National tax foes to assemble for big fight

America’s anti-tax activists plan a Colorado crusade this summer and fall, turning a debate on the state’s budget woes into a national battle over limited government.

Groups such as Americans for Tax Reform, the Reason Foundation and Freedom Works call Referendum C, the budget-balancing plan legislators sent to voters this week, a $3.1 billion tax increase on Coloradans.

But many in the ranks say it’s more – an attempt to effectively and symbolically gut their “gold standard,” their “Holy Grail”: the state Taxpayer’s Bill of Rights.

Fiscal conservatives call Colorado’s TABOR the strictest, most effective brake on government spending in the nation, and a model for several states considering similar limits.

“If TABOR goes down here, frankly, it’s in trouble everywhere else,” said Beth Skinner, the Colorado director for Freedom Works, a 700,000-member small-government group that opened a state branch here to fight the budget measure.

Referendum C’s proponents say they’re not attacking TABOR, just fixing it – and the state’s finances. They say other states considering TABOR clones have already made changes they’re now seeking in Colorado.

“If national groups understand that we haven’t touched TABOR . . . they would have a different view,” said Republican Gov. Bill Owens, who crafted Referendum C with Democratic leaders. “I don’t think they understand Colorado.”

The battle traces to 1992, when voters wrote TABOR into the state Constitution. The measure limits government spending increases to a factor of inflation and population growth, and it requires any tax increase to win voter approval.

When tax receipts exceed the limits, lawmakers must refund money to taxpayers. The refunds, along with several tax rate cuts, totaled more than $3 billion in TABOR’s first decade. The checks stopped after recession hit in 2001.

Colorado’s economy has recovered. But some state programs took a beating first, including mental health care and higher education.

Lawmakers project they’ll collect enough in taxes to protect those programs from further cuts in the next five years. But the projections say TABOR’s limits won’t let them spend enough to keep up with rising costs and caseloads.

The result, which legislators call “the ratchet effect,” is a scheduled $3.1 billion in refunds through 2010 while the state faces a nearly $800 million shortfall. Transportation needs could cost billions more.

Referendum C asks voters to give up five years of expected TABOR refunds to cover the shortfall and help roads, schools and health care rebound from the recession. It effectively eliminates the ratchet effect in the future. Spending limits would return in 2011, and voters would still need to approve tax increases.

Backers say the measure uses TABOR’s provisions to correct a budget problem – and that several other states mulling their own TABORs, including Kansas and Maryland, eliminate the ratchet in their plans.

“What most folks are marketing is TABOR 2.0,” said House Speaker Andrew Romanoff, D-Denver, a Referendum C architect. “And they want Colorado to be stuck with the flawed version. It doesn’t make any sense.”

Many conservative groups disagree. Several protested when Owens and Democrats announced their referendum deal last month.

Grover Norquist, the president of Americans for Tax Reform and perhaps the nation’s strongest anti-tax advocate, urged Republicans to reject the plan and cut costs to balance the budget instead. So did the National Taxpayers Union of Alexandria, Va.

The Tax Foundation released a study challenging what it called “a well-coordinated but misleading attack” on TABOR in Colorado. Americans for Prosperity issued talking points on TABOR’s “overwhelming success.” Both operate out of Washington, D.C.

“The Taxpayer’s Bill of Rights is a special law,” said Paul Gessing of the National Taxpayers Union, adding, “There’s a really united front from the right” on protecting it.

Protection could be expensive. Referendum C supporters are assembling a statewide coalition of business and civic leaders. Some supporters say they’ll raise millions by November.

Opponents likely need much less, because it’s easier to beat ballot measures than pass them.

Budget on the ballot

• One in an occasional series of stories on Referendum C, which will ask voters on Nov. 1 if the state can spend $3.1 billion that otherwise would be refunded to taxpayers.

tankersleyj@RockyMountainNews.com or 303-892-5219