed the U.S. in all but one measure, poverty rates, during the period that TABOR was a part of Colorado's economic landscape.

I am not encouraging the adoption of constitutional amendments to limit government spending growth. I am pointing the potential positive outcomes from restrictions on the growth in the size of state and local governement.

EPG