TABOR and fiscal policy issues

TABOR | Referendum C | Mill levy stabilization | Fiscal work

Colorado's Referendum C

During the 2005 legislative session, Gov. Bill Owens and state lawmakers crafted a compromise proposal to help state government deal with massive budget cuts. The cuts were forced because tax revenues sharply declined during the 2001-03 recession.

But while the state's economy began to rebound by 2004, the "ratchet effect" in the TABOR amendment prevented state government from using the rising tax revenues to restore funding. The bi-partisan compromise was a package of measures to be referred to voters in the November election, called Referenda C and D. In the election, voters approved Ref C but defeated Ref D. (See results at right.)

Referendum C gives Colorado state government a five-year reprieve from the spending limits of the TABOR amendment, from FY 2005-06 through FY 2009-10. Ref C funds are to be specifically used for public K-12 education, higher education, health care and transportation.

Ref C was originally expected to raise state revenues by as much as $3.7 billion over the five years. Colorado's economy has rebounded at a stronger rate than expected, and as of December 2006, the five-year total is estimated to be $5.7 billion.

Referendum D would have allowed state government to issue up to $1.5 billion in bonds to catch up on transportation projects, maintenance and repairs for school and college buildings, and to fill police and firefighter pension funds. Had Ref D passed, about 10 percent of the Ref C funds would have been used to pay off the Ref D bonds.

Taxpayers will still get refunds when their state withholding is higher than the income tax they actuallyt owe, but they will not receive TABOR rebates from the state as they did from 1993 through 2000. Loss of the TABOR rebates is projected to cost a single taxpayer $450 and joint filers $1,250 over the five-year period.

For the Bell Policy Center, which had been researching TABOR impacts since 2002, the value of Refs C and D was clear. The package offered a short-term fix to Colorado's budget crisis, which had forced painful cuts in many areas, particularly higher education and health care.

Ref C also permanently eliminated the so-called "ratchet effect," one of the four flaws that make TABOR so damaging to Colorado's fiscal health.

With voter approval, the state government was able to retain all taxes collected — retroactively to July 1, 2005 — and apply much of this money to restore cuts made during the 2001-03 recession. In the General Assembly's 2006 session, legislators applied Ref C funds as supplementals to the 2005-06 budget, and used the funds in planning for the 2006-07 budget.

In 2006, legislators wanted to explain how they were spending the Ref C money. In cooperation with the Bell Policy Center, legislative leaders launched the 2006 Accountability Tour, which made 11 stops along the Front Range from February through April.

Next >

Quick links to

Bell's 2005 Outreach Tour

featuring Bell tour booklets:
"No College For You" and
"Warning: Budget Cuts May Be Hazardous to Your Health."

The Bell Policy Center's
Refs C & D Fact Sheet

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Referenda C & D election results
Nov. 1, 2005

Referendum C passes
YES: 52 percent, 578,112 votes
NO: 48 percent, 533,349 votes

Referendum D loses
YES: 49 percent, 547,932 votes
NO: 51 percent, 561,572 votes

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Commentary - One step forward on TABOR: As temporary fixes go, this is a good one, by Wade Buchanan, The Boulder Daily Camera, March 20, 2005

The compromise reached last week by the governor and legislative leaders falls short of what we have been seeking. It is a temporary fix, not a permanent solution.

Still, as temporary fixes go, this agreement is pretty good. We support it and will work for its passage in November. We urge others to support it as well.

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Testimony - Bell Action Network
on the bi-partisan fiscal policy reform proposal,
by Wade Buchanan, March 15, 2005
Although flawed, the Colorado Economic Recovery Act (HB 1194) represents a workable bipartisan compromise.
Read the testimony.

Testimony - Bell Action Network on the bi-partisan fiscal policy reform proposal,
by Penfield Tate III, former state senator and Bell Policy Center board member, Feb. 2, 2005