Tax and Spending Limit Amendments Pick Up Steam

Tax and Spending Limit Amendments Pick Up Steam
June 1, 2009

Amendments limiting increases in taxes or spending by state and local governments will likely be appearing on ballots in at least two states over the next two years.

Activists in Maine and Florida are confident about the prospect of reform in 2009 and 2010, respectively, because many voters believe in the need to control spending in the wake of a serious economic downturn.

Proponents of the new amendments point to the successes of the original tax and spending limitation amendment, called the Taxpayers Bill of Rights (TABOR), as evidence recommending similar measures in their states.

Colorado voters enacted the first TABOR in 1992. TABOR limits annual increases in government revenues to inflation plus the rate of population growth, subjects any tax hikes to a citizens’ vote, and returns surplus revenues to taxpayers.

The refund threshold in Colorado was first met in 1997, and over the next three years taxpayers received $3.25 billion in refunds, according to Prof. Barry Poulson of the University of Colorado.

Voters Defend TABOR

Colorado citizens defended TABOR in the November 2008 election by rejecting Amendment 59, which would have repealed surplus rebates forever and weakened the spending limit to the point of irrelevance, essentially scrapping TABOR.

The education lobby spent enormous sums of money in support of Amendment 59. Poulson says it “was defeated not because we had a huge, well-funded effort, but because citizens understand and fundamentally embrace TABOR.”

The National Taxpayers Union, a nonpartisan citizen group that promotes lower taxes and limited government, spearheaded an effort to inform Coloradans about the harmful effects of Amendment 59.

The momentum from the pro-taxpayer victory against Amendment 59 has spread to Maine and Florida.

Maine Schools Carved Out

Maine Leads, a nonprofit advocacy group, is the chief organizer of the 2009 effort. A similar drive in 2006 failed, but activists made some changes to the amendment proposal after going on a statewide tour to seek voters’ opinions.

Perhaps the most significant event for the Maine amendment proposal took place when Gov. John Baldacci (D) instituted his own version of TABOR on every school board in the state, according to Roy Lenardson, executive director of Maine Leads.

“Our first effort in 2006 got 46 percent of the vote,” said Lenardson. “As a direct result of its initial popularity, the governor now requires a town vote on every school district budget. The result has been school districts coming to the table with increasingly modest budgets.”

For that reason, Maine Leads has been able to remove school districts from its version of TABOR, likely preempting teacher unions’ anti-TABOR activities like those seen in Colorado.

Voters Back Restraint

The current economic downturn has made budget restraint increasingly popular with voters.

“Spending is already going to grow beneath the TABOR limit,” said Lenardson. “When this amendment passes, what we’ll have is built-in brakes on spending growth when the economy rebounds.”

The measure is similar to Colorado’s TABOR. It restricts spending to the rate of inflation plus population growth, and subjects any increases beyond that to a popular vote. It does the same for tax increases, and it returns the majority of any surplus to the taxpayers.

Petition signatures already have been collected and submitted to the secretary of state. Lenardson foresees no problems getting the initiative on the ballot.

Florida Businesses Back Limits

In Florida, the National Federation of Independent Business is sponsoring an effort called “Your Dollar, Your Decision” to enact a spending limit on local governments via the initiative and referendum process. The measure is scheduled for the ballot in 2010.

Unlike the amendments in Colorado and Maine, the Florida initiative does not explicitly impose any restrictions on tax hikes, nor does it return any surpluses to taxpayers. It is strictly a revenue limitation amendment, allowing local government receipts to increase only as fast as the rate of inflation plus population growth. Any excess tax collections go into a separate cash reserve, which is applied as revenue in the following year.

The initiative is meant to encourage tax cuts, as local governments will be unable to amass huge “slush funds.”

The Florida initiative also allows voters to approve revenue increases. This makes citizens more likely to support the initiative, as they tend to find such an “opt-out” reassuring, according to Allen Douglas, legislative affairs director for NFIB in Florida.

Initial polling has shown overwhelming support for the initiative, “in the mid-70 percent range,” said Douglas. “Once they realize there is a voter approval aspect, support jumps.”

State Court Must Weigh In

To make the ballot, 675,000 valid petition signatures are required. The Florida Supreme Court also must review the proposition for clarity and to ensure it meets the state’s “single-subject rule” requiring any initiative to be tightly written to cover only one issue. Douglas is cautiously optimistic the court will approve it.

“We did go to great lengths to pare this thing down to be as narrowly focused as you can get,” Douglas said.

“Democrats and the ‘usual suspects’ have been trying to change TABOR for years” in Colorado, said Poulson. “I think the most important thing to consider is that when people understand TABOR, and once they understand that it gives them control over fiscal policy, they support it.”


Josh Culling (jculling@ntu.org) is state government affairs manager for the 362,000-member National Taxpayers Union.