400 North Capitol Street, NW
Washington, DC 20001
- Toll Free 1.888.564.6273
- Local 202.783.3870
The following column appeared in the 11-05-05 edition of The Oklahoman.
To address the never-ending tax-and-spend habits of state legislators, Colorado voters passed a Taxpayer Bill of Rights (TABOR) in 1992. The plan was to limit the growth of the state budget to the rate of population growth plus inflation. Excess tax revenues were returned to taxpayers, totaling $3.3 billion to date. Thirteen years later, even with Colorado's government spending increasing each year, the voters last week voted to temporarily suspend TABOR. Rather than receive tax rebates, they will now place an additional $4 billion of revenue in the hands of state legislators.
Nearly half of all states, including Oklahoma, are considering similar TABOR measures. Oklahoma's spending growth escalated 12 percent this year and new heights are anticipated next year. The Oklahoma Council of Public Affairs recognizes the need for reasonable growth, but sees a greater need for restraint.
The 2001 recession caused every state to experience declining tax collections. Desperate to grow state government, legislators shed tears when tax collections slowed compared with growth experienced during the 1990's dot-com era. Financial managers understand economies are cyclical, but this point is lost on big spenders.
TABOR prevented Colorado from overspending during the good years, which made the recession less painful. Because TABOR ratcheted down the cap on spending, it took longer to return to past spending levels. Colorado was further impaired during the lean years because it lacked a contingency plan. There were no means to supplement the budget and make up missing revenue.
Before anyone attempts to administer last rites to a similar TABOR proposal in Oklahoma, consider our good fortune to learn from Colorado's mistakes. OCPA has developed a stronger, yet more responsive plan. Three bills were submitted to the Oklahoma Legislature last year consistent with our proposal. Due to the lack of legislative attention, however, an initiative petition effort is now under way. These proposals deal with the flaws in Colorado's plan and offer a much better TABOR.
Voters will find an answer for the so-called ratchet provision. In the case of slower-than-anticipated growth, Oklahoma's potential spending levels will stay artificially inflated to allow for future growth. Also, the Oklahoma proposal improves our existing emergency fund for rainy days by adding a budget stabilization fund. No tax rebates are paid until the safety net accounts are fully funded. We will have revenue available if a critical need arises.
Colorado's decision to suspend TABOR isn't a setback for states contemplating a similar protection of taxpayers. When legitimate needs are identified, voters confirmed their willingness to suspend tax rebates. Also, Colorado wisely followed Oklahoma's lead by fixing an original design flaw. Great opportunities are on the horizon for Oklahoma taxpayers if we learn from our Colorado neighbors and rely on the right TABOR.
Nichols is president of the Oklahoma Council of Public Affairs, a conservative think tank based in Oklahoma City.