Taxpayer Bill of Rights

TABOR

By far, the potentially most devastating initiative to higher education in 2006 came in the form of TABOR (Taxpayer Bill of Rights). Sixteen state legislatures initiated TABOR legislation, had citizens circulate signature petitions to have the issue placed on the ballot, or voted on whether to add constitutional amendments that would create strict revenue or appropriations limits for the state. TABOR originated in Colorado in 1992 as a way to limit the growth of government spending. Approved by the voters that year, the constitutional amendment capped annual revenue increases at the rate of inflation plus population growth. Variously named Stop OverSpending (SOS), Tax and Expenditure Limitation (TEL), or Taxpayer Protection Amendment (TPA) by the proponents of the initiative, the new versions circulated in the states all shared the basic tenant of Colorado's TABOR, which is that the growth in state revenues or appropriations is tied to the rate of population growth plus the increase in the Consumer Price Index or inflation.

TABOR on the Ballot

Ultimately, TABOR initiatives made it onto the ballot in Maine, Nebraska and Oregon, but failed in all 3 states. While in Oregon and Nebraska the measure failed by over a 2-1 margin, in Maine the final tally was much closer, with just over 54% of voters opposing the measure.

Several other states were to also have TABOR on the ballot but were blocked by the courts. Montana's TABOR initiative was thrown off the ballot by a district court judge because of a "pervasive pattern and practice of deceptive, fraudulent, and procedurally defective practices" and because the initiative would have amended two sections of the state constitution, whereas initiatives are only allowed to amend one section. Nevada and Oklahoma were to have TABOR initiatives on the ballot, but the initiatives were struck down by the courts because they addressed multiple subjects, against the single subject requirement for the initiative, and because of the use of out-of-state signature gatherers, which is against state law, respectively. In Michigan, the Board of State Canvassers voted to not certify the initiative because of concerns over the amendment language and duplicate and invalid signatures.

Donald Carceiri, Governor of Rhode Island, was going to place a nonbinding question on the ballot asking voters if the state constitution should be amended to limit annual increases in state spending and property taxes. However, in response the General Assembly changed the law addressing the governor's ability to place questions on the ballot, resulting in the Supreme Court removing the question from the ballot because putting it on the ballot exceeded gubernatorial authority.

The TABOR Experience

Opinions are divided on the success of TABOR in Colorado and how that experience would translate to other states. While it appeared to be reasonably successful during Colorado's significant growth in the 1990's, the limitations in spending growth hit Colorado particularly hard during the economic downturn in the early 2000's. After 13 years of TABOR, voters in Colorado narrowly decided in 2005 to take a 5 year break and allow the state to retain the money that would otherwise have been returned to the taxpayers. This money will be used for improvements in education, health care, transportation, and retirement plans for firefighters and police.

However, proponents of TABOR initiatives in other states argued that the problems that caused Colorado voters to take a break from TABOR have been fixed in the new proposals. For Colorado, TABOR meant that after the recession in the early 2000's, spending couldn't rebound quickly to pre-recession levels because annual spending increases were limited. This so-called "ratchet" effect meant that state revenues could decrease at a rapid rate, but could only increase at a controlled rate following these declines. This effect was addressed in different ways by different initiatives in attempts to avoid the recurrence of this problem, from the creation of rainy day funds to alternative spending increases.

A situation unique to Colorado which also contributed to the budget problems in the state was Amendment 23. This constitutional amendment, approved by Colorado voters in 2000, mandated that Colorado increase per pupil K-12 funding by inflation plus 1 percent a year through 2010. This increase necessitated a corresponding decrease in other services to remain within the required spending limits, making it increasingly difficult to fully fund other services.

During Colorado's experience with TABOR, higher education funding decreased on several measures. Higher education funding per resident student dropped by 31% after adjusting for inflation, and college and university funding as a share of personal income declined from 35th to 48th in the nation. As a proportion of the state budget, higher education received 10.5% of the budget in 2004 as compared to 20.3% in 1990.

State Analyses of TABOR

Several state legislative research divisions released non-partisan analyses of the fiscal impact of the initiatives, with most finding that the limit would severely curtail revenue or appropriations growth in their states. In Michigan, the Senate Fiscal Agency calculated that the level of state appropriations in the 2006-7 fiscal year would only be approximately $68 million less than the actual appropriations if the TABOR limitation had been in effect since the 1995-6 fiscal year. However, over that time period, state appropriations exceeded the appropriations that would have been available under TABOR by $9 billion as in some years of budget growth TABOR would have limited appropriations to more than $2 billion less than the actual appropriations. Meanwhile, the Oregon Legislative Fiscal Office projected that the passage of the initiative would result in about $1.5 to over $2 billion in revenue in the state during the 2007-2009 biennium that would be prohibited from expenditure. Maine released an analysis that projected TABOR would on the whole allow for increased appropriations over the current spending restrictions, but would curtail the growth of some programs that are excluded from current spending limits.

Governing Boards' Reactions to TABOR

Higher education governing boards in the states affected came out strongly against the initiatives by passing resolutions opposing them. The University of Wisconsin - Madison (UWM) was particularly active in opposing the TPA before it died in the legislature, stating that it would result in diminished access to higher education and that it would consequently hurt Wisconsin economically as it tries to increase the percentage of its residents with college degrees. It also argued that the amendment wouldn't account for the changing demographic of college students, such as the increasing number of non-traditional students, who require more resources than traditional students.

Chancellor John D. Wiley of UWM wrote in a public letter to Andy Reschovsky, a professor at UWM researching the possible affects of the TPA, of his concerns about the amendment. He noted that with the recent base budget decline in Wisconsin, some of UWM's highest-ranked programs had been struggling in recent faculty searches and that their retention rate of faculty against outside offers had dropped by about a third. He went on to say that "if not reversed quickly, [the current] situation will be educationally and economically disastrous for Wisconsin. If the Taxpayer Protection Amendment is enacted, reversal won't even be remotely possible".

The Maine Community College System Board of Trustees released a statement of concern over TABOR, noting that the community colleges in the state have experienced a 50% growth in the last four years but that state funding increased by less than 10%, leaving the community colleges severely underfunded. The enactment of further limits on appropriations would lead to "enrollment caps, program cuts and tuition hikes". Terry MacTaggart, the Chancellor of the University of Maine System, said that "TABOR, as written, is the wrong approach to determining policy and budget priorities" and "would lead to the reduction or elimination of programs and services at the local, state, and university levels".

Similarly in other states, active opposition by governing boards contributed to the opposition effort. The Ohio State University Board of Trustees, the Ohio State Board of Education, Bowling Green State University Board of Trustees, and Cleveland State University Board of Trustees all passed resolutions opposing Ohio's version of TABOR, which would have appeared on the 2006 ballot but was pulled off it by the Governor in favor of a less restrictive legislative spending limitation. Boards in Kansas, Montana, Nebraska and Oklahoma also contributed to the defeat of TABOR in their states through resolutions.

The TABOR movement has not died, however. Backers vowed to try again in 2008. In the meantime, several state legislatures took up TABOR legislation in 2007, although it died or has stalled in every state. South Carolina lawmakers, urged on by Governor Sanford, introduced a TABOR bill that passed the House before stalling in the Senate. Taxpayer Protection Amendments were also filed in the Georgia House of Representatives and Senate. The amendment in the House did not move, but the the Senate amendment passed the Senate and moved to the House. It did not make it to a House vote, however. Pennsylvania was the last state to face TABOR legislation in 2007. Lawmakers introduced 2 TABOR bills in the Senate, but neither made progress out of committee.