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Colorado Voters Suspend Controversial Spending Cap

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In a victory for Colorado Gov. Bill Owens, voters in that state yesterday approved a statewide measure that suspends the Taxpayer Bill of Rights—or TABOR—and will allow roughly $3.7 billion in tax revenue to be spent on education, health care and transportation projects.

The victory of Measure C, which won with 53 percent of the vote, is seen as a setback for tax-control proponents advocating similar TABOR amendments in other states.

Colorado Gov. Bill Owens waves to well-wishers as he works his way through the crowd at a Nov. 1 victory rally in Denver for a referendum that suspends a restrictive state spending formula.
Colorado Gov. Bill Owens waves to well-wishers as he works his way through the crowd at a Nov. 1 victory rally in Denver for a referendum that suspends a restrictive state spending formula.
—David Zalubowski/AP

Voters, however, just barely turned down a companion bond measure that would have allowed state officials to borrow up to $2.1 billion and start spending money on repairs in some of the state’s poorer school districts to comply with the terms of a lawsuit against Colorado. The money also would have been used to construct roads and bridges, and build facilities at some of the state’s colleges and universities. Just over 50 percent of the voters rejected that measure, according to election results.

With Measure C passing and Measure D failing, supporters of both referenda woke up with mixed feelings this morning.

“We got the one that was most important, absolutely,” said Heather McGregor, a spokeswoman for the Bell Policy Center, a nonpartisan Denver think tank. “We’re happy, but there’s a definite tone of disappointment. But Colorado is now on a good track and we can figure out other ways to meet those needs.”

Since 1992, Colorado has had the strictest limits on state and local spending in the country. The formula limits spending growth to the rate of inflation, plus annual population growth. Any revenue over that amount was sent back to the taxpayers in the form of rebates. Since 1997, taxpayers have received over $3.2 billion.

The formula, however, was permanently lowered after the economy entered a recession in 2001. Payments to taxpayers grew larger, but the state had to keep cutting the budget to meet the caps. That’s why Gov. Owens, a Republican, supported Referendum C, which grew out of a March budget compromise between the governor and members of the legislature.

Referendum C will now set a new cap at the highest level of state revenue reached between now and 2011, and allow those extra tax dollars to be used for state projects.

Broader Implications

The outcome in Colorado, however, could make it difficult for anti-tax groups, which fought hard against the two ballot proposals, to move their agendas forward in other states. Efforts to pass similar TABOR amendments are under way in Wisconsin and Kansas.

“It is certainly disappointing to see a flagship fiscal limit like TABOR suffer an electoral defeat,” Michael J. New, an adjunct scholar at the Washington-based Cato Institute and an assistant professor at the University of Alabama, wrote today in the National Review Online, a conservative publication. He added, “Fiscal conservatives certainly have their work cut out for them.”

Ms. McGregor at the Bell Policy Center said she doesn’t think the suspension of TABOR will deter small-government advocates in Colorado and around the country. But at least it has “sent a message to the rest of the country how Colorado has felt about the restrictions of TABOR.”

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