Coloradans like voting on tax increases, but did we get more than we bargained for?

In 1992, Colorado voters approved the Taxpayer’s Bill of Rights, now known as the TABOR Amendment to the state constitution.

TABOR’s provisions:

• Require a public vote on all tax increases and new government debt.
• Limit the amount of tax revenue raised by state and local governments in Colorado; year-to-year increases in revenue amid economic growth may not exceed the combined rates of population growth and inflation.
• Apply the revenue limits to almost all revenue sources, ranging from income tax and sales tax to college tuition..
• Refund to taxpayers any excess revenue collected above TABOR’s limits unless they vote to let government keep the surplus.
• Prevent state and local governments from ever recovering lost revenue that would have been needed to make up for the added cost of inflation and population growth during an economic downturn, when tax revenue drops. (This is sometimes referred to as the “ratchet effect”.)
• Place into the state constitution all previously legislated spending limits (e.g. Arveschoug-Bird) by mandating that “limits on…spending and debt may be weakened only by future voter approval” (This is sometimes referred to as the “weakening provision.”)

TABOR’S implications:

This policy, unprecedented among the states, has by most accounts accomplished its goal of limiting government’s growth and giving voters veto power over tax hikes and bonded debt. It also, however, has hindered government’s ability to deliver basic services over the long run by failing to account for growth and inflation during economic downturns. That’s because even when revenue dips during a recession, the cost of providing government services still tends to increase. Yet, once the economy rebounds, and revenue begins to rise, TABOR only allows tax revenue to grow enough to cover inflation and growth from that point forward; government is prevented from recovering lost revenue that would have been needed to cover growth and inflation during the downturn.

It is important to keep in mind that TABOR applies to all levels of government in Colorado, ranging from special districts (such as fire departments) to school districts, as well as county and state government. Although various levels of government are treated differently, their ability to raise and spend revenue is constrained by TABOR.

Want to learn more about the TABOR Amendment? Read TABOR 101.

Want even more information? Here’s a collection of links and resources about TABOR.

Read about proposals to reform the TABOR Amendment.