Just as North Carolina senators were tentatively passing a so-called Taxpayer Bill of Rights on Tuesday, people in Colorado who have lived with a similar bill were warning against it.
N.C. Republican senators argued the bill, Senate Bill 607, would protect taxpayers from spendthrift politicians.
But the experience in Colorado – the only state to have passed such a bill – has been more damaging. Several lawyers and professors who have closely studied Colorado’s experience described to the Observer editorial board Tuesday just how that state’s legislation crippled its ability to bounce back from recession and to invest in roads, education and other areas.
North Carolina would ask voters to amend the state constitution to do three things: Limit year-over-year spending increases to a formula based on inflation plus population growth; cut the maximum income tax rate from 10 percent to 5 percent; and create a Rainy Day fund that would be hard to tap.
The bill’s backers took pains Tuesday to distance it from Colorado’s version. While there are important differences, they share the most important component: arbitrarily restricting state spending with a conservative formula.
The effect in Colorado? So-called ratcheting down. During a recession, state spending drops. But then each year’s spending is pegged to that new lower level, and the state is unable to get back to responsible levels even when a thriving economy makes that possible.
Bob Loevy, a retired political science professor at Colorado College, said TABOR, as the Taxpayer Bill of Rights is known, has taken a huge toll on highways and higher education. After TABOR squeezed public schools too much, voters required a minimum level of K-12 funding. But with TABOR limiting spending, other things got shortchanged. Colorado’s public universities rank far behind North Carolina’s, and Loevy said some believe they will all be privatized within 10 years. Tuition is up as are fees of all kinds, Loevy said.
“If people in North Carolina want to learn what the real effect of TABOR is, they should study Colorado Springs. It really is Pothole City,” Loevy said.
“TABOR is good if you want to see a steady reduction in government services. If you want to see them stay at the present level or perhaps even get better … TABOR is bad.”
David Skaggs, a former Democratic congressman who is challenging the law in court, said the ratcheting down effect was such a “nightmare” that voters overturned that piece a decade ago. He cited a recent study that suggested that within 10 years, Colorado will be able to fund K-12, Corrections and Medicaid – and everything else will be squeezed out.
Next year, Skaggs said, Colorado residents “are going to be getting $50 tax refunds even as they complain about potholed streets, a lack of sufficient funds to deal with transportation and highways and no money for public institutions of higher education.”
Skaggs points out that Arizona Gov. Jan Brewer, hardly a raging liberal, vetoed similar legislation in 2011, saying Arizona should have learned from Colorado’s failed experiment.
So should North Carolina. The income-tax provision would cut revenues by almost $2 billion a year, and state Treasurer Janet Cowell warns the bill endangers the state’s high credit rating.
After the Senate gives final approval to the bill Wednesday, the House should stop it cold.