Fiscal policy issues
TABOR | Referendum C | Mill levy stabilization | Fiscal work
Colorado's TABOR amendment
In 1992, Colorado voters approved the Taxpayer’s Bill of Rights, a constitutional amendment designed to restrain growth in government. It took the acronym TABOR, which has extra meaning in Colorado because some of the state's history was shaped by the famous mining baron of the late 1800s, Horace W. Tabor.
TABOR applies to all levels of government in Colorado: state government, cities, counties, school districts and special districts. It is the most restrictive tax and spending limitation in the country.
Passage of TABOR came at the start of nearly a decade of record economic growth in Colorado, the Rocky Mountain region and the country. During those years, TABOR limited the amount of revenue governments could collect and spend. Taxpayers received TABOR refunds on their state income taxes, and mill levies were suppressed to prevent governments from collecting too much in property tax.
Some local governments found TABOR's restrictions too constraining, and hundreds of cities, counties, school districts and special districts successfully appealed to voters over the years for a partial repreive from some TABOR provisions.
The more serious negative impacts of TABOR came with the recession of 2001-03. Tax revenues fell, and the state government had only a 4 percent cushion to fall back on. Lawmakers were forced to make hundreds of millions of dollars in budget cuts.
By 2005, Colorado's economy was making strong gains. But TABOR's ratchet effect prevented the state government from using the growing revenues to restore cuts to vital programs. That year, legislators and former Gov. Bill Owens crafted a bi-partisan budget compromise that would give Colorado state government a five-year time-out from TABOR's revenue and spending limits. Following the voter approval requirements in TABOR, they referred the measure, called Referendum C, to the state's voters. It was approved in the November 2005 election.
More detail on Ref C
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The Taxpayer's Bill of Rights
Article 10, Section 20 of the Colorado Constitution
TABOR's basic provisions:
- Voter approval for tax increases
Voters must approve in advance any new tax, tax rate increase, mill levy increase, extension of an expiring tax, or a tax policy change that would result in a net revenue gain.
- Revenue limits
Prohibited:
- New or increased real estate transfer taxes
- New state property taxes
- New local government income taxes
All taxable net income is to be taxed at one rate.
- Government spending limit
Increases in spending from one year to the next are limited to a formula of inflation plus the percentage change in population.
If revenues not exempted exceed the spending limit formula, the excess is to be refunded the next year, unless voters approve a revenue change.
The entire TABOR amendment online, courtesy of Lexis-Nexis
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