Background on Colorado TABOR

This information was excerpted from a report by the National Conference of State Legislatures.

TABOR stands for “Taxpayers’ Bill of Rights,” and plays on the name of Horace Tabor, a well-known 19th century Colorado silver king.

TABOR is a set of constitutional provisions Colorado voters adopted in 1992 to limit revenue growth for state and local governments in Colorado and to require that any tax increase in any state or local government (counties, cities, towns, school districts and special districts) must be approved by the voters of the affected government.

TABOR is principally a revenue limit, not a spending limit. It limits revenue the state government can retain from all sources except federal funds in a year to the previous year’s allowed collections (not actual collections) plus a percentage adjustment equal to the percentage growth in population plus the inflation rate. Any revenues received in excess of this limit must be refunded to the voters. In this paragraph, allowed collections means the amount that the Tabor Amendment allowed state government to retain in the previous year.

The voters may vote to allow the state to keep the excess. TABOR limits the times when such votes may occur. Voters may also exempt their government from TABOR revenue limits for a set number of years. Both kinds of votes have passed in special districts, school districts and some small cities and in the city and county of Denver. The statewide vote that approved Amendment 23 in 2000 could be considered such a vote, because it allows the state government to retain as much of a TABOR surplus as necessary to fund the K-12 provisions the amendment included. No other such statewide vote has passed.

When revenues fall, the following year’s limit on collections is still based on the allowed collections of the previous year. The result is that in years following a recession, allowed revenues will grow only from the worst revenue collection year of the recession to the extent allowed by rate of population growth and inflation.

TABOR also affected a 1991 limit on spending growth that the General Assembly had passed. By reference, it made the limit impossible to amend except by vote of the people. This provision, known as Arveschoug-Bird, limits the growth of General Fund expenditures to 6 percent more than the previous year or 5 percent of personal income, whichever amount is lower. In practice the 6 percent limit is always less.

Colorado TABOR is a huge success and FreedomWorks is fighting to defend it and bring similar measures to other states.