Thursday, September 28, 2006

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.



Paul P said...

Gee Ernie, you wouldn't allow for maybe a few other factors in those statistics would you?
I am not a pro such as yourself and I think the figures you choose provide a gross exageration.
What would be the mechanism of this increase in personal wealth wich is driven by TABOR? (honest question here)
Aside from an actual Increase in wealthy household by migration to High tech work and the growth of the ski/ tourist industry.
What about that increase in poverty ?
Are you saying wealthy people migrate toward a lower tax environment (and the people who were there get poorer)?
If the best effects are due to an influx of wealthy outsiders (Look at the infrastructure and social costs there -affordable housing- school funding-etc.), will that effect really come into play here in plain(s) old Nebraska?
This is not some sort of trouble free cure all.

Like it or not, ($or Not)people want good roads,schools,police protection and a safety net for the poor. Like it or not , those costs have and will continue to increase beyond the rate of inflation.For very good reasons.Which I am sure you could itemize.( Start with unfunded federal Mandates...)
What this comes down to is an attack on the ability of government to provide basic services for the poor and the middle class.
The big winners (as always)
the rich and the super rich.
At best, this kind of legislation has created greater division between the rich and the poor (Your figure prove it)and the beginings of political class war.
witness years of political chaos in California and Washington state as the poor are put out in the cold and the middle class fights to have even lousy schools.
This is just another way to lock a regressive tax system on the back of the average taxpayer and let the top 1% off.

-Paul P.

Anonymous said...

goss and morse suck...Clark rules