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06/19/2006 The Taxpayers' Bill of Goods




Monday, June 19, 2006

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Growing-Economy

The Taxpayers' Bill of Goods

With the 2006 elections quickly approaching, a small group of highly energized right-wing activists are working hard to export a failed policy from Colorado to other states around the nation. The idea is known variously as the Taxpayers' Bill of Rights (TABOR), the Stop OverSpending Amendment (SOS), or as Tax and Spending Control (TASC). Fundamentally, though, all of the amendments boil down to a single policy idea: arbitrarily capping increases in state spending based on only two factors -- population growth and the consumer price index.

As Colorado's voters realized, the TABOR amendment is destructive -- it undermines essential health care and education programs. The Center on Budget and Policy Priorities reports drastic impacts from TABOR.

  • Colorado ranks 47th in K-12 education funding as a share of state income.
  • Colorado ranks 50th in the nation in on-time immunization rates....
  • Colorado has eliminated its affordable housing loans and grants program.
  • Probation officers in Colorado carry an average of 238 cases ”” nearly double the national average of 130. Due to funding decreases, nearly 50 probation officers were laid off between 2002 and 2004....
  • The high school graduation rate in Colorado fell from 76 percent in 1990 to 70 percent in 2004....
  • The percentage of low-income Colorado children who lack health insurance rose from 15 percent in 1991-92 to 27 percent in 2002-03. (During the same period, the national proportion who lack insurance declined from 21 percent to 19 percent.) Among Colorado low-income adults, the rate rose from 22 percent to 32 percent while the national rate rose from 26 percent to 27 percent.
  • In 2005, voters in Colorado passed Referendum C to temporarily repeal TABOR and allow the state to shore up its suffering social services and public infrastructure.

    Below, you'll find details both about where TABOR stands in your own state, as well as information on the groups behind this movement. TABOR amendments are being advanced both through initiatives and through legislation. For more information on TABOR's disastrous history, make sure you read the primer below.

    More Resources

    Growing-Economy

    An Orchestrated Movement: The Backers of TABOR

    Although TABOR campaigns across the country claim to be homegrown, the evidence suggests that nothing could be farther from the truth. In Michigan, Montana, and Nebraska, the amendment has received the name Stop OverSpending (SOS). The ballot issue committees for the organizations have striking similar names across the country -- in Montana the moniker is Montanans in Action, while in Oklahoma they are Oklahomans in Action. The Michigan amendment and Nebraska amendment are using the same website firm and design for their internet presence.

    What's more, virtually all of the funding is coming from the same handful of organizations. At the forefront are Grover Norquist's Americans for Tax Reform and Americans for Limited Government -- an organization closely associated with U.S. Term Limits and the Club for Growth, a PAC famous for its nastiness in fighting for a right-wing economic agenda.

    A publication from the Heartland Institute a year ago highlighted these organizations, as well as such high profile far-right institutions as The Heritage Foundation and the American Legislative Exchange Council as being the major players behind the pro-TABOR movement, notwithstanding the local puppets' claims that the idea is homegrown.

    More Resources

    Growing-Economy

    TABOR in Your State

    In states across the country, the far-right is pushing TABOR Amendments. Find out below how the issue is faring in your state:

    • Colorado: This is the state where it all began. After living with TABOR for 13 years, voters approved Referendum C last year to temporarily repeal TABOR and allow the state to expand spending and get its social services and public infrastructure back on the right track.
    • Kansas: Attempts at a legislative TABOR floundered after bipartisan opposition to the measure killed it in May. The Fiscal Focus Institute established TABORtruth.org as a way to educate Kansans about the implications of TABOR.
    • Maine: Signature gatherers for TABOR in Maine failed to gather signatures quickly enough to qualify the measure under statutory rules, but challenged the law on the grounds that the Constitution did not authorize additional statutory deadlines for signature gathering. The courts agreed, striking down the law and allowing the TABOR measure on to the ballot. Citizens United, a large coalition, is organizing to oppose the issue.
    • Michigan: With a goal of 320,000 signatures by July 10, Michigan's TABOR backers are expressing optimism at qualifying for the ballot. Opposition is being organized with the best resources available through the Michigan League for Human Services.
    • Missouri: Signature gatherers under the guise of "Missourians in Charge" were advancing their version of the TABOR Amendment, named "People in Charge." The Missouri Secretary of State ruled that signature gatherers had failed to follow specific rules, knocking the issue off the ballot. Missourians in Charge has appealed that decision and a ruling is pending. The Missouri Budget Project has information on the dangers of the TABOR Amendment in Missouri, as well as information on the homegrown coalition being built to fight the measure.
    • Montana: Petitioners have been working for months to qualify a TABOR Amendment, along with two other measures (and have come under fire for their practices, see today's Eye on the Right). This Friday is the deadline for submitting signatures. Opposition is being organized by Not in Montana.
    • Nevada: The organization backing Nevada's version of the TABOR amendment went to court to try to get a six-week extension to gather more signatures. The judge ruled against them and they must submit over 80,000 valid signatures by tomorrow. Despite asking for the extension, they have expressed optimism at qualifying. Local opposition is being organized by a group called Nevadans for Nevada that does not appear to have an internet presence.
    • Ohio: Secretary of State Ken Blackwell had become a leading TABOR proponent, but ended up viewing the measure as a "political liability," prompting the conservative legislature to pass a statutory cap and allow Blackwell to back away from his own proposal. The statutory cap, though, is probably not enforceable according to a legislative report completed on the subject. TABOR backers like Grover Norquist have already pledged to try again for a constitutional amendment at a later time. Locals are organizing through the Coalition for Ohio's Future.
    • Oklahoma: To qualify the measure, proponents had to submit nearly 220,000 valid signatures. They submitted almost 300,000, but now face a lawsuit charging that as many as 120,000 of those signatures were gathered illegally, requesting a judge toss them out. Both sides are publicly saying they are optimistic of victory. The Alliance for Oklahoma's Future has information on the anti-TABOR fight.
    • Oregon: Initiative 6 has been circulating since last October. Its backers have until July 7th to qualify it with a little over 1000,000 signatures. Their efforts have come under fire (see today's Eye on the Right). Our Oregon is organizing to oppose the measure and the Oregon Center for Public Policy is providing the intellectual firepower.
    • Pennsylvania: The legislature is considering both constitutional and statutory caps, which the minority has labelled the Taxpayer Rights Assault Plan. The Pennsylvania Budget and Policy Center has more.
    • Rhode Island: A group consisting of conservative activists, some legislators, and the Governor have put forward a bill to amend the Constitution with a TABOR. A hearing on the measure was held in late May. No further action appears to have been taken.
    • South Carolina: A spending cap initially had the backing of the Governor and several legislators. Following disagreements between the Governor and legislative leadership, and with state revenues exceeding expectations, the legislature appears to have moved past the idea.
    • Wisconsin: A legislative proposal to amend Wisconsin's Constitution died a quiet death. The measure was first gutted in the Assembly, where it was edited to only apply to state spending instead of all government spending. The Senate outright killed the measure in May. The defeat for TABOR-backers came after three years of organizing.

    Growing-Economy

    A TABOR Primer: Why the Policy is So Destructive

    Why TABOR Fails in Theory

    The core feature of TABORs that are being advanced around the country is the formula to limit spending increases to a rate equal to the rate of population growth plus growth in the consumer price index (inflation). This formula is meant to sound reasonable but is theoretically flawed for a number of reasons:

    • Inflation for Consumers is Different from Inflation for Government. Inflation in the general economy is measured through a variety of standards, of which the consumer price index (CPI) is only the most common. The CPI measures inflation for a typical household budget, but households allocate their spending in a very different way than governments. And state governments in particular devote large portions of their budget to health care and education, two areas that have experienced more rapid inflation than other sectors of the economy.
    • Populations Relevant to Government are Different from Populations as a Whole. Just as the inflation portion of the equation applies an unfair standard to government, the population growth standard fails to properly anticipate population changes of the greatest relevance to government. Government expenditures are tied to specific populations. Education costs increase with the number of children; corrections costs increase with the number of inmates; and health care costs increase with the number of seniors. Denying demographic changes by fiat does not make dealing with reality easier.
    • The Formula Does Not Account for Emergencies. One-time expenditures occasionally become necessary in times of emergency or great need. Locked-in, one-size-fits-all formulas fail to address the realities of a complex world.
    • Federal Spending Cuts Will Require Stepped Up State Efforts. Utah's government, acknowledging federal budget cuts, is turning toward charity to shore up the state's Medicaid budget. Whether federal cuts are made up through voluntary giving to state government or increased taxation, a pure limitation on state spending makes it impossible for states to shore up losses due to federal cuts. In other cases, states simply have increased burdens, such as what has resulted from the unfunded mandates of No Child Left Behind (NCLB).

    TABOR's Disastrous Record in Colorado

    As the people of Colorado realized during their state's disastrous experimentation with TABOR, these concerns are not merely theoretical. TABOR has a very real impact on people's lives. According to the Center on Budget and Policy Priorities:

    • K-12 Education -- Funding for K-12 education plummeted, resulting in some of the lowest expenditures as a percentage of income of any state in the country. Colorado slipped further behind other states in their per pupil spending.
    • Higher Education -- State spending on higher education fell by 31% when calculated in real terms. Students picked up the tab, facing 21% higher tuition rates between 2000 and 2004 after adjusting for inflation. In other states, students may not be able to make up the shortfall, since even tuition money may end up being considered state spending. In such a case, universities would simply cut budgets, with education quality suffering.
    • Public Health -- Colorado's public health system, which used to be competitive with others around the country, suffered massive problems and became among the worst in the country in terms of access to prenatal care and vaccinations. Colorado schools actually "suspended its requirement that school children be fully vaccinated" against a range of diseases, due to lack of money to pay for the vaccines.
    • Health Insurance -- Following TABOR's adoption, the percentage of children lacking health insurance almost doubled, from 15% to 27%. The Medicaid system was also gutted, resulting in Colorado being the second worst state in the country for Medicaid coverage.

    Once Colorado adopted the spending cap, these cuts were virtually guaranteed. In addition to being unable to cope with high rates of health insurance inflation and demographic changes, Colorado also had to deal with implications of increasingly popular strict sentencing laws driving up costs for the state's prison system.

    Why TABOR Hurts the Economy

    “[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

    While advocates of spending caps rely on economic growth as a key argument, the business community in Colorado and independent research have made it clear that spending caps are a bad idea if the goal is good-paying jobs and a friendly environment for business. In fact, while far-right ideologues claim that Colorado flourished as a result of TABOR, the evidence indicates that the opposite may be true. In the twelve years prior to TABOR's enactment, Colorado grew at the typical rate for states in the Rocky Mountain Region. In the twelve years for which data is available after TABOR's passage (1992-2004), Colorado's economy actually grew slower than the typical economy in the Rocky Mountain Region.

    In fact, many Colorado business leaders and associations signed on to raise money and spread the message that TABOR desperately needed reform. Why was TABOR so bad for the economy?

    • TABOR Weakened Infrastructure. Businesses rely on investment in public infrastructure, like public roads, in order to be able to deliver for their customers. Potholes are bad for the economy.
    • TABOR Weakened Education. Colorado's education system took a major hit from TABOR's passage. Education is one of the key policies for strengthening a state's economy. Without the money to keep schools strong, Colorado was likely to see real long-term problems if reform had not been adopted.

    More Resources

    TABOR

    National Resources
    Ballot Issue Strategy Center
    The Bell Policy Center, TABOR
    Center for American Progress, TABOR
    Center on Budget and Policy Priorities, "TABOR: A Threat to Education, Health Care, and Social Services"
    The Tax Policy Center, "The Economic Effects of TABOR"

    State-by-State Resources
    Colorado: The Bell Policy Center, TABOR
    Kansas: TABORtruth.org
    Maine: Citizens United to Protect Our Public Safety, Schools and Communities
    Michigan: Michigan League of Human Services, SOS/TABOR
    Missouri: Missouri Budget Project
    Montana: Not in Montana
    Nevada: Nevada AFL-CIOM
    Oklahoma: Alliance for Oklahoma's Future, Your Guide to TABOR
    Ohio: Coalition for Ohio's Future
    Oregon: Oregon Center for Public Policy, TABOR Resources
    Oregon: Our Oregon, TABOR Spending Trap Constitutional Amendment
    Pennsylvania: Pennsylvania Budget and Policy Center
    Pennslyvania: Taxpayer Rights Assault Plan
    Wisconsin: Institute for Wisconsin's Future, TABOR Overview

    Eye on the Right

    TABOR backers in at least three states are under serious fire for potential legal and ethical issues related to their funding sources and their signature gathering methods. In Oklahoma, a group of businessmen and a former Republican Attorney General are challenging roughly 40% of the signatures gathered for having been gathered illegally. Meanwhile, the effort in Oregon was under fire for refusing to name donors to the effort and hiding their big money backers through complex financial tricks. In Montana, signature gatherers for TABOR and two other measures have had complaints filed against them for misleading voters about the contents of their petitions.

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    Matt Singer
    Editor, Stateside Dispatch