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Colorado's political environment since the passage of the taxpayer's bill of rights

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Colorado's political environment since the passage of the taxpayer's bill of rights
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Johnson, Derek Michael
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Denver, CO
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University of Colorado Denver
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80 leaves : ; 28 cm

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Since 1951 ( fast )
Tax and expenditure limitations -- Colorado ( lcsh )
Politics and government ( fast )
Tax and expenditure limitations ( fast )
Politics and government -- Colorado -- 1951- ( lcsh )
Colorado ( fast )
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bibliography ( marcgt )
theses ( marcgt )
non-fiction ( marcgt )

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Includes bibliographical references (leaves 71-80).
Thesis:
Political science
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Department of Political Science
Statement of Responsibility:
by Derek Michael Johnson.

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Full Text
COLORADOS POLITICAL ENVIRONMENT
SINCE THE PASSAGE OF THE TAXPAYERS BILL OF RIGHTS
by
Derek Michael Johnson
B.A., University of Northern Colorado, 1995
A thesis submitted to the
University of Colorado at Denver
in partial fulfillment
of the requirements for the degree of
Master of Arts
Political Science
2002


This thesis for the Master of Arts
degree by
Derek M. Johnson
has been approved
by
/\1 cW c£vk
Date
Michael Cummings


Johnson, Derek M. (M.A., Political Science)
Colorados Political Environment Since the Passage of the Taxpayers Bill of Rights
Thesis directed by Assistant Professor Anthony Robinson
ABSTRACT
Taxation is the very basis of government in the United States. In order for the
government to maintain armed forces, law enforcement, educational institutions, a
viable infrastructure, and perform its other business, it must possess the ability to tax
its population. Therefore when the root of that power is tightly restrained, the
fundamental political environment is altered.
Beginning in the 1970s with Proposition 13 in California, the tax revolt aimed
to limit the power of taxation in the states. Utilizing the initiative, various interests in
various states were able to alter state constitutions. The limitations engraved into the
key documents of the states removed elected representatives from many of the tax
and spending questions they had dealt with in the past.
In Colorado the tax revolt culminated in the passage of the Taxpayers Bill of
Rights [TABOR]. This amendment not only placed the power to increase or
implement taxes into the hands of the voters, but TABOR also strictly limited the
amount the state could spend in its general fund budget as well as the overall amount
of money the state could retain in a given year. While its effects were neither
m


immediate nor dire, the following years did witness unforeseen alterations to the
political environment that called into question the wisdom of allowing the state
constitution to be altered by a simple majority vote in a single election.
This abstract accurately represents the content of the candidates thesis. I recommend
its publication.
Signet
Anthony Robinson
IV


DEDICATION
For my parents, David and Donna, and my lovely wife Meredith who have supported
me mentally, spiritually and financially through it all.


ACKNOWLEDGEMENT
Much thanks to Tony Robinson, Thad Tecza and Mike Cummings for making this
process the most educational of my life. They have showed great understanding and
patience in the working and reworking of it all from beginning to end.
I need to also thank all of the people who deal with TABOR daily for their insights.
First to Fred Brown, Barry Poulson, Ray Kogovsek, Rudy Andress, James Jacobs,
Jane Urschel, Lauren Kingsbery, Peggy Lamm, Mark Cavanaugh, Kenneth Conahan,
Sharon Eubanks, Tom Dunn, Rep. Todd Sairman, and Sen. John Andrews for giving
of their time so that I could interview them and learn from their experiences. And
also to the General Assembly who unwittingly were my guinea pigs as I observed the
process from behind the glass.
And lastly to Ryan McMaken, a friend and scholar who has given me perspective on
the world and allowed me to bounce numerous ideas off of him during the preparation
and writing of this work.


CONTENTS
Introduction.........................................viii
CHAPTER
1. THE TAX REVOLT AND PROPOSITION 13....................1
Proposition 13.................................. 8
2. COLORADO AND THE TAXPAYERS BILL OF RIGHTS..........16
Campaign 92.....................................20
The Election and Its Aftermath...................26
TABORs Provisions and the following Eight Years.30
3. TABORS EFFECT ON COLORADO STATE POLITICS...........40
Priorities.......................................42
Political Gymnastics...........................47
Unintended Consequences..........................49
4. CONCLUSION..........................................61
BIBLIOGRAPHY.................................................69
INTERVIEWS CONDUCTED.........................................77
vii


INTRODUCTION
A shouting mob of more than 1,000 anti-tax protesters stormed the Capitol
Thursday, pounding on office doors and breaking windows, with one broken by a
rock hurled into Gov. Don Sundquists office. Chanting no new tax! the protestors
banged on the locked doors of the Senate chamber where Tennessee lawmakers were
debating the creation of a state income tax {Atlanta Journal and Constitution, July
13,2001, p. 1A).
The excerpt above sounds more like something from the late 18 th Century than
from a 21st Century daily. However, it proves that while the republic may have been
founded over 200 years ago, the issues that the colonists and early Americans dealt
with are still prevalent today. Taxation is something that U.S citizens were told was
as inevitable as death, but the issue of who is taxed, on what, for how much, and to
what purpose is still a driving issue in American politics. The haves versus the
have nots, the private sector versus the public sector, and personal gain versus the
greater good are the terrain upon which the tax debate travels.
While the incident in Tennessee in the summer of 2001 may have been an
extreme example of popular dissatisfaction with taxation, it is by no means the apex
of the tax revolt that occurred in the last two decades of the 20th Century. This
revolt was a period initiated by the passage of Proposition 13 in California, and
vui


followed in many other states with initiative-driven measures that forced dramatically
different means of revenue raising, spending and reserving. Missouri,
Massachusetts, California, and Colorado are some, but not all, of the states that
imposed restrictions on their state or local governments since 1978. However,
Colorados constitution was amended in 1992 to include one of the most restrictive
fiscal limitations on state and local governments since the revolt began. Taking
pieces of a number of other states limitations, Douglas Bruce, a Colorado Springs
resident and property owner and former citizen of California created the TABOR
(Taxpayer Bill Of Rights) Amendment, which not only required voter approval on all
tax increases, but also limited how much state and local governments could spend in a
given year, and how much revenue those entities could retain if not spent. The 1992
initiative was not Bruces first attempt at amending the state constitution, but it was
the one that finally passed and it dramatically altered how the state of Colorado
conducted its business.
Tax and Expenditure Limitations (TELs) are almost always brought about
through the initiative process; thus the citizens are responsible for bringing about
these changes via the ballot box. However, this process does not always translate into
a mass uprising or concern over the issue of taxation, and it most certainly does not
translate into an understanding of the issue or the proposed solution by those who
vote for these measures. In the case of the Taxpayer Bill of Rights in Colorado
(labeled as Amendment 1 on the ballot), it read nearly 2,000 words and contained
IX


language not understood by general accounting professionals. It was somewhat
confusing in its wording to the lawyers as well, and nearly ten years later the courts
still spend time and money interpreting its many clauses. Requiring any new tax or
tax increase to be ratified by the citizens was clearly a populist concept that could be
widely supported, as could the idea of the government returning any excess revenue
not spent in a given year to the people who earned it in the first place. However,
limiting spending and revenue limits to a strict and unbendable level was not so clear-
cut, and in 2002 these principles are still the center of the debate.
At the time of TABORs passage, the nation as a whole was in a recession and
the high-tech industry was only preparing to take the economy where it had not been.
Dissatisfaction with the government was apparent with the defeat of President George
Herbet Walker Busha man who had won a war yet presided over a deep
recessionto a relative newcomer, Arkansas Governor Bill Clinton. Polls were
showing a great distrust of government on the whole, as was evident with the passage
of term limits in states such as Colorado. Doug Bruces amendment was yet another
manifestation of this sentiment. Many decried it as a stripping away of representative
government. This amendment would tie the hands of legislators in their managing of
state finances. It would remove the flexibility needed to deal with the ups and downs
of an economy. No longer could revenue shortfalls be reconciled by a tax hike, and
no longer could the state retain excess revenue for rainy days. For fiscal
x


conservatives of Bruces ilk, these were all positive limitations on a government that
had grown to unprecedented proportions under the New Deal and the Great Society.
However, most of the voters were unaware of the magnitude to which thi s
initiative would affect their government. In fact, as the economy rose to levels never
before witnessed, the taxpayers of the state earned the fruits of their constitutional
amendment as the excess revenues began to arrive every tax season in their refund
checks. Times were rosy, and lawmakers were faced with an opportunity to
permanently cut taxes and thus prevent the state from receiving the revenue in the
first place. These cuts not only made economic sense at the time, but also provided
those lawmakers with campaign ammunition.
This situation would all change when the bubble burst in 2001. After rumors
of a recession began to spread and the zooming economy slowed to a crawl, terrorists
hijacked and crashed passenger jets into the World Trade Center in New York City
and the Pentagon in Washington D.C. Economic and historical forces converged,
Wall Street closed for a week, and grave uncertainties about the market surfaced.
2001 closed and 2002 opened with the markets down, layoffs rampant, and U.S.
Armed Forces on the ground and under fire in Afghanistan. The mini-recession
that resulted showed the citizens of Colorado how TABORs measures could
adversely affect state and local government. When the economy slowed and the
revenue under the existing tax structure was not enough to balance the budget,
rescissions became necessary, and state economists forecasted a bleak future for the
xi


state. As a result the politics under the dome became more focused on fiscal issues
than ever before.
The Taxpayer Bill of Rights amendment to the Colorado Constitution, with its
unique and comprehensive restrictions on governmental taxing and spending powers
has drastically altered Colorados political environment. Given the legislative budget
power, the General Assembly generally and the Joint Budget Committee more
specifically are severely affected by the political challenges created by this change in
state fiscal operations. State lawmakers are forced to balance their constituents
generally conservative fiscal values with their desire for government services, and as
such, priorities must be more clearly stated. Politicians can utilize the measure to
further their own political ideals as the budget becomes tighter and their arguments in
support of or opposition to legislation can be clouded in the mist of budgetary
responsibility. The TABOR amendment thus results in consequences both
unintended and unforeseen by the voters.
Throughout this work, I will show how the political environment has been
altered in the state of Colorado, specifically in terms of education, because of actions
taken by the citizens who have taken it upon themselves to guide state fiscal policy.
Beginning with California and then focusing more closely on Colorado under the
TABOR amendment, I hope to illustrate how tax and spending limitations have tied
the hands of lawmakers and given them less room to maneuver when calculating the
needs and desires of their constituents. Prioritization and federal control clash as the
xu


state attempts to balance its own books while retaining political capital with the
voters and dollars from the federal government.
The first chapter will contain a short summary of the historical background of
the tax revolt, but spend more time on the 1978 groundbreaking passage of
Proposition 13 in California In doing so, I hope to develop a better understanding of
the motives behind TELs as well as the campaigns and results of those elections.
Early attempts in Colorado will also be examined, showing how the revolt did not
occur overnight, but was building for a number of years before coming to a head in
1992 with the passage of Amendment 1.
In the second chapter I will turn to TABOR specifically and give a review of
the 1992 campaign with attention to the arguments for and against the amendment in
that year. This review should give the reader some idea of how this initiative passed
as well as the lengths both sides went to in their efforts to push or stall Amendment 1.
I will also look at some of the most important aspects of the Taxpayer Bill of Rights
that affect the state government. Finally, chapter two will examine how the General
Assembly has dealt with TABOR during the 1990s and how legislative decisions in
one year had deeper effects in later years, and how drastic changes in the economy
played a role in the states fiscal situation nearly ten years after its passage.
Chapter three will examine more deeply both the intentional and the
unintentional consequences of TABOR. I will focus on how legislators are forced to
more stringently prioritize their wishes for spending, often at the cost of unpopular
xm


but perhaps necessary services. Then I will look at how such tight fiscal restraints
allow for the debate to be shifted from a philosophical policy debate to a fiscal
responsibility debate. And finally I will examine how all of the consequences of
TABOR have affected the political environment in ways perhaps not thought of ten
years ago.
There is extensive documentation on Proposition 13 and its progeny, as well
as many studies of how the initiative process has been utilized in the various states to
shape their individual political landscapes, but the subject of Colorados TABOR
amendment has not received nearly as much attention. It may be that up until the
2001-2002 fiscal year, its effects on the state have been minimal. Thus, the vast
majority of the resources utilized in the following pages will be from newspaper
articles, a few scholarly works on the subjects of taxes, initiatives and the tax revolt in
general, and interviews with persons who confront TABOR almost daily. These
interviews include members of the Colorado General Assembly such as
Representative Todd Saliman and Senator John Andrews, support staff for the
legislature such as Sharon Eubanks of Legislative Legal Services, and a number of
policy analysts and political actors outside of the established lawmaking body such as
Fred Brown, the former Capitol Beat reporter from the Rocky Mountain News, and
Peggy Lamm and Mark Cavanaugh of the Colorado based public policy organization,
the Big Horn Institute.
xiv


While TABOR and its effects are the central theme of this work, I will not
focus on budget analysis or number crunching. Nor will this paper examine Colorado
in comparison with other states fiscal policies or provide an analysis of the fiscal
changes in Colorados budget over the past nine years. Instead, it will focus on the
politics involved in a state with such restrictions, and while TABOR affects every
governmental entity in the state, the General Assembly will provide the environment
in which the subject will be studied. Battles over dollars continue regardless of the
amount of money a state takes in and regardless of how much money a state can
spend. However, under TABOR, certain programs that in the past were easily
defended or compromised become strict lines with little room for give due to the
permanent losses possible given the new zero-sum game and eventual ratchet-down
effect. Budget balancing now drives the political process, and priorities are formed
under new constraints.
I hope that the work will provide the reader with a greater understanding not
only of how a seemingly simple plan for controlling the size, scope and growth of
government can drastically alter the very means by which the government is overseen
by those in elected office, but also of how the democratic process requires more than
casting a ballot. It requires serious, deep, and lengthy debate on the issue to be voted
upon. There should also be a better understanding as to how TABOR specifically
affects the government in Colorado and how there may be an alternative or even
xv


better means to achieve the goals of government while avoiding writing a blank check
to those who manage the coffers of the people.
While those who opposed TABOR have yet to see the doomsday they said
would arrive with its passage, there are certainly many citizens who voted for the
measure who are only now realizing the magnitude of Amendment 1. Regardless of
how one interprets the happenings of the last nine years, it is certain that the
landscape on which the political battle is fought has been altered to include strict
borders, and those borders are likely to remain in place for a long time. Therefore, it
is necessary for elected officials, voters, policy analysts, academics, and citizen
bystanders to take note of how these changes affect decision making in the state. It is
also important to note that the initiative and referendum of direct democracy are not
likely to disappear and in fact may be an increasing means of taking popular control
of the reigns of government. Those in favor of representative government as opposed
to direct democracy cite confusing initiatives such as TABOR as ammunition for their
cause, while true democrats announce such governmental limitations as only the
beginning of the revolution. The fact of the matter is that altering the very means by
which ones government operates is an awesome responsibility and should not be
taken lightlyor without knowledge.
xvi


CHAPTER 1
THE TAX REVOLT
AND
PROPOSITION 13
Few truisms of American political thought are more hoary than
this: The power of the purse is the heart of legislative authority...
Those who made the American Revolution concluded from experience
in Britain and the colonies that a free people had to keep its governors
on a tight fiscal leash. From the earliest days of American
government, budget decisions were treated as a struggle for power
(Wildavksy and Caiden, 2001, p.25).
As tax revenues are the means by which a government can implement public
policy* so it follows that taxes are the root of politics and the political debate. Most
new programs a governmental body hopes to initiate cost money and the revenue to
fund them must either come from increased taxes, selling government assets,
charging fees for service, or cutting the budgets of other programs. Likewise, any
elected or appointed official who wishes to abolish a program may attack it at its
funding source. Aaron Wildavsky, a long-time observer of the federal budget noted,
... inability to implement decisions nullifies them (Wildavsky, 2001, p.5). Today
there is an anti-tax contingent that believes that the government on the whole is
bloated and has been growing out of control since the advent of the New Deal and
l


World War II. Certainly most can agree that the government utilizes tax revenues to
perform its necessary duties such as maintaining a military, police force,
infrastructure, and all of the necessary tasks involved in lawmaking and adjudicating
by elected persons. Aside from those and a select few other programs, liberals and
conservatives alike attack the pork in the federal and state budgets, but at the same
time, one can observe yearly increases in the amount of money that is spent on nearly
every elected officials pet projects. On this point, Wildavsky comments that
Citizens want some spending more than others; they want their priorities to prevail;
and among these priorities is a preference for lower total expenditures (Wildavsky,
2001, p.168).
After the 1980 election, David Stockman became the head of President
Ronald Reagans budget team and was charged with cutting excess spending from the
budget. William Greider, then a writer for the Washington Times, gave an account of
Stockmans tenure in the newspaper as well as in the book The Education of David
Stockman. What Stockman found in his attempt to cut or at least cutback various
programs was that many portions of the budget were untouchable given each
congressmans attachment to them. The result was Stockmans assertions that The
system has an enormous amount of inertia, and I have a new theorythere are no
real conservatives in Congress (Greider, 1982, p.44). While Stockman may have
been somewhat accurate in his observations, Wildavsky notes that the big budget
winners in the governmental budgeting process are not a result of mere political
2


inertia, but instead are programs the voters believe in. He asserts that if the public did
not support these services at least to some degree, then they would simply exercise
their right to remove the backers of these programs from office (Wildavsky, 2001,
p.166).
After witnessing government expansion for most of the latter half of the
twentieth century, certain actors on the political stage utilized the initiative process to
take the question of taxation and the associated issue of the size and scope of
government directly to the voters. What emerged became known as the tax revolt.
It was ushered in with the passage of Proposition 13 in California, but quickly spread
to other states, and Tax and Expenditure Limitations (TELs) became quite popular
throughout the union. As a result, many voters in many states placed limitations on
the very people they elected to conduct the business of government. While it may be
unclear how the dollar amounts in each state budget have been affected, there is little
doubt that these limits altered the political environment in each of those states by
shifting budgetary concerns from one governmental entity to another or even to the
people themselves.
In all actuality, the revenue raising and spending system present at the federal
and state levels in 2002 is fairly recent in its establishment, and the income tax, which
quite possibly receives the most negative attention from the public, was not enacted
until 1913 with the passage of the Sixteenth Amendment. During the Great
Depression states needed to find a new and, at the time, popular form of taxation to
3


make up for rapidly shrinking revenue, so many of them followed the federal
government and began levying such a tax at their own level of government (Winters,
1999, p.324). States saw the benefits of the income tax in that it had a broad base
and was able to generate revenue regardless of inflation. However, both income taxes
and consumption taxes can result in greater, economy-related, fluctuations (Snell,
1993, p. 11). Local governments on the other hand, have always viewed the property
tax as a viable and relatively stable means of raising revenue.
When it comes to taxation, many question not what or how the government is
taxing but how much. Regardless of the means by which the money is taken, the
money is still taken. Beginning with President Franklin D. Roosevelt and continuing
through the rest of the century, the government grew at a rate faster than the private
economy. Starting with the government taking unprecedented action to end the Great
Depression, continuing with WWII and right on through the Cold War, spending by
the federal government, and then later by the state governments, grew to astronomical
levels. From 1902 to 1999 federal, state, and local government spending increased
nearly 1,800%. While population growth may account for some of this, it should be
noted that government grew at a rate five times that of population (Winters, 1999,
pp.304-305).
In the late 1970s, as the Cold War and its companion aims race were still
raging, a movement began to restrict the ability of state and local governments to
collect money from their citizens. During the preceding years, specifically the sixties
4


and early seventies, the country experienced a number of social changes brought
about by what many believed to be grass-roots, or at least locally-oriented
movements, such as civil rights demonstrations throughout the South and anti-
Vietnam War protests on college campuses. So there should be little surprise that the
main weapon used by those behind the tax revolt was the populist initiative.
Made popular and institutionalized in many states during the Progressive Era,
the initiative has been seen as the purest form of democracy in the United States, in
that the petition drives needed to get theses measures on the ballot and the votes
needed to get them passed are all brought forth by the citizens themselves. Daniel
Smith argues in his book, Tax Crusaders and the Politics of Direct Democracy, that
these movements, specifically initiatives regarding tax-limitation measures, are not as
democratic as they seem on the surface. Smith argues that, given the fanatically
driven individuals and special interests behind them, there is little procedural
difference between direct democracy and representative democracy (D. Smith, 1998,
p.37). Thomas Cronin notes that while the theory behind the initiative and
referendum may be populist or democratic, putting them into motion and funding the
processes needed to get them on the ballot and passed are truly only available to
special, organized interests (Cronin, 1989, pp.5-6).
Many would argue that regardless of the democratic level of the process
involved in getting such initiatives on the ballot and getting them passed, the end
result of these revolts puts more power in the hands of the people, and thus it is by
5


nature a more democratic means of government. This argument is evident in one of
the very measures implemented by tax revolutionaries: the requirement for a majority
of the voters to ratify any new tax placed on them. While Smith would state that
these tax crusaders are the real power behind the initiatives, he also quotes an
Oregon tax limiter as saying that paying petitioners is every bit as democratic as
paying a politician to increase your taxes, (Cain, 1996, B3). Quite similar to this
notion of allowing the citizens to vote on their level of taxation is the notion that
people can vote with their feet. R.T. Smith notes that given the number of different
services provided by the government, people are free to move about until they find
the level of services at the rate they are willing to pay (R.T. Smith, 1991, pp.53-55).
David Lowery and Lee Sigelman observed that right after the tax revolt
began, there was a rushed and haphazard attempt by the academic world to find a
reason behind its widespread success and that the various explanations that emerged
were untested or inappropriately tested. The authors themselves were unable to find
a single cause for backing these limitations, but were only able to narrow the reasons
to eight. These included self-interest, political ideology, perception of a lack of
efficiency in government, and even a simple lack of information and understanding
by the voters of the manner in which taxes are collected and the revenue spent
(Lowery and Sigelman, 1981, pp.963-966). To their credit, it should be noted that the
various conditions in the various states wherein these measures were supported also
6


help to account for the wide range of reasons for the success of tax limiting measures
(Rabushka and Ryan, 1982, pi89).
Justification for limiting the hand of government to reach into the bank
accounts of individuals and private business may not be limited to dollars and cents,
but may also be a message from the voters that they are dissatisfied with the men and
women representing them in the political process. Smith states, tax revolts are
symptomatic of the perception that the state has taken an unrepresentative and anti-
democratic turn (D. Smith, 1998, p.39 and Lowery and Sigelman 1981, p.969). This
last explanation for the tax revolt, disillusionment with those in office, seems to
indicate what was stated earlier in that the people were able to attack the root of their
dissatisfaction by means of budget cuts. In terms of a measure passed in Missouri, the
Hancock Amendment, Terry Ganey of the St. Louis Post-Dispatch commented that it
served. little other purpose than allowing special interests to earmark state money as
opposed to letting the legislature do its job in allocating money (Ganey, Nov. 30,
1990, p.lB). The same newspaper editorialized, Prohibiting government from even
asking the tax question is a punitive act, substituting voter resentment for good sense
(St. Louis Post-Dispatch, Nov. 19,1992, p.2C). Daniel Smith has a more favorable
view noting that tax revolts, not new to the late twentieth century, tend to bring back
the delicate equilibrium between taxpayers and the state (D. Smith, 1998, p.18).
This approach is justified even more when the means is the ballot box, through the
7


citizen initiative (the established means of revolt), rather than through mass protest or
even violence.
Just as the reasons for success in the various states were many, so were the
methods of limitation. Given the variety of policies for revenue raising in the states,
the tax limitation movements morphed to specifically target taxation policies deemed
lacking in each of the respective states. Allowing the citizens to vote on when and
how to raise taxes is a widespread and popular method to restrict the power of policy
and law makers to levy taxes on those over whom they govern, but Mandy Rafool of
the National Conference of State Legislatures notes that there are a couple of different
limitations, including appropriation and revenue limits. Each of these, or a
combination of them, can be and are used to limit either the rate of government
expansion in relation to the economy or perhaps just to strip away the power of
legislative bodies to adjust (or specifically to increase) the taxation rate of the
populace over which they are elected to govern (Rafool, 1996).
Proposition 13
While Californias Proposition 13 did not represent the opening shot in the
tax revolt1 its passage in 1978 was the first major victory for those in support of the
tax revolt (Rabushka and Ryan, 1982, pp.186-187). This measure, also known as the
1 New Jersey and Colorados state legislatures each placed a statutory limit on government spending
and Tennessee voters passed a constitutional amendment tying spending to growth in the states
economy prior to 13.
8


Jarvis-Gann Amendment for the two men who spearheaded the movement, was not
even the first one in the Golden State. One of the better known and publicized
proposals was guided by then Governor Ronald Reagan in 1973. Labeled as
Proposition 1, it would have tied state spending to 8.3% of personal income, but it
failed 46 to 54 percent at the ballot box (Rabushka and Ryan, 1982, p. 18). When
Prop. 13 finally did gain a majority of the California voters, it created a national tidal
wave (D. Smith, 1998, p.37).
Proposition 13 had two major aspects that changed the manner by which
localities managed their money. First, property taxes were limited to an increase of
2% per year regardless of how much the property value went up. Second, it required
approval by a vote of the people before any tax could be increased. Californians, as
with other state populations that eventually passed similar measures, were dissatisfied
with the rate at which their taxes were increasing and at the same time were
dissatisfied with the manner in which the money was being spent. This was not even
Howard Jarvis first attempt to limit taxation in the state, but his previous attempts
failed just as Reagans did. However, that situation changed in 1978, when the
sentiment among voters that their elected officials were doing nothing about
government waste and rising property taxes as a result of increasing property values
reached an all-time high (Rabushka and Ryan, 1982, p.31).
Support for and opposition to Prop. 13 was not as representative of the classic
dueling ideologies as one might expect. While Republicans and homeowners were
9


vehemently in favor of the amendment, that fact did not prohibit Democrats or even
traditionally Democratic-leaning groups from supporting it, at least in the voting
booth. However, as one might expect, the opposition campaign was led by groups
such as teachers unions, the California State Employees Association, and other at
risk state workers. There was also vast bi-partisan opposition by elected officials
from the state house down to the various city halls (Rabushka and Ryan, 1982, pp.22-
23). As with many of the subsequent limitation movements, the opposition to the
measure utilized a doom-and-gloom campaign in an effort to convince the voters that
government could not carry out its vital functions should these limitations be
imposed. This tactic by the opposition was lost on voters who felt that this
amendment was the only way to convince the politicians that real change had to be
made (Rabushka and Ryan, 1982, pp. 24-31).
Immediately following the June 6,1978 passage of Proposition 13, the nay-
sayers questioned the intent and wisdom of the voters in supporting such a measure,
while its backers declared a victory for the people of California and the beginning of
greater things to come for states throughout the county. However, the effects brought
about through drastic changes such as those implemented by TELs take time to bear
full fruit, and even years later, there is mere speculation regarding how the new, and
generally lower, levels of funding have affected the operation of government.
Rabushka and Ryan noted a couple of short years after the passage of 13 that while
the outcome is not what many politicians, pundits and some voters hoped it would be,
10


the state survived, and none of the disastrous consequences materialized (Rabushka
and Ryan, 1982, pp. 135-137).
All of that may be true and while there is little doubt in the year 2002 that
California is still a thriving state with a strong economy boosted by the high-tech
growth of the late eighties and nineties, there is also little doubt that in terms of
politics, state and local competition, and educational funding, the state has been
altered from what it was prior to the passage of Proposition 13. This change is
evident when one looks at the manner in which governments at the state and local
levels collect taxes.
All things being equal, states rely on income and sales taxes, as well as on
federal aid, while local governments rely more on property taxes (Harrigan and Nice,
2001, p.72). However, when 13 altered the amount that could be collected through
property taxes, the local governments were forced to try and find other ways to raise
revenue. Most of these methods were fees on utilities or park-and-recreation use or
business licenses. In order to retain a certain level of revenue for localities from the
property tax, it shifted to a state tax, with monies going to each local government
determined by apportionment formulas developed by the state government, (Sexton,
Sheffrin, and OSullivan, 1999, pp. 106-107, and R.T. Smith, 1991 pp.52-53). By
looking at this sort of allocation process, one can see why one writer noted in a study
on the measure ten years later, Most analysts have concluded that Proposition 13
eroded the power of local self-government (R.T. Smith, 1991, p.53). Dan Walters of
li


the Fresno Bee noted that while Howard Jarvis alteration to the state government
halted decades of government expansion, it also led to a massive shift of financial
and operational authority from locally elected government and school officials to
Sacramento (Walters, Nov. 14,2001, p.A19).
Ironically, local control and school funding may well have been one of the
reasons for the passage of Proposition 13. The Serrano v. Priest decision in the
California Supreme Court stripped the ability for localities to fund their school
districts, because of disparities in funding from district to district depending on the
relative wealth of the district (R.T. Smith, 1991, p.67). William Fischell has argued
that the Serrano decision created a belief that local control had been lost as the state
Supreme Court mandated equalization in funding for school districts throughout the
state (Fischell, 1989, pp.465-474). California has attempted to maintain an adequate
level of spending for its K-12 system, but given the limits on the local governments,
the state has taken a larger portion of the pie for spending on schools, going so far as
an 80-20 split (Rabushka and Ryan, 1982, p.123). However, in the growing areas of
the state, alternatives to school funding have included fees levied on developers to
help fund school construction in those areas where new building is occurring
(Chapman, 1991, pp.26-27).
Proposition 13 did not mark the end of the tax revolt in the state of California.
As the wave spread through the nation, Paul Gann, one of the major backers of the
original amendment, began a new crusade, this time for a much stricter limitation on
12


the spending powers of all the governmental entities in the state. Much like the
Reagan initiative six years prior, Proposition 4, also known as the Spirit of 13,
limited growth in government to the rate of population growth plus either the rate of
inflation or the increase in personal income (whichever was lower) while allowing for
the voters to shift these levels by a simple majority of the vote. This measure was
brought forth in a special election in 1979 that only managed to get a 40% turnout of
registered voters, but after a subdued, nearly silent, opposition campaign led by state
employee unions and education groups, it gathered 74% of those votes (Rabushka and
Ryan, 1982, pp.148-151). Whereas 13 was fairly straightforward, and easily
complied with, this new measure was much more elaborate. Its complexity has
allowed the legislature to utilize its powers to work around it, while at the same time,
the limits imposed by it are such that they are rarely, if ever, met or exceeded by any
of the entities affected by it (Rabushka and Ryan, 1982, p.208).
There is little question about the success that Proposition 4 had on the heels of
its more renowned predecessor, but its passage was the pinnacle of the movement in
California. By the time the 1980 election rolled around, Howard Jarvis had another
proposal on the ballot for the people to consider. While the first two had been
attempts to limit the growth rate of the government to more closely keep pace with
the rest of the economy, this new initiative, Proposition 9, nicknamed Jarvis II or
even Jaws II, was an attempt to actually cut income taxes, business taxes, and index
rates to prevent bracket creep. While the other two movements, especially 13,
13


showed little in early polling and finished strong at the ballot box, this attempt began
with high popularity but ended with a thud as 61% of the voters decided to cast a
no vote (Rabushka and Ryan, 1982, pp.159-161). Rabushka and Ryan note that by
1980 the perceptions of a number of the citizens in California had changed. Between
the early polling in the 78 election and the time two years later that the vote on 9
came around, 20% more of those interviewed believed that further cuts would result
in a significant decrease in the quality of service in essential government functions
such as law enforcement and education (Rabushka and Ryan, 1982, p.178).
While the inferno was turning into a slow bum in the Golden State, the fire
was spreading to other states. Public opinion outside of California was strongly in
favor of Proposition 13 after its passage (Ladd, 1978, p.32, and Rabushka and Ryan,
1982, p.38). Even Californias governor, who had opposed the original measure,
toured the nation promoting an Amendment to the U.S. Constitution for a balanced
budget (Rabushka and Ryan, 1982, p. 140-141). Following on the heels of the initial
tax revolt victory in California, many other state legislatures moved to prevent it from
spreading into their backyards by cutting taxes (Rabushka and Ryan, 1982, pp.185-
189). At about the same time as 13, Nevada voters passed a very similar measure,
which was impressive given the state constitutional requirement that any initiative
pass in two consecutive elections (Rabushka and Ryan, 1982, p.191).
It has been observed that such revolts as occurred in the late 70s are short
lived, as is evidenced by the failure of Jarvis 1980 measure (Rabushka and Ryan,
14


1982, pp.201-203), but even in 1996 voters in four different states approved tax-
limiting measures while only two turned them down (D. Smith, 1998, p.8). Even so,
the results of the tax revolt in cutting or just limiting the size and scope of
government are not deep and lasting. Steven D. Gold notes that such measures have
merely shifted by whom these revenues are raised and spent in terms of state or local
government (Gold, 1989, p.30), and Mandy Rafool concurs that these limitations are
weak if imposed only the state or local level and are strong only when both are in
place (Rafool, 1996). Rafool goes on to note that other very restraining methods
include a strict cap on revenue raising, spending, or both (Rafool 1996). In 1992 the
voters of Colorado passed a measure that met those criteria. It was an amendment that
combined many different limits at all levels of government within the state. TABOR,
the Taxpayers Bill of Rights, was noted by the St. Louis Post-Dispatch, to be much
more Draconian than measures passed in Missouri (St. Louis Post-Dispatch, Nov.
19,1992, p.2C). Known as Amendment 1 on the ballot, this change has drastically
altered how government in the Centennial State operates.
15


CHAPTER 2
COLORADO
AND
THE TAXPAYERS BILL OF RIGHTS
The tax revolt in the state of Colorado found both success and failure. In
1978, the General Assembly had already taken action to keep the scope of
government reigned in, by limiting the amount that could be spent in the General
Fund to a 7% growth rate each year. By the mid-80s, there was yet another tax-
limiting measure, this one enacted by the people and instituted in the state
constitution. It was known as the Gallagher amendment, named alter then State
Senator Dennis Gallagher, and it limited the rate at which personal property could be
taxed in comparison with business or commercial property. During the 1970s, 80s,
and 90s, Colorado went through a series of booms and busts, most notably an oil bust
in the early 80s which set the state back a few years in terms of revenue, and it was
about this time that the state inherited a former California lawyer-tumed-real-estate-
speculator named Douglas Bruce, a small-govemment conservative with strong anti-
tax sentiments. An observer of the events in California, Bruce was about to alter
16


Colorados political environment to a degree only dreamed of by Howard Jarvis or
Paul Gann in the Golden State.
By the time 1992 rolled around, Doug Bruce had already been hard at work.
His first attempt at limiting state or local taxing authority was in the form of voter
authorization for new or increased taxes. Amendment 4, as it was listed on the ballot,
failed to earn the needed votes to become law (Smith, 1998, p.137). Bruce attempted
to get similar measures passed in 1988 and 1990, each of which failed but with the
margin of defeat shrinking with each attempt, over 200,000 votes in 1988, and less
than 20,000 votes in 1990 (Cronin and Loevy, 1993, p.97). Bruce gained his first
success in his adopted hometown of Colorado Springs. A city known throughout the
state as a fairly conservative community, it is home to the Air Force Academy, Fort
Carson Army Base, and the socially conservative policy group Focus on the Family.
In 1991, he successfully petitioned for, earned ballot spots, and passed two tax-
limiting measures in that city (Smith, 1998, p.147). By the time the 1992 election
rolled around, Bruce was ready to strike at the state level for the fourth time. This
time the General Assembly hoped to head Bruce off by referring its own measure,
one more palatable to its own interest, to the voters. However, the legislators were
unable even to get it passed through the legislative process so it could be placed on
the ballot and the table was set for Bruces Taxpayers Bill of Rights [TABOR], listed
on the ballot and referred to during the campaign as Amendment 1( Smith,
1998p.l48).
17


One can look at the previous failures of Bruce and then at the success in 1992
and wonder what the difference was in the intervening years. If we look back at the
data for those years, the evidence that the citizens of the centennial state were being
taxed any more or less than those in peer or neighboring states points in both
directions. In a pre-election editorial, Betty Ann Dittemore noted that taxes in the
state had remained virtually unchanged (at 10 percent) since 1975 (Dittemore, Oct.
18,1992, p.lG). For the most part, it was agreed that the state rates were not
unusually steep. Instead it was the cities, counties, and other special districts that
were noted as having high rates of taxation. In fact, in local taxation Colorado ranked
quite near the top (Lorch, 1997, p.343). The Office of State Planning and Budgeting,
the executive offices economic forecasting and planning office, presented its own
evidence that tax revenues had declined in comparison to the rate of personal-income
growth. However, Coloradans were taxed overall at about the same rate as those in
other states, but the state still spent $102 more per person than the average state in the
Union (OSPB, Feb. 1,1990). The conservative Independence Institute noted that in
1987 the graduated income tax was done away with in favor of a flat tax, and that
the average collected rate (the real tax burden) rose from 4.35% to 5% (TABOR
Legislative Handbook, 1999, p.l). From the aerial view one would assume that the
ambiguously defined high rate of taxation was not the major reason behind the
success of TABOR in 1992. Perhaps the real reasons lie not in dollars and cents but in
the fundamental beliefs of a majority of Colorados population.
18


Whether myth, legend, or reality, there is a prevailing sentiment that the states
of the West and Colorado in particular have a sort of rugged, individualistic
population that has little trust in or reliance on government to prop them up. Thomas
Cronin and Robert Loevy, observers of Colorado history and politics, note that for
years prior to the tax revolt, many citizens lingered in the Centennial States past,
and its do-it-yourself society (Cronin and Loevy, 1993, p.19). Daniel Smith would
add to those sentiments a prevailing skepticism towards government (Smith, 1998,
p. 135). This became evident in the 1880s as the Populist Party, which had
progressive, small d democracy ideals such as universal suffrage as well as the
initiative and referendum, did very well in Colorado elections, even gaining control of
the governors office (Larson, 1986, p.37). Former Congressman Ray Kogovsek
noted that one of the reasons TABOR may have passed was the feeling that the
elected officials were not doing anything to limit the growth of the state, and the
people believed this is one way they thought they could have some control
(Interview Oct. 3,2001).
Even given the conflicting evidence regarding tax rates, perhaps it was such
individualistic sentiments that had polls showing many people, including those who
would normally label themselves as liberals, feeling that they were being heavily
taxed about the time Amendment 1 appeared on the ballot (Cronin and Loevy, 1993,
p.l 16). Bruce himself noted that even if taxes were not as high as some felt, does
that mean you shouldnt have the right to vote? (Roberts, Oct. 14,1992, p.l A). He
19


was speaking of one of the aspects of TABOR that allowed voters to approve or
negate any new tax or tax increase. James Jacobs, an observer of the Colorado state
economy, noted that while taxes may not have been exceptionally high, the citizens
latched onto a concept that would give them some control over government, at least
at the state and local levels (Jacobs, Mar. 29,1998, p. 1J). Mandy Rafool, of the
National Conference of State Legislatures, notes that the citizens of Colorado were
the first to have the power of approval for tax increases (Rafool, 1996).
Campaign 92
1992 was a defining election in the state of Colorado. While the nation and
the state were voting for the next president, the people of the Centennial State also
found their ballots filled with initiatives and referenda. At the head of the list was
Amendment 1, the latest and greatest attempt by Douglas Bruce to limit the growth of
state and local government. Many pollsters and politicos viewed this as just another
tired attempt from Bruce, and with a crowded ballot they focused on many other
issues. Nearly two months before the election, John Sanko of the Rocky Mountain
News reported that the closing margin of defeat in Bruces last two attempts and the
fact that the opposition was forced to look at other issues, made this perhaps the best
chance for Colorados tax limitation crusader to gain victory (Sanko, Sept. 6,1992,
p.l). Two Colorado pollsters noted that the voters were frustrated not only with the
crowded ballot but by the campaigning and advertising that followed, and for that
20


reason they might vote against all of the questions, with the single exception of
Amendment 1 (Brown, Nov. 1,1992, p.lA). Rounding out the slate that year were
items such as a .1% sales tax increase for education, a measure to earmark lottery
money for Great Outdoors Colorado (GOCO), and a very controversial measure that
would deny protected status to homosexuals. It was the last one that perhaps drew
most of the local and national media, taking attention from TABOR. However, that
oversight did not translate into a friendly or calm campaign on either side of
Amendment 1, with Bruce being the spearhead of the pro-TABOR movement and
many government and education entities opposing the question.
Daniel Smith notes that there was not an enormous grass roots organization
for Amendment 1, and Bruce has always presented himself as a sort of lone soldier on
his tax-limiting mission, so support for the amendment did not have a coherent,
organized strategy. His selling of TABOR came through free media press
conferences and a savvy advertising strategy of a one-person marketing firm with
low-budget television ads (Smith, 1998, p.163). Bruces use of less costly means of
promoting his amendment is not to say there was no money in the campaign. Bruce
declared that there was going to be much more money than in the previous attempts,
including "up to $150,000 from the National Taxpayers Union, and he had the added
support of like-minded organizations such as the Colorado Union of Taxpayers
(Sanko, Sept. 6,1992, p.7). Bruce presented most of his arguments in newspaper
editorials and election forums. While he did attempt to get the message out that taxes
21


in the state were much too high (Bruce, Oct. 28,1992, p.57), the brunt of the
campaign was focused on ensuring that the citizens were aware of the level of control
they would have if this measure passed. He argued that as long as the state had the
unchallenged authority to tax it was, and would continue to be, a bureaucratic Big
Brother (Roberts, Oct. 14,1992, p.lA), and that the citizens could exercise their
power to approve a tax increase [I]f the voters are convinced there is a definite need
for higher taxes (Patty, Nov. 1,1992, p.44). The overall thrust of the pro-TABOR
campaign was not to sell it as a limitation of government spending so much as a
democratic means by which the citizens at the state and local level could control the
rate of taxation. Again, this tactic was a nod to the rugged individualism and
populism that in the early 1900s had placed the initiative into the American political
lexicon. He illustrated this point clearly by stating that voters could easily approve
his measure while also approving another ballot measure that allowed an increase in
sales taxes to fund schools. Quite simply, a vote for either was an affirmative vote
for a democratic means of levying taxes. The two are not inconsistent, Bruce said.
(Stevens and Roberts, Oct. 11,1992, p.lA).
While not as vociferous as it had been in previous years, opposition to
Amendment 1 came from many different sources and attempted to convince the
people that the amendment was not as democratic as its backers claimed, but was
instead a legal and logistical nightmare that would cost thousands of courtroom hours,
and millions of dollars in elections, while driving the Colorado economy into the
22


ground. At the head of the charge was the No on 1 committee, which bragged of
having more than a half a million dollars in its coffers to offset Bruces campaign
(Rocky Mountain News, Nov. 1,1992). Opponents of the measure listed like a whos
who in Colorado politics and communities: former legislators Betty Ann Dittmore
and Ray Kogovsek, Colorado Ski Country USA (Sanko, Sept. 15,1992, p.14),
Arapahoe County Sheriff Pat Sullivan, Arapahoe County District Attorney Bob
Gallagher, and the arts and culture industry (Patty, Nov. 1,1992, p.44). Education
groups such as the Colorado Association of School Boards, the Education
Association, the Colorado Association of School Executives, and the Colorado
Student Association (No on #1 Press Release) were helping the effort to defeat
TABOR.
On the whole, the anti-TABOR groups had reason to be worried and had
logical and meaningful reasons to oppose the measure. First, Bruce was selling his
amendment as a better and more democratic way to impose and increase taxes on the
people, but there was also a concern that the result would be mass confusion at the
ballot box and a stripping away of the deliberative process necessary for
implementing policy decisions such as taxation (Rocky Mountain News, Nov. 1,1992,
p. 18V). Even the Colorado Association of Commerce and Industry came out in
opposition to all of Bruces efforts by stating that the provisions stripped away a core
aspect of representative government whereby elected officials make those types of
23


decisions and their re-election or ousting from office is based on those decisions
(CACIAdvantage, July 16,1990, p.l). Betty Ann Dittemores letter to The Denver
Post warned voters that while it might seem proper for them to vote on such issues,
the ballot would become even more crowded than the one currently frustrating the
citizens (Dittemore, Oct. 18,1992,1G).
Some did not debate the number of tax-increase proposals that may appear on
the ballot or how representative government would be affected. Instead they focused
on the unwieldiness of the measure itself and the problems that would arise from the
limitations and forced revenue returns. The Science and Culture District of Metro
Denver questioned the viability of refunding excess revenue derived from sales tax,
and argued that the cutting of a sales tax in a year of high revenues would require a
vote to bring it back to its initial level1 (Morgan, Oct. 28,1992, p.57). Common
Sense Colorado-Citizens Opposed to Amendment 1 stated simply that the government
would be unable to deal with the constant surprises of the world ranging from market
fluctuations to natural disasters {Position Statement). As for municipalities, school
districts, and other special districts, their major concerns were that local services and
services that required fees or licensees would be forced to have an election every time
1 This concern would prove to be one of the greatest arguments against TABOR, especially after its
passage. When the economy was in a boom cycle, the legislature would feel the need to cut taxes, but
those taxes would never be able to return to their original level should there be a revenue shortfall.
This point will be discussed later.
24


there was a need to increase that fee. This change, they feared, would lead to erosion
of local control as the state took on more and more of the responsibilities for these
functions (Ibid.).
There were also concerns that the measure itself, reading nearly 2000 words
and containing numerous provisions and definitions, would end up in the courts both
at the state and local level on numerous occasions. John Lay, chairman of the No on
1 campaign, stated that the proponents of the measure were not even aware of the
ramifications of TABORs passage: They just want to be disruptive (Roberts, Oct.
14,1992, p.l A).
Ironically, the spark that had ignited the inferno of the tax revolt more than
twenty years before Bruces TABOR, Californias Proposition 13, was used by
Amendment 1 s opponents as an example of how not to run state and local
government finances. Betty Ann Dittemore noted that California had once been
known for the quality of its education system, but after years under Prop. 13 the state
was faced with horrible per pupil funding and overcrowded classrooms (Dittemore,
Oct. 18,1992, p. 1G). Bob Ewegan of the Post also noted that higher education in
that state was suffering, and the police departments were stretched incredibly thin,
especially in high-crime areas such as L.A. all as lasting effects of the 1978 passage
of Prop. 13 (Ewegen, Sept. 28, 1992, p.7B).
These points could all be considered well-reasoned and legitimate arguments
against the passage of Amendment 1 in 1992, but there was also another campaign
25


that was waged that consisted of scare tactics and a Chicken Little mentality. One
article looking back on the election noted that opponents to TABOR had prophesied,
Prison inmates would be let out early. Colleges would have to restrict enrollment.
Services would be cutback. Classrooms would be over crowded (Sanko, Aug. 3,
1999, p.l4A). Bob Ewegan even ran an editorial that predicted that localities would
face so many cutbacks and layoffs in the fire and police departments that people
would not have their emergency calls answered. Instead he instructed endangered
citizens to call Doug Bruce (Ewegen, Sept. 28,1992, p.7B). For year after TABORs
implementation, none of these predictions (with the possible exception of a cutback in
services) came true, and in the end this tactic may very well have backfired on the
anti-TABOR crowd. In an editorial on Amendment 1, the Rocky Mountain News
announced its opposition to the measure, but then could not help but note for the
record a strong distaste for the tactics of some of those most aggressively opposed to
Amendment 1 (Rocky Mountain News, Oct. 14, 1992, p.58).
The Election and Its Aftermath
As Election Day 1992 drew close, the numbers on Amendment 1 were not
revealing to either side. The Rocky Mountain News reported in mid-October that the
number of those in favor of the measure had dropped from an earlier high of 65%
down to 52% (Sanko, Oct. 20,1992, p.16). Just before election day, Talmey-Drake
Research and Strategy, a Denver-based firm, was reporting that the percentages had
26


swung to a plurality opposed to the measure-47% to 46% (Brown, Nov. 1,1992,
p.lA).
On November 4,1992, the majority of the citizens who cast votes did so in
favor of Amendment 1. Bruce finally had the victory he was after. With 53.6% of
the vote, TABOR officially became part of Colorados constitution (Roberts, Nov. 5,
1992, p.l A). Reaction was diverse and widespread. In Colorado, opponents stated
that while the ramifications would not be felt immediately, they would be felt, and in
the end they would be deep and lasting (Roberts, Nov. 4,1992, p.l A). Many also
cited the other measures on the ballot as one of the factors that led to the passage of
TABOR. Those who spent their time shouting down Amendment 2 (which passed)
and trying to sell the Governor Romer-backed Amendment 6, a tax increase for
education (which failed), were blamed for viewing Amendment 1 as just another of
Bruces tired and played-out attempts at limiting taxes and not worth the breath to
denounce it (Smith, 1998, p.l 30). Outside of Colorado, many tax-limitation
supporters began to get the same urges that followed the passage of 13 in California.
While the passage of tax limits was nothing new, the passage of a voter approval
measure for all new taxes was unprecedented and was latched onto by limitation
proponents in states such as California, Oregon, Florida, Ohio and Washington
(Roberts, Feb. 1,1993, p.lA).
For the education community, the entire election was a disaster in that
Amendment 1 passed, Amendment 6 failed, and the measure that earmarked all of the
27


lottery money in the state for Great Outdoors Colorado (money for parks and
recreation) passed. This combination was deemed as the worst-case scenario, and
per-pupil spending was projected to slip to $3,437 from a projected high of $4,347,
should the opposite occur (Stevens and Roberts, Oct. 11,1992, p.l A). Cronin and
Loevy pointed to the failure of Amendment 6 and the passage of TABOR as a clear
demonstration that the people of Colorado were tired of what they perceived as high
taxes, even when that money was going toward K-12 education (Cronin and
Loevy,1993, p.301). Bruce looked back years later on his victory and humbly called
it the most important political event since statehood (Sanko, Aug. 3, 1999, p.l4A).
When the fog of war began to clear the next day, legislators and local
government officials began to do more of their homework and discovered, for the
most part, that their understanding of the new restraint was too simplistic. One of the
opponents of the measure looked back on Amendment 1 stating that the ballot title
was a gross oversimplification of its true nature (TABOR: A Guide to the
Taxpayers Bill of Rights, 1993, p.97). Charlie Brown, then director of the Colorado
General Assemblys research branch, stated that even after discussions with Bruce
and other legal experts, he understood it less well than I did the day before
(Stevens, Nov. 7,1992, p.3B). As the post-election discussions emerged, local
government officials distaste for the amendment seemed to grow (Stevens, Nov. 22,
1992, p.l A). Legislation for implementing the various aspects of the amendment
would require a great deal of legal interpretation and maneuvering. Election Day had
28


been a mere battle in Bruces war; the next rounds would be fought in the legislature
and in the courts. Tim Foster, then a State Representative from Grand Junction, noted
that a number of people had even stated that it would be best if the legislature used
the confusing and ambiguous language to undercut the amendment, but he and other
lawmakers felt it was their duty to follow the will of the voters that passed it
(Germer, Nov. 6,1992, p.24).
The Colorado Municipal League noted that between the time of TABORs
passage and 1999:
The Colorado appellate courts wrestled with the meaning of
TABOR on at least two dozen occasions. The Colorado General
Assembly debated innumerable bills interpreting, applying, or
implementing TABOR in some way, many of which were
adopted into law. And, of course, countless state and local
government officials spent untold hours in study, discussion,
analysis, and implementation of TABORs various requirements
(TABOR: A Guide to the Taxpayers Bill of Rights, 1993, p.93).
Where there was ambiguous or uncertain language the legislature and the courts had
to balance how to protect the interests of governmental functions with protection of
their political interestsafter all, it was their constituents who had voted in favor of
TABOR. In court proceedings, gleaning the intent of the legislative body that passed
the law is not without precedent, but in the case of Amendment 1, attempting to
determine exactly the intent of those who voted for the measure is a daunting task and
the courts had never before needed to revert to campaign literature or debates in order
to make their decisions (TABOR: A Guide to the Taxpayers Bill of Rights, 1993,
p. 100). Bruce certainly felt that he, as chief drafter and proponent, had a place in the
29


deliberative and legislative process, but rarely was that privilege granted (TABOR: A
Guide to the Taxpayers Bill ofRights, 1993, p.99). In terms of initiatives such as
this, the courts will look at only comments made prior to the election, never anything
discussed or testified to in the post-election (Interview Dec. 6,2001).
TABORs Provisions
And
The Following Eight Years
Regardless of the battles in court or the legislative debate over how best to
implement it, on Nov. 5,1992, TABOR was part of the states constitution and its
provisions had to be followed. Reading nearly 2,000 words, Article X Section 20 of
the Colorado Constitution, also known as The Taxpayers Bill of Rights, restricts how
much the state can spend, how much it can retain in tax revenue, how it can raise
those limits, and how much and for what purposes a reserve can be kept. TABOR has
nine subsections in it, and many of the terms do not necessarily correlate with
common understanding of those terms. This fact means that a true detailed
description of its various components can be at best confusing and at worst
misleading.
In terms of revenue raising and general fund spending, TABOR works at both
ends. Concerning spending by the state, the General Fundthe operating budget of
the state and its departmentsis limited by a 6% cap over the budget from the
previous fiscal year. Known as the Bird-Arvescough limit for the legislations two
30


prime sponsors, it was passed in the General Assemblys regular session in 1992, and
it is contained in the Colorado Revised Statutes 24-75-201.1 .2 A mere statutory limit
would normally be amendable by passage of legislation in the General Assembly, but
with the passage of Amendment 1 it is considered constitutionally protected under a
section of TABOR that prohibits states or localities from weakening any spending
limits put in place prior to Amendment 1 s passage (Governors Office of State
Planning and Budget, Sept. 2000, p. 1). However, the provision in TABOR that
limits the entire state budget is the provision that deals with revenue. While the
Constitution states in Subsection 8 that there is a revenue limit, the section actually
limits the expenditures of the state to the rate of inflation (measured by the Denver-
Boulder Consumer Price Index [CPI]) plus the increase in population. Any monies
over this limit collected by the state must be returned to the taxpayers. Thus, with
CPI and population growth normally larger than the 6% General Fund limit, the true
level of how much the state can spend is defined by how much revenue the state takes
in from total revenue sources. Specifically, the difference is made up by cash funds,
capital construction dollars, and other miscellaneous expenditures or revenue by the
state (Ibid.). It is only money collected over and above this revenue limit that must be
returned to the taxpayers, and therefore the state is free to spend above the 6%
General Fund, Bird-Arvescough limitation.
2 The General Assembly met in the spring of 1992, a few months prior to the Nov. 1992 election.
31


Apart from the spending and revenue limits covered by TABOR, there is the
major aspect of requiring voter approval of any new tax or tax increase. This
provision directs the holding of an election for: any new tax, tax rate increase, mill
levy above that of the prior year, valuation for assessment ratio increase for a
property tax, or extension of an expiring tax, or a tax policy change directly causing a
net tax revenue gain to any district, (Colorado Constitution, Article X, Sec. 20.4).
This part of TABOR was the most touted section of the initiative and was used to sell
it to the voters. As was stated earlier, Doug Bruce certainly attempted to sell his tax-
limitation measure as a more democratic method of conducting the business of
revenue raising and spending. Voter approval of taxation is one of the things Grover
Norquist, President of the Americans for Tax Reform, said was, so important, a
simple majority vote by elected officials is insufficient (Roberts, Feb. 1,1993,
P-1 A).
When a state, county, local, or special district government passes a measure
extending, implementing, raising, or exempting a tax it is now known as de-
Brucing, a reference to the measures author. Since the constitution was amended,
many de-Brucing ballot items have been presented to the voters. By 1998, six
years after TABOR was on the books, over 400 cities, counties, and local districts had
passed spending or revenue measures outside of TABOR (The Denver Post, Mar. 29,
1998, p.J4). However, attempts at the state level to de-Bruce were not nearly as
successful. Not until Amendment 23 passed in the 2000 election had any anti-
32


TABOR measure placed on the statewide ballot gained a majority of the votes
(TABOR Legislative Handbook, 1999, p.2).
A third major aspect of the TABOR Amendment regards reserves and
emergency spending by governments. Under subsections (5) and (6) of Article X
Section 20 an emergency fund of 3% is established and allows for strictly limited tax
increases in the event of an emergency. However, a problem for lawmakers exists in
that nowhere is there a definition of what an emergency is, but there is a general
consensus that a revenue shortfall in a depressed economy does not constitute the
kind of emergency the TABOR reserve could be used for (Hartman, Feb. 19,2001,
p.5A). Adding to those constraints, any emergency tax must be ratified by the voters
within 60 days of the declaration or must be refunded, and any unused portion of the
emergency tax has to be repaid within 180 days of the end of the emergency, a
limitation that officials say renders the reserve effectively useless, (Ibid.). This was
a major change from pre-TABOR standards whereby, although there were statutory
limits on state General Fund spending, any monies collected over and above that
spending could be held in reserve until needed at a later date. With the strict
limitation on revenue collection placed on the government, there was no left over
revenue to be held in reserve; rather there was the 3% required by TABOR and
nothing else. This provision has saddled most governmental entities with the task of
maintaining two reserves, one required and restricted by Amendment 1 and another,
voluntary, reserve that can be tapped for each governments definition of an
33


emergency, i.e. the tapping the reserve for a sharp enrollment in a school district
(Ibid.).
All of these measures combined limit government taxing and spending to a
degree not seen before November 1992. Supporters see it as a way to give the voters
a greater say in the size and scope of their government, while opponents see it as a
draconian attack on necessary functions of a government serving the people. Paul
Grattet, the city manager of Greeley, in 1998, stated that the measure eroded many
powers of state and local governments in terms of multi-year obligations, home rule,
and intergovernmental agreements as well as much greater expenses for
implementation of all of its sections (Grattet, Mar. 29,1998, p.J2). Unfortunately for
those who hoped that after a couple of years under such restrictions the voters could
be convinced to change their minds, another constitutional amendment passed in 1994
which limited any ballot measure to a single subject. Fred Brown, a Denver reporter
and observer of state politics, noted that the time for repeal was ripe because of the
trouncing of another government limiting measure at the polls, but he noted that at the
same time the voters approved a measure that limited ballot measures to a single
subject, a restriction that would make it nearly impossible to remove the lengthy and
many faceted TABOR from the constitution (Brown, Dec. 23,1994, p.Bl). State
Senator Norma Anderson noted that in order to amend TABOR completely or
partially out of the constitution, as many as 30 separate issues would have to be put
on the ballot, and passing such a bundle would probably be an insurmountable
34


obstacle (Imse, Jan. 4,1998, p.2A). It has never actually been determined by the
courts how many provisions there actually are in TABOR, should a sweeping repeal
be sought (Interview, Dec. 6,2001).
It seemed that TABOR would be on the books permanently and it was time to
move forward with the day-to-day operations of government. The recession that had
resulted in the election of Bill Clinton as President and had contributed to the public
mood that was an underlying factor to TABORs passage was drawing to a close. For
the next few years the nation as a whole and Colorado specifically would experience
a boom in the economy sparked by the information and technology revolution. James
Jacobs noted that during the period from 1992-1996, Colorados economy grew faster
than the national average, as did the rate of inflation and the per capita rate of
taxation. When the rate of inflation and the rate of taxation were figured together,
Colorados per capita tax growth rate of 5.2 percent was less than the national
increase of 8.6% (Jacobs, Mar. 29, 1998, p.Jl). Colorado had nearly five years
before it had to face the impact of the TABOR revenue limit. Given the base year set
at 1992, and the rate at which inflation and population were growing, the CPI plus
inflation cap was not reached until 1997. Jacobs notes that between the years of 1986
and 1996 income rate revenue in the state rose by 130% (Jacobs, Jan. 10,1999,
p.Hl). During the boom years, the state was not happy under TABORs restraints,
but it was able to operate comfortably. Programs could continue to be funded above
35


what they were the previous years and any excess revenues reverted to the people
who paid them.
However, from a fiscally conservative standpoint, the Taxpayer Bill of Rights
resulted in certain programs being funded at the maximum increase allowed each year
regardless of what was actually needed. This fact was due to a fear of the ratchet-
down effect. The reasoning goes as follows. If the Bird-Arvescough limit
(constitutionalized under TABOR) allows for a spending increase 6% over and above
the previous years (Yl) base, and the following years (Y2) base is established by
the new base of the current year (Yl+6%), then any spending less than that maximum
increase is lost forever. Thus in a year when there is a need for only a 5% increase
and the legislature sets it as that, then the next year the need is for 7%, they are
limited to the 6%. Therefore, while in the first year the budget is 105% of the
previous year (not 106%), then in the next year the increase is 6% over 105% (not 6%
over the possible 106% or even 7% over the 105%). That lost money can never be
made up and the budget is forever ratcheted down.
Peggy Lamm, a former state legislator and now the director of legislative
affairs at the Bighorn Institute, a Colorado political think tank, compared TABOR to
a boa constrictor, if the prey of a constrictor releases the air in its lungs and relaxes its
muscles, then the snake squeezes tighter, with no intention of letting go (Interview,
Nov. 29,2001). For many fiscal conservatives, the need to maintain base funding
seemed to be stronger than the cost of permanent loss of room to grow and often led
36


them to vote for increases they might not have voted for in a less restrictive situation
(Interview with Fred Brown, Sept. 28,2001). Linda Morton, the mayor of the city of
Lakewood during the debate over Amendment 1 warned, No local government will
dare allow spending to fall below what it spent the previous year (Patty, Nov. 1,
1992, p.44).
Once the TABOR revenue cap was surpassed, the state needed to find a way
to refund the excess and is where the rubber met the road for policy makers. Before
state legislators could figure out how to return the money to the taxpayers, they
decided to delay it for a year. They passed House Bill 1414, legislation that allowed
excess revenue taken in one year to be returned to the taxpayers from the general fund
in the next. When it came time to actually make the returns, the House Republicans
offered to refund the surplus based on the amount of income taxes paid, while the
Democrats led by Governor Roy Romer felt that a different formula would give
refunds to all those who contributed to the revenue surplus through sales, gas and
other taxes (Bartels, May 15, 1998, p.4A). Different proposals were put into place to
refund the money depending on the level of surplus. These included capital gains
exemptions, earned income tax credit, and a temporary sales tax refund (TABOR
Legislative Handbook, 1999, p.6).
After the taxpayers received their checks for a couple of years, certain
members of the General Assembly began to question the wisdom of taking the money
in the first place. With refunds reaching roughly $350 million per year, many began
37


to consider cutting taxes (Imse, Jan. 4, 1998, p.2A). Tax-cutting versus refunds really
heated up after the 1998 election. When Republican Bill Owens was elected
Governor, the voters turned down a ballot proposal that would have allowed the state
to retain excess revenue for education and transportation, and the economy continued
its unprecedented growth (Dally-Johnston, Dec. 27,1998, p.B7). James Jacobs and
others warned that the option of leaving things as they were was not being properly
considered. He and those like him noted that while there might be good reason to cut
taxes when there were booming economic times and excess revenues, the economy
could turn and it would result in not only smaller returns, but quite possibly not
enough revenue to even reach the TABOR limit (Jacobs, Jan. 10,1999, p.Hl).
Failure to reach the TABOR ceiling could occur because the lowered (weakened)
rates could not be increased again without a vote of the people, and approval of a tax
increase in down economic times is not a likely scenario. If this revenue shortfall
were to happen, the ratchet-down effect noted earlier would become inevitable as the
base for a given year would be slashed to cover lost revenue, and it could never be
regained. While some saw a temporary tax cut as an option, most legal experts
warned that TABOR disallowed such an action and would probably be upheld in
court should someone choose to contest it (Ibid.). In the end, the tax cuts won out.
Beginning in the year 2001, fortunes began to turn. While the effects of the
TABOR limits on revenue had been felt four years earlier and the state had to refund
monies collected over the limits, an economic slowdown turned into near recession as
38


a terrorist attack startled the people and the markets in the U.S. The economic
slowdown translated into smaller tax revenues and led to the budget shortfalls
projected by those such as Jim Jacobs. As the economy slows and dips, tax revenues
decrease and the state can only make them up through tax increases. Since the
Colorado Constitution prohibits such increases without a vote of the people, the state
found itself in a serious crunch. The Denver Post editorialized that the state would
not have felt such a pinch had it not been for the tax cuts enacted during the good
times, and during those good times, the worst that would have happened to the state
was that it would have to send out refund checks (The Denver Post, Jan. 26,2002,
p.B7). Standard and Poors downgraded the credit rating of the state, noting that
various actions taken by the state (including tax cuts) would cause the state to end up
more than $200 million under what it was entitled to collect and spend (Ibid.).
Since TABORs passage the state has seen revenues meet and surpass the
TABOR limit resulting in refund checks for the taxpayers. There has been an
economic downturn resulting in smaller revenues and eventually budget rescissions.
Because of the restrictions of TABOR, the political environment has been altered as
policy makers look to prioritize their interests, use the lack of state flexibility to cover
their political tracks, and find themselves forced to deal with consequences not
projected during the initial debate. These issues will be the focus of the next chapter.
39


CHAPTER 3
TABORS EFFECT
ON COLORADOS STATE POLITICS
Previous chapters have looked at tax limitations in a broad sense, focusing for
the most part on the beliefs of those who presented them and the mindsets of the
people who voted for them. TABOR in particular was presented to the voting
population as a populist measure which would allow the average citizen to vote on
any new or increased tax and as a measure to limit the growth of a government
perceived to be rapidly expanding and unresponsive. However, as has been seal, the
measure contained other, more complicated measures, and has been denounced by
certain policy makers for reaching beyond anything envisioned by the voters who
passed it. Some criticize the measure for taking budget decision making out of the
hands of lawmakers (Straayer, 2000, p. 217), as well as for exacerbating the inability
of the government to do many things in good economic times to make up for its
inability to do much in poor economic times (Straayer, 2000, p.331). This restraint of
government is magnified by the fact that Colorados constitution, as with many states,
forbids the state from contracting any large, long-term debt (Lorch, 1997, p. 345). It
should also be noted that given the diversified system of collecting taxes, between
40


sales, property, income, etc., the effects of the limitations on the state can be quite
different from the effects on city or local district governments (Andras, 1993).
After nearly ten years under the TABOR Amendment, the state has found
itself dealing with situations that perhaps were unforeseen or unintentional, but some
could have been quite intentional. While it is difficult to really plumb the will of the
voters nearly ten years ago, the common wisdom seems to be that the citizens were
more interested in the aspect of TABOR that allowed for voter approval on any tax
increase or implementation than in the strict revenue and spending limitations
contained in its lengthy wording (Interviews with Fred Brown, Sept. 28,2001, Ray
Kogovsek, Oct. 3,2001, James Jacobs Nov. 21,2001, and Mark Cavanaugh, Nov. 29,
2001). Whatever the case may be, the fact is that Amendment 1, passed by a majority
of the voters and instituted in the constitution, has resulted in major changes to the
manner in which the business of government at the state level is conducted. First, the
restrictions of TABOR have led to a greater prioritization of how the state spends
money, deepening the divide between budget items in the zero-sum battle for state
dollars. Second, the political environment in the statehouse has changed to the point
that TABOR is foremost on the minds of lawmakers in everything they do, even to
the point of using the measure for their political gain. And third, the measure has led
to intentional, unintentional, or perhaps just unforeseen consequences. Such
consequences include a seeming push toward privatization and shifts in political
powers from one center to another. Each of these can dovetail into the others to give
41


an overall picture of how TABOR has drastically altered the environment of Colorado
state politics.
Priorities
Republican State Senator John Andrews, the Senate Minority Leader in the
Colorado 63rd General Assembly, noted that prior to TABOR legislators could raise
taxes by a vote of the general assembly and a signature of the governor, and the only
restraint on them was a combination of conscience and [political] self-preservation
(Interview, Dec. 19,2001). Quite simply, prior to the constraints of TABOR, if
legislators needed more money to fund new programs or increase funding for existing
programs, they only needed to find enough votes in the state house to get it all done.
However, in the TABOR era budgeting becomes a true zero-sum game. Without the
ability to simply raise revenue, cuts must be made in some programs to fund others.
This trade-off creates an even more politically heated budget process which demands
that legislators more tightly prioritize their desires for state dollars.
In this sort of budget environment, the states ability to prioritize its budgetary
needs can be seen in the disparities between K-12 and Higher Education. Making up
over 50% of the state budget, these two budget items have vastly different places in
the hearts and minds of the taxpayers and policy makers in the state of Colorado.
42


Quite simply, K-12 education in the United States is a right for all citizens,1 while
higher education is perceived to be a mere privilege. However, in Colorado both of
these systems are strong political actors, one backed by a multitude of parents,
educators, and school boards, the other by strong administrative bodies and well-
compensated lobbyists.
In the United States, education has become a right granted to everyone, and
the state has a requirement to educate up through the 12th grade. As a result,
admission into the K-12 system is an entitlement program, and thus must be funded at
a level to provide the service to everyone within that age range. In Colorado, both the
state and the individual districts provide the money needed to educate their citizens.
TABOR affects both of these levels of government and therefore is a hindrance to
what many view as a prime function of both the state and local governments. Robert
Lorch notes that it often costs more to run public school districts than to run the
cities or counties they are located in (Lorch, 1997, p. 353).
During the initial debate over the TABOR Amendment, there were many
questions about what would happen to K-12 education should the amendment pass,
and after it did there were many left wondering how the state education system would
look years down the road. Then Governor Roy Romer, who had concentrated his
political power and influence on a tax increase for education during the same
1 Under CRS 22-33-104 unless certain criteria are met, attendance for children between the ages of 7
and 16 is compulsory.
43


election, stated after its loss and TABORs victory that This is one of the dirtiest
tricks you could pull on children in a long time (Roberts, Nov. 5,1992, p.lA).
While the state collected huge revenues as its economy and population boomed in the
years immediately following TABORs passage, this surplus did not necessarily
translate into more money for schools. Members of the education community such as
Phil Fox of the Colorado Association of School Executives, noted that Colorado was
falling behind other states in education funding, and it was not until 1998 that the
state increased spending on K-12 education to keep pace with the rate of inflation
plus population (Finley, Apr. 19,1999, p.lA).
Even though state funding for schools increased in 1998, the general
perception of the state as doing too little too late was strong enough to give birth to
another initiative in the 2000 election. Labeled as Amendment 23, it required the
state to increase spending on the K-12 system by the rate of inflation plus 1 % each
year for the next ten years, and with its passage it became the first statewide
earmarking of revenue placed in the constitution. While many local governments
were successful in the nineties de-Brucing all or portions of their budgets by
holding local elections, state measures were not so lucky. As late as 1998, the Rocky
Mountain News noted that the TABOR era has only begun by noting that in
statewide ballot questions voters consistently turned down proposals for tax increases
or proposals by the state to retain surplus revenue for education or transportation
(Rocky Mountain News, Dec. 2,1998). While Amendment 23 was not necessarily a
44


refutation of this trend, it did send a message to lawmakers and budget writers that
education was important enough for funding to increase at a steady pace. Phil Fox
noted before 23s passage that the only reason there were not severe shortages in
school funding under TABOR was the booming economy, and when (not if) the
economy turned sour every district will be in a state of hemorrhage (Sanko, Aug. 3,
1999, p. 14A).
Higher Education, another large budget item, is prioritized quite differently
from K-12 education. Not only does higher education require state dollars to operate,
but it is also funded on a cash basis in the form of tuition. TABORs limitation on
cash revenues such as tuition makes higher education a target under the 6% spending
limit as well as the overall revenue limitations which affect how much each of the
institutions can take in the form of tuition.
There are three aspects of higher education that set it apart from K-12 in the
budgetary political environment The first is that for the most part, colleges and
universities receive their governmental funding from the state (with a small amount
from the federal government), not from local governments.2 This difference is
extremely important owing to the fact that TABOR does not allow for any enrollment
adjustments as allowed for in the K-12 system. Second, as stated above, a large sum
comes from cash funding through tuition and fees, and in some states any lack in
2 There are local district collegestwo-year institutionsthat receive funding from the localities they
exist in.
45


direct state funding can be made up through rising tuition. This, however, is not the
case in Colorado. Most important is the third reasonaccess to a post-secondary
education is not a right while K-12 education is. While all of these factors play a
role, it is the prioritization aspect that is perhaps the greatest detriment to state
funding for higher education in Colorado.
Amendment 23 constitutionalized funding for K-12 education, and at the same
time sent a clear message to policy makers that it was a major concern of theirs. The
colleges and universities have not earned that same place in the hearts and minds of
either lawmakers or the general public. Colorado State Representative Todd Saliman,
a member of the Joint Budget Committee,3 noted that in the case of budget priorities,
especially in tight times, Higher Education is the first to give. He finds it
impossible to cut Medicaid or K-12 education, unfeasible to cut prisons, and
unpopular to cut transportation, which leaves Higher Ed. (Interview, Nov. 12,2001).
State Senator John Andrews notes that Higher Education is not a matter of necessity
or importance to the population as a whole. He would state that something like
transportation is a much more grass roots, democratized, equal benefits to everybody
type of activity than is the astrophysics department at the university in Boulder
(Interview Dec. 19,2001). Donald Heller of the Pennsylvania State University
3 In Colorado the legislature holds the power of the purse. While the governor has the ability to veto
the budget as with any other statutes, the Joint Budget Committee is the body that sets the budget
figures each year. This committee consists of 6 members, three from each chamber, appointed by the
leader ship in the respective chambers.
46


Center for the Study of Higher Education notes that the media have promoted overall
negative attitudes of citizens and lawmakers toward colleges and universities by
bringing attention to such less-than flattering topics as campus crime, drug and
alcohol abuse by students, poor graduation rates of athletes, work habits and
productivity of faculty members, and million-dollar-a-year athletic coaches (Heller,
2001, p.3). All of these factors work against the high prioritization of government
services such as higher education.
Higher education is only one example of how legislators must prioritize their
interests under the tight constraints of TABOR. It is a weaker claim than other
essential roles government play in the day-to-day lives of people, and thus shows
how TABOR limits the General Fund monies that are given to it in good times and
the cuts it can experience in lean times. Should the ratchet down effect of TABOR
continue for years at a time, one could see how the cuts would make their way up the
ladder until programs that are mandated by the federal government or
constitutionalized within the state would be all that remains.
Political Gymnastics
Certainly prioritizing is something that happens in any budget process, even
outside of tax and spending limitations, but there are certainly political ramifications
that very few could have predicted or measured during the debate over Amendment 1
in 1992. Prior to the financial problems that occurred during the 2001 fiscal year,
47


many observers of state politics had already noted that the political dynamic of the
state legislatures operations had been changed by the new restrictions. John Straayer
noted that the Appropriations Committee now had to operate under a zero-sum
mentality whereby any new program or proposed increase in a program would have
to come from some other program (Straayer, 2000, p. 217). For opponents of bills,
the TABOR restrictions turned the Appropriations Committee into a slaughterhouse
for bills, a place where legislators could defeat legislation without the risk of political
damage. If a member opposed a certain piece of legislation, he or she could simply
ensure that it received a hearing in Appropriations, where members may be forced
to oppose it given financial constraints (Straayer, 2000, p.239). This fact also added
to the power of the Joint Budget Committee [JBC] and its members, who were in
control of the ever-tightening purse strings of the state budget. In the era of TABOR,
The long billthe main budget as developed and introduced by the JBCis more
than ever immune to significant modification by the rest of the legislature (Ibid.).
Therefore, in the year 2002, with the country in recession, revenue down, and the
state forced to refund the surplus revenues from the year before because of House Bill
98-1414, the Joint Budget Committee and the Appropriations Committees in both the
House and Senate were as powerful as they had ever been.
However, the politics of life under TABOR and tight economic times was not
limited to those select committees and their members. Former State Legislator Peggy
Lamm noted that lawmakers often do things in a sort of winkie-winkie fashion
48


knowing full well that there is little or no money to work with, but they still attempt
to pass something anyway for the political points with the voters (Interview Nov. 29,
2001). Perhaps the greatest example of legislative gymnastics was performed on the
floor of the House and concerned a bill by Representative Peter Groff during the
fiscally restricted 2002 legislative session of the 63rd General Assembly. His bill was
to mandate the use of child safety seats for children under a certain height and weight.
While the bill cleared the Transportation Committee and the Finance Committee,
debate on the floor only led to its being sent back to the Appropriations committee for
review. One only had to listen to the floor debate on the bill to see that small-
government conservatives viewed the bill as yet another intrusion of government into
the lives of its citizenry. Brad Young, Chair of the JBC and therefore a prominent
member of the House Appropriations Committee, argued that this mandate would
require the state to fit its vehicles with safety seats and therefore cost the state money.
This tactic was a much more politically savvy means of opposing a bill that many
legislators labeled a pro-child bill. Rep. Groff noted that this move was just a
procedure to kill the bill, while Rep. Young simply noted that he had a
responsibility to have these bills that cost money reviewed (Ames, Feb. 27,2002).
In order to get the bill moving, it was amended to exclude the state from the mandate
and therefore cost the state no money. With enough press coverage, the bill was able
to get through the process. However it could be argued that this bill was the
49


exception to the rule for bills that can be killed in tight fiscal times under the guise of
fiscal responsibility.
I Jnintended Consequences
While TABOR is lengthy and restrictive and fundamentally altered the
manner in which the state could tax its citizens and spend the revenue, the state
legislators and the voters themselves did a number of things to exacerbate the
situation. As was noted at the end of the last chapter, the General Assembly, in an
attempt to deal better with some of the requirements of TABOR, took a number of
steps that helped in the short run, but hurt in the long run. Hoping to decrease the
amount the state would have to return through refunds, the state cut taxessomething
made permanent to an extent, given the requirement of voter approval for any tax
increase, and then the state (in an attempt to bolster the coffers in the first year of a
TABOR surplus) passed House Bill 1998-1414, which allowed it to refund the excess
to the taxpayers in the following year. These measures resulted in few if any negative
results until 2001. With the economy slipping (perhaps even approaching a recession)
after the 90s boom and worsening after the surprise attack of September 11th,
revenue did not come into the state at a rate able to keep up with current funding
levels. With TABOR in place, emergency increases in taxes were not allowed, and
the refund checks from the previous years revenue surplus, an amount nearing five-
hundred million dollars (Paulson, 2002), would have to be sent out regardless of the
50


cuts the state would have to make in spending for the current years operating
expenses.
The passage of Amendment 23 in 2000, requiring the state to fund K-12
education at the rate of inflation plus 1% for the next ten years, was yet another factor
turning up the heat in the budget battle. Even though the effect of this amendment
was to ensure K-12 funding for the coming years, it lessened the amount of funds
available for other programs immediately. Prior to the 2000 election, the Office of
State Planning and Budget, the governors economic section, noted that the
displacement of dollars for certain programs to K-12 education, would magnify if
the state were in an economic recession or if there was not a TABOR surplus
(McCallin, Sept. 29,2000). Only months after 23s victorious run, OSPB Director
Nancy McCallins predictions came to fruition and the true effects of 23 combined
with the restrictions already in place created a budget nightmare. Cuts were made in
the existing budget, and increases for the next fiscal year were projected to be
extremely low. Naturally this situation meant that the state would have to perform all
of its existing functions with much less money.
It should be noted that these measures were intentionally implemented after
TABOR, and they only magnified the Amendments effects on the political process.
This also leads to another point of clarification. Some argue that the unintended
consequences of TABOR are many and varied, but this may not be the case. As
was noted, many claim that Amendment 1 in 1992 was sold as a measure for control
51


over new or increased taxes, but there is a single portion of the amendmentnow in
the constitutionthat seems to clearly state the true intent of the measure, or at
least the measures author. The General Provisions of Article X, Sec. 20 (the opening
paragraph of TABOR), states, Its preferred interpretation shall reasonably restrain
most the growth of government. Thus one could make a strong argument that by
that simple statement, Amendment 1 was not intended to spread populist democracy
into the realm of government taxation, but instead was a tool to limit the growth of
government on the whole. Thus statements that TABOR has had an unintended result
of tight restrictions on government may be true only to the point that they may be
more restrictive than originally intended, but not that these restrictions were fully
unintentional.
It could also be argued that Douglas Bruce, the measures drafter and primary
proponent, had a motivation, or vision, of such limitations leading to the privatization
of a number of government programs and services. If the rate of government growth
is constrained by TABORs measures then the state may find that an alternative route
for providing those services exists, namely through the marketplace. Again, there is
an aspect to the measure that leads one to believe that this possibility could indeed
have been a motivation of the author, but whether or not the result was intended by
those who voted in favor of the measure is unknown.
Amendment 1 contained a section directing cash funds directed toward a
state-run enterprise to be excluded from the overall revenue limit. An enterprise was
52


defined in Article X, Sec. 20, Subsection (2): a government-owned business
authorized to issue its own revenue bonds and receiving under 10% of annual revenue
in grants from all Colorado state and local governments combined. Since TABOR
restricted general fund spending as well as cash funds, this provision allowed the state
to exempt certain programs or services if at least 90% of its funding came from those
cash funds and not general fund or tax revenue. Prime examples of this are the
Colorado Lottery, which receives its revenue from ticket sales, and the Department of
Wildlife, which receives a good portion of its revenue from hunting and fishing
licenses. Such an entity would basically become a free-market actor, creating a sort
of pay-as-you-go program. Once the entity reaches enterprise status, then the
dollars it takes in are no longer counted against the entire states cash fund amount
thus the payoff for entities reaching the magic 10% figure.
This motivation for privatization is quite apparent in recent debates over
higher education. Tuition dollars, paid by students, are considered cash funds, and
since the entire budget exists under a revenue restriction which contains cash funds,
the level of tuition has been held down in order to make room for all of the other
programs that require those cash funds to operate. In fact, along with items such as
unemployment insurance, college tuition is one of the largest cash revenue sources in
the state (OSPB, Sept. 2000). Thus, in any year when revenue butts up against the
TABOR limit and triggers a refund, a portion of the tuition students pay would be
thrown into the entire surplus pot and refunded to the taxpayers. Therefore money
53


they pay to the schools with the belief that it is going toward student oriented services
would be simply sent to the state and redistributed with the rest of the surplus
revenues. Mark Cavanaugh, an analyst and TABOR expert at the Bighorn Institute, a
non-partisan Colorado think-tank, noted that except for those that have reached the
magic 10% level, the TABOR amendment has set up a very artificial environment
that does not allow the market, if you will, to react in cash fund situations
(Interview, Nov. 29,2001).
Many small-govemment or free-market-minded people might find this aspect
of TABOR, which seems to result in a pay-as-you-go government, to be a positive
result. However, the problem is that the mandated restrictions circumvent serious
policy issues that must be considered. Access to quality higher education is a major
policy question that has ramifications in terms of both general fund and cash funds.
First of all, Census data show that average annual household income increases by
$10,000 to $15,000 for every level of education achieved, with the average income of
a high school drop out hovering around $20,000 and the average high school graduate
near the $37,000 mark (Jacobs, Apr. 26,2002). Combine this consideration with the
fact that the lowest income quartile has a dismal participation rate in the post-
secondary education system, and the conditions are present for entrapment in a
welfare cycle (Jacobs, Nov. 6,2001). It would seem that good policy would be to
ensure access to higher education in order to break this cycle. However, there are two
factors to consider in implementing such a policy, one is the geographic access
54


needed to ameliorate the opportunity costs associated with moving to a college
town to take classes, and the other is the level of tuition and with it the level of
financial aid needed to attend school. In order to meet these two needs, the state is
forced to decide in budgetary terms how much that it is willing to spend to ensure
access to higher education and therefore meet the long-term needs of all of its
citizens.
It should be noted that not only does the legislature put higher education lower
on the priority list when disseminating General Fund monies, but TABOR also does
not allow for enrollment adjustments in higher education like in the K-12 system.
Given that individual school districts are considered local governments, they have a
provision allowing for the growth of their population, or quite simply, a change in
enrollment. In higher education, this is not the case. Post-secondary education is
funded at the state level; a fact that translates into an allowance for increases only up
to the rate of population growth within the state regardless of enrollment. In 1998,
the Colorado Commission on Higher Education predicted that over the next couple of
years population growth would be at 2% while enrollment in the states colleges and
universities would be closer to 4% growth (Curtin, Dec. 1, 1998). The fear was that
with the rate of enrollment in the state institutions greater than the overall population
growth, higher education institutions would have to cap enrollment, a major blow to
the policy goal of universal access (Rocky Mountain News, Dec. 2,1998).
55


TABORs restrictions on general fund spending are merely one edge to the
sword, but higher education also faces another threat. Tuition is considered revenue
in the form of cash and therefore is calculated into the states entire revenue
restriction. What this provision means is that the state is in a bind to offer greater
funding to the institutions because of other budgetary priorities, and the schools are
prohibited from making up for that by increasing tuition. This problem has led to a
sort of paradox for students interested in gaining an education past the 12th grade.
Since the state is limited in how much it can increase tuition, the cost of attending
even a major institution such as the University of Colorado has (at least in terms of
tuition) remained relatively low. On average, the rate of increase for in-state tuition
has been limited to an average of 1.3% per year since the state bumped into its limit
and been forced to refund excess dollars (Curtin, Dec. 1, 1998, p. Bl). Thus, in the
event of enrollment rising at a rate faster than the growth of the revenue limit, schools
could accept the students but would potentially be unable to accept their tuition
(Buechner, Mar. 29,1998, p. J2). While the overall effect is to keep the tuition
down, it also serves to keep the schools from getting the money needed to maintain
high quality programs.
In order to operate in the higher education system within the entire United
States, schools rely a great deal on reputation and comparisons with peer institutions
to sell themselves to prospective students. What this reliance translates into is that in
order to maintain high quality instruction, small class sizes, adequate facilities, and
56


proper administration, schools need more money to lure professors, build buildings,
and process paperwork. Increased funding to produce results is always a hot policy
topic. John Brandi, a professor of political science and former Minnesota state
legislator, notes that between 1960 and 1990, spending per pupil in the K-12 system
in constant dollars increased by over 300%, but it is highly unlikely that the average
student in 1990 learned 300% more than one in 1960 (Brandi, 1998, p. 31). He does
not argue against the premise that more money may help students, but instead states,
the sequence of money producing expected results is neither automatic nor even
common (Brandi, 1998, p. 32). However, there have been few studies done
regarding the correlation between spending on institutions of higher education and the
product produced, but those that have been done indicate a much stronger relationship
between spending in higher education and the resulting education than from its
counterpart for the younger citizens (Brandi, 1998, pp.39-40).
Under President Elizabeth Hoffman, the University of Colorado presented a
plan to the Colorado Commission on Higher Education known as Quality for
Colorado. In an attempt to lure more high-quality instructors to its school, develop
better facilities, and therefore increase the achievement of its students, the school
proposed a tuition increase of $300 per year over four years for a total of $1200,
which would put the university more in line with its peer institutions around the
country in terms of cost. However, because of the cash fund limitations, if the
program went forward, the huge increase on the Boulder campus would suck the
57


financial oxygen out of Colorados higher education system (Denver Post, Sep. 9,
2001, p. F6). Over the years, as the economy recovers and state revenues return to
the levels that spurred refund checks in previous years, the zero-sum pie for higher
education would be overburdened by the funds required to go to Boulder through
tuition receipts. This shift would result in the schools from the rest of the system
having to cut tuition or simply live on fewer dollars. Thus one could argue that the
vise that higher education is caught in, both in terms of low prioritization in the
General Fund and the inability to fund itself through cash funds, results in an inability
for the state to implement policy for the success of its higher education system.
Another unforeseen result could also be the transfer of control from local
governments to the state. School districts felt squeezed not only because of the effect
Amendment 1 would have on state spending but also because of the combination of
TABOR and another Amendment 1 passed nearly 10 years earlier known as the
Gallagher Amendment. This change to the constitution was aimed at property taxes
and mandated that the majority of property taxes collected must come from
commercial property and not residential property. With the restriction on tax
increases contained in TABOR, local governments and school districts in particular,
which generate a great deal of their revenue from property taxes, could no longer
increase mill levies in the years without reassessment (done every other year) unless
the voters approved it. Due to such restrictions during these years, the State Aid
component [assumed] a significantly larger portion of total program funding in the
58


School Finance Act (Dain Raucher, Denver Public Finance). Even though local
governments such as school districts attempted to circumvent this limitation by
leaning more heavily on sales tax receipts, a large portion of the burden still shifted to
the state (Sanko, Dec. 12,1998). State Representative Todd Saliman noted that there
was little incentive for local districts to increase their mill levies if the state could
backfill the funding, and after the 2000 election the share of funding by the state
could increase even more, given the requirements of Amendment 23 (Interview Nov.
12,2001). Inevitably this situation results in yet another unintended consequence
moving control of educational program desires from district bodies to the state, for as
the budget burden shifts, so does the desire for control (Gavin, Feb. 7,1993, p. 1,4C).
Jane Urschell, the Associate Executive Director of the Colorado Association of
School Boards, noted that states such as Texas and Florida earmark the state dollars
sent to the districts, but that has not been the case in Colorado. However, she is
constantly on the lookout for it (Interview, Dec. 17,2001). Certainly one could see a
major shift in this direction with the institution of the Colorado Student Assessment
Program test administered statewide to assess achievement levels for students at
various grade levels.
Mark Cavanaugh and Peggy Lamm note another consequence of TABOR
lack of preventative spending. When there are no excess dollars, the state is forced to
look at things that need immediate attention with immediate results. Items such as
the department of agricultures noxious-weed prevention program, or capital
59


construction dollars to maintain instead of construct new state buildings, are cut in
order to get immediate results (Interview, Nov. 29,2001). If money could be spent
bn these items, it could save the state money down the road.
Enhanced prioritization, political masquerading, and other consequences
intentional or not have greatly altered the manner in which Colorado deals with
policy making at the state level. There is little doubt that the state would have
different ways of dealing with these issues had TABOR not passed in 1992.
Certainly there are few that could claim that these results were what the voters had in
mind when they approved its placement in the Constitution, but to say that everyone
who voted for or even persuaded others to vote for this measure did not have one or
more of them in mind would be naive. The Taxpayers Bill of Rights has been
chiseled into the political landscape and is therefore an obstacle to be dealt squarely
with and not circumvented, and since the measure was initiated and passed by a
majority of the voters, the manner in which the state does things will have to be
accepted by them or once again be altered by them.
60


CHAPTER 4
CONCLUSION
Taxes will always be a source of contention in American politics; they are the
lifeblood of a government perceived by some to provide essential services for a
private sector incapable of doing so and by others as a bloated, inefficient
bureaucracy with more money than needed to perform its job. Differing views on the
role of government manifest themselves both in representative bodies such as the
state house and through direct democratic action via the initiative process. A single
legislator can have a strong belief about the costs and benefits of implementing,
expanding, reducing, or abolishing a program, but that legislator still must convince
at least a majority of other members that his or her view is the correct one.
However, the budget debate in a given year does not begin from a point of
zero spending and then adjust for certain wants or needs. There are dollars that the
state is resolute in spending before the debate even begins. For instance, any money
tied to federal grants is most often off the table for debatethe reasoning being that
any dollar matched by the federal government that is not spent by the state is a dollar
lost. There are also entitlement programs that the state must grant to its citizens
61


regardless of the amount needed to fund themi.e. if there are one million persons
who need Medicaid benefits, the state must come up with the money for that many
citizens. Thus, any entitlement program is untouchable for those looking to save
money in the budget. Many at the federal level would claim 75% of the budget as
untouchable, but Aaron Wildavsky states, that given the possibility of retribution at
the polls, most would see merely 10% of the federal budget subject to change
(Wildavsky and Caiden, 2001, p.20). It would not be unreasonable to transfer those
same figures onto the state budgets, and that estimate points to the very issue at hand.
While a number of lawmakers and other politicians may state that so much of the
budget is untouchable, the real issue is whether or not they are willing to pay the
political price for actually cutting the budget.
Wildavsky notes that budget making is not some smoke-and-mirrors exercise
whereby policy makers and bureaucrats continue certain programs by hoodwinking
the population, but instead they continue funding the programs on which the voters
will likely re-elect them (Wildavsky, Budgeting, 2001, p.166). While it is certainly
true that the voters could simply choose not to re-elect a representative whose
budgetary priorities do not mesh with their own, it is also true that such voting
behavior (either on the part of the representative or the citizen) does not always
follow such a simple pattern. Those who have the job of setting budget figures may
take their cues not from the desires of their constituency, but from special interests
who play a large role in their election campaigns either through monetary
62


contributions or positive advocacy. This political fact is important in our recognizing
that when it comes down to figure setting, only those programs that have
overwhelming public support or perhaps strong interest groups behind them will win
out, leaving the weaker clients by the way-side. The only way around this is through
the initiative process. If the citizens mobilize enough votes to earn a permanent place
in the budget, they will prevail. The citizenry on the whole can force legislators to
follow a certain policy by altering the statutes (or more commonly the constitution)
through the initiative and ballot box. If the citizens successfully accomplish this goal,
the impetus they put on the legislature becomes more politically potent, given the fact
that the people have spoken. There is no doubt that the initiative arises from
populist notions, and is a more direct form of democracy. It is also certain that the
initiative strips away power from the elected officials forced to do the business of
government on a daily and continuous manner. Tax and spending limitations have
been implemented by means of the initiative and therefore express the desire of the
voters, but they drastically alter the fundamental manner in which representative
democracy operates.
In the late 20th century the budgets at both the state and federal level had
grown to enormous proportions. While little was done to stem the tide at the federal
level, at the state level the tax revolt was waged through populist sentiments and the
initiative. A group of citizens such as Howard Jarvis and Paul Gann in California and
later Douglas Bruce in Colorado sought to limit the fiscal growth of government by
63


utilizing the progressive banner and the democratic shield to fight their war. Their
proposed measures met early defeats, but lawmaking bodies did not act to stem the
tide themselves, and eventually the limitation movements were victorious. William
Greider noted that political interests in the United States are broad and multi-faceted,
that changing the system on the whole would be impossible for any one group and
certainly for any one man. He states that citizens mobilize for a specific mission,
which is often short-lived and unable to instill permanent change (Greider, 1982,
p.133). However, the 1992 election in Colorado resulted in a change that was long
lasting, and it deeply affected the way the government at all levels could operate.
Repealing the tax and spending limitation in a broad sense would be unlikely in an
election, and given the single-subject requirement for all ballot measures, a complete
overthrow of TABOR would be impossible in a single election.
In Colorado, the Taxpayers Bill of Rights has proven to be a hydra that the
state and local governments have been forced to deal with for nearly ten years. It is
unclear how the state would have been different during the 1990s had it not been for
TABOR, for during that time Colorado has faced major political shifts: a Republican
governor elected in 1998 for the first time in twenty years, a senate captured by the
Democrats for the first time in nearly forty years, unprecedented economic growth in
the country as a whole and file state specifically, and a slowdown in the economy
made even worse by a terrorist attack inside the United States. The fact of the matter
is that in 1992 the voters passed an amendment to the constitution that not only
64


required a vote of the entire electorate to increase or enact any tax, but also limited
government growth and ensured that any money collected by the government over
and above the rate of inflation plus population growth would be returned to the
taxpayers. What the 1990s did teach the taxpayers and the legislators in Colorado
was that the measure was a true restriction on how business would be done after the
92 election.
Political interests must act in a more confined fiscal space, but at the same
time they are able to utilize that space to their political advantage. However, there are
also policy decisions that are taken out of the hands of lawmakers by some of the
provisions in the TABOR Amendment. Higher education is a victim of this very
thing. It is caught between low prioritization in the eyes of figure-setters and the
restrictions of TABOR on cash funds. Difficult decisions lie ahead on budget items
such as higher education, and chances are they must be made in the TABOR
environment, for permanent change has occurred in Colorado. Peggy Lamm notes
that lawmakers, lobbyists, and pundits alike must constantly ask, Will this have an
impact on TABOR? Will TABOR have an impact on what I am trying to do?
(Interview Nov. 29,2001).
There has not been a broad, sweeping movement to repeal the TABOR
Amendment, and with the single subject required for ballot proposals, it is doubtful
there will ever be a repeal of the entire amendment. Mark Cavanaugh related the
passing of TABOR to stepping into a room with Frankensteins monster, and then the
65


passage of the single-subject amendment to closing the door, locking it, and breaking
off the key in the door (Interview, Nov. 29,2001). In fact, the only way an immediate
and complete repeal could occur would be through a constitutional convention, which
could leave out the unpopular aspects of TABOR. Such conventions were not
uncommon in the 1960s and 1970s in other states. However, since Colorado drew up
and ratified its original constitution in 1876, the much-amended document has not
been totally rewritten (Cronin and Loevy, 1993, pp.99-100).
Instead of such drastic reworking of the entire constitution or even the
amendment itself, what has occurred is that each political interest has attempted to
remove itself from the TABOR restrictions through specific measures aimed at its
individual goals. This effort translates into a loss of motive for certain political actors
to use their clout to repeal parts of TABOR. Amendment 23 is a perfect example.
By placing in the constitution a requirement for the state to fund K-12 education at
least to a certain level each year, the K-12 interests are held harmless by any of the
aspects of TABOR that limit other programs or the state as a whole, but at the same
time the K-12 system and those with a vested interest in it have removed themselves
as a viable reason for a repeal of TABOR. Local governments have operated much in
the same way. Many cities, counties, and even school districts have enacted measures
exempting them from certain tax and spending limitations. They no longer have such
an impetus to see the state constitution amended to free it from TABOR, and thus,
there is no longer a unified coalition of local governments, political actors, or
66


motivated citizen groups that could build the needed and sustained support for a
thorough and lasting repeal of Colorados tax-limiting constitutional amendment.
Removing it is also a political question. Fred Brown, formerly of the Rocky
Mountain News, believes that repeal referred by the members of the General
Assembly would not be politically popular, given that the measure was brought by
citizen initiative in the first place (Interview, Sept 28,2001). As for removal via the
initiative, the fact that taxpayers receive refund checks in flush years, a removal
through the initiative would be unlikely. And certainly one should never forget that
with all of the consequences and alterations to the way the state conducts its fiscal
business, there is still a strong contingent that believes along with Professor Barry
Poulson of the University of Colorado at Boulder that TABOR has insulated
Colorado from wide swings such as occur in the private sector and forced the state to
pursue more prudent fiscal policies (Interview, Sept; 25,2001).
Ironically the situation the citizens and their elected representatives have
found themselves in is one whereby an initiative promoted as a more democratic
means of running the state government may indeed have proved to be just the
opposite. TABOR may allow for the citizens to approve any increase in taxes and
may require the government to return any excess revenue, but at the same time it
shifts political power and creates distortions throughout the system. From the time
the question is printed on the ballot, the citizens are never fully aware of the
intentions of the person or people who drafted and presented the amendment. There
67


is rarely if ever a true understanding of the future effects of the measure. In fact
proponents and opponents of a given measure use exaggerated or possibly even
downright false predictions of what may occur if an amendment is passed, and they
are both able to get away with such actions merely by the fact that future
repercussions are uncertain. As is the case with TABOR, such unknowns are then
placed in the constitution and tie the hands of elected officials giving the citizens a
distorted view of politicians who may use the constraint to veil their true intentions.
TABOR also led to a shifting of power from the General Assembly as a whole to the
committees who most closely monitor the purse strings of the state, namely the Joint
Budget Committee and the Appropriations Committees. Most voters would agree
that such a concentration of power is less, not more, democratic than the entire body
of delegates elected from the various districts deliberating budgetary issues in detail.
The TABOR amendment also brings up more fundamental questions
regarding amending the constitution through an initiative that requires a mere
majority vote in a single election. In the years since Amendment 1 s passage in 1992,
various aspects of it have resulted in unforeseen consequences, but it is difficult to
remedy them given the fact that TABOR is imbedded in the constitution. With
elected officials unable to adjust the budget and the statutes to fill needs, more
constitutional amendments (such as Amendment 23) are needed. Thus, the system
shifts to a more direct democracy with each new initiative carving out a place in the
constitution and requiring yet another amendment to make up for any unforeseen
68


consequences in any other amendment. And with each successive amendment there
comes the same superficial and hurried debate that surrounds such forms of
democracy.
TABOR has proven in the past decade that the initiative process in Colorado
is flawed. Creating drastic changes in the fundamental document of the state
government with debate on the issue being limited to a few short months leading up
to a single general election is certain to lead to significant alterations in the political
environment. Elected officials cannot correct any minor deficiencies by statutory
change, and therefore must work within a strict and perhaps flawed framework of
government. If such fundamental change is allowed to happen, it should at least
require more than a simple majority vote in a single election in order to provide for a
more detailed and substantive debate on the issue.
In the years to come, priorities will have to be set by both the elected members
of government and the people who elected them. Under the dome and at the ballot
box, the citizens of Colorado will have to decide where best to spend money. If the
money is not available and the restrictions on the budget are too tight in any given
year, both bodies have the opportunity to change things, but only through the
amendment process. Some may argue that TABOR had unintended consequences or
that the voters merely approved it because of the provision of voting on tax increases,
but the fact of the matter is that 10 years later it is still in place. A few local
governments have de-Bruced and a few measures have been passed to limit the
69


effects of TABOR, but Douglas Bruces Amendment 1 still remains basically intact
in the Constitution. If the votersthe true components of democracywish for this
limitation to disappear, they will work toward that end, but until then, lawmakers and
pundits must learn to live within the limitations imposed upon them by the people,
but that fact does not mean that they cannot use any means necessary within the law
to achieve their political goals.
70


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Poulson, Barry. A legislative no-Brainer. 6 Feb. 2002. Independence Institute. Feb.
2002 LegislativeNoBrainer.htm>.
Position Statement. Common Sense Colorado-Citizens Opposed to Amendment
One. Jack Wolfe, Treasurer.
Rabushka, Alvin and Pauline Ryan. The Tax Revolt. Stanford, CA: Hoover Press.
1982.
-----------------. Bruce: Taxpayers must seize control. Denver Post 14 Oct. 1992:
1A+.
Rafool, Mandy. :The Fiscal Perspective: State Tax and Expenditure Limits. 1996.
National Conference of State Legislatures: The Fiscal Letter. 1 Oct. 2001
.
Roberts, Jeffrey A. Other states copying Colorados Amend. 1. 1 Feb. 1993:1A+.
75


-----------------. Tax-limit amendment passes. Denver Post 4 Nov. 1992: 1A+.
-----------------. Tax limit hailed and decried. Denver Post 5 Nov 1992:1A+.
-----------------. Tax limits scope shocks government. Denver Post 22 Nov.
1992: 1A+.
Rocky Mountain News/9 News Voter Guide: Amendments and Referendums/
Amendment 1 Rnckv Mountain News 1 Nov. 1992: 1V+.
Romer, Chris. Can Colorado hit its fiscal target? Editorial. Denver Post 27 Jan.
2002: 1D+.
Sanko, John. 92 Election was fiscal facelift, voters approval of TABOR changed
government. Rockv Mountain News 3 Aug. 1999: 14A+.
------------. Budget agreement reached. Rockv Mountain News 12 Mar. 2002:
16 A.
------. Foes call tax limit initiative sour lemon. Rockv Mountain News 15
Sept. 1992: 14A.
. State reliance on property tax falls, collections of levies on incomes,
sales have grown faster in 20 years. Rockv Mountain News 12 Dec. 1998:
7A+.
------------. States colleges and universities seek end to budget limits. Rockv
Mountain News 17 Nov. 1998: 5A.
------------, Tax-limit amendment wins by slim margin. Rockv Mountain News 4
Nov. 1992: 6+.
------------. Tax-limit backers smell victory. Rockv Mountain News 6 Sept.
1992: 1+.
Sexton, Terri A., Steven M, Sheffrin, and Arthur OSullivan. Proposition 13:
Unintended Effectsiand Feasible Reforms. National Tax Journal 52.1 (1999):
99-111.
76


Smith, Daniel A. Tax Crusaders and the Politics of Direct Democracy. New York:
Routledge. 1998.
Smith, Rodney, T. Local Fiscal Arrangements, Home Rule, and Californias Fiscal
Constitution after Proposition 13, Proposition 13: A Ten-Retrospective.
Fredrick D. Stocker, ed. Cambridge, MA: Lincoln Institute of Land Use,
1991.51-111.
Snell, Ronald, ed. Financing State Government in the 1990s. Washington, D.C.:
National Conference of State Legislatures and National Governors
Association. 1993.
Spotlight on Amendment 1. Editorial. Rocky Mountain News 14 Oct. 1992: 58.
Straayer, John A. The Colorado General Assembly. 2nd Ed. Boulder, CO: University
Press of Colorado. 2000.
Stanford, Gully. Neighborhoods, schools arent rivals. Denver Post 22 Mar 1998:
4H.
Stevens, Mark. Limits raise questions. Denver Post 7 Nov. 1992: 3B+.
-------------. Other Amendment 1 muddies tax waters. Denver Post 22 Nov.
1992:18A+.
Stevens, Mark and Jeffery A. Roberts. Measures could alter way state operates.
Denver Post 30 Oct 1992: 6B.
----------------------------------. States schools face triple threat. Denver
Post 11 Oct. 1992:1A+.
TABOR Legislative Handbook. Golden, CO: Independence Institute. 1999.
TABOR: A Guide to the Taxpayers Bill of Rights. Denver, CO: Colorado Municipal
League. 1999.
The TABOR Surplus. Issue Brief. Governors Office of State Planning and
Budgeting. Sept. 2000.
TABOR vs. the colleges. Editorial. Rocky Mountain News 2 Dec 1998: 57A.
77


Tampering with TABOR. Editorial. Rocky Mountain News. 10 July 1999: 63A.
Walters, Dan. Politics still swayed by Prop. 13. The Fresno Bee 14 Nov. 2001:
A19.
Wildavsky, Aaron. Budgeting and Governing. New Brunswick: Transaction
Publishers. 2001.
Wildavsky, Aaron and Naomi Caiden. The New Politics of the Budgetary Process.
4th Ed. Boston: Addison-Wesley Longman. 2001.
Winters, Richard F. The Politics of Taxing and Spending. Politics in the American
States. 7th ed. Eds. Virginia Gray, Russell L. Hanson and Herbert Jacob.
Washington D.C.: CQ Press. 1999.304-348.
7S


INTERVIEWS CONDUCTED
Andress, Rudy. Conducted at Offices of Dain-Roucher TABOR Center, Denver, CO.
13 Dec. 2001.
Andrews, John, Senator, Colorado General Assembly. Senate Minority Leader.
Conducted at State Capitol Bldg. Senate Minority Office. 19 DEC 2001.
Brown, Fred. Denver Post Capitol Beat Reporter. Conducted at Colorado Capitol
Building, Room 351 28 Sept. 2001.
Conahan, Kenneth. Director, Joint Budget Committee. Conducted at Legislative
Services Bldg. JBC Offices. 16 Oct. 2001.
Dunn, Tom, Chief Economist Legislative Council Staff. Conducted at State Capital
Office #007.29 Nov. 2001.
Eubanks, Sharon, Senior Attorney, Legislative Legal Services. Conducted at
Legislative Legal Services Offices, Colorado State Capital. 6 Dec. 2001.
Jacobs, James. Director of Policy and Research: Colorado Commission of Higher
Education. Conducted at CCHE offices, ADDRESS. 21 Nov. 2001.
Kogovsek, Ray. Former Congressman. Conducted at Kogovsek and Associates,
Pueblo, Colorado. 3 Oct. 2001.
Lamm, Peggy, Director of Governmental Affairs-Big Horn Institute and Chairperson
CCHE and Mark Cavanaugh, Sr. Policy Analyst-Big Horn Institute.
Conducted at Wells Fargo Bldg, Ste. 1830, Denver, CO. 29 Nov. 2001.
Poulson, Barry. Professor of Economics, University of Colorado at Boulder.
Conducted at CU Boulder, Econ. Bldg. Room 108.25 Sept. 2001.
79


Saliman, Todd, Representative, Colorado General Assembly. Member of Joint
Budget Committee. Conducted at Legislative Services Bldg. JBC Offices. 12
Nov. 2001.
Urschel, Jane, PLD. Associate Executive Director, Colorado Association of School
Boards and Lauren Kingsbery, Legal Counsel, Colorado Association of
School Boards. Conducted at CASB Offices, 17 Dec. 2001.
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Full Text

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COLORADO'S POLITICAL ENVIRONMENT SINCE THE PASSAGE OF THE TAXPAYER'S BILL OF RIGHTS by Derek Michael Johnson B.A., University ofNorthem Colorado, 1995 A thesis submitted to the University of Colorado at Denver in partial fulfillment of the requirements for the degree of Master of Arts Political Science 2002

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lbis thesis for the Master of Arts degree by Derek M. Johnson has been approved by d. b 1\\ 0 '\} (j)a..._ Date

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Johnson, Derek M. (M.A., Political Science) Colorado's Political Environment Since the Passage of the Taxpayer's Bill of Rights Thesis directed by Assistant Professor Anthony Robinson ABSTRACT Taxation is the very basis of government in the United States. In order for the government to maintain armed forces, law enforcement, educational institutions, a viable infrastructure, and perform its other business, it must possess the ability to tax its population. Therefore when the root of that power is tightly restrained, the fundamental political environment is altered. Beginning in the I 970s with Proposition 13 in California, the tax revolt aimed to limit the power of taxation in the states. Utilizing the initiative, various interests in various states were able to alter state constitutions. The limitations engraved into the key documents of the states removed elected representatives from many of the tax and spending questions they had dealt with in the past. In Colorado the tax revolt culminated in the passage of the Taxpayer's Bill of Rights [TABOR]. This amendment not only placed the power to increase or implement taxes into the hands of the voters, but TABOR also strictly limited the amount the state could spend in its general fund budget as well as the overall amount of money the state could retain in a given year. While its effects were neither iii

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immediate nor dire, the following years did witness unforeseen alterations to the political environment that called into question the wisdom of allowing the state constitution to be altered by a simple majority vote in a single election. This abstract accurately represents the content of the candidate's thesis. I recommend its publication. iv

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DEDICATION For my parents, David and Donna, and my lovely wife Meredith who have supported me mentally, spiritually and financially through it all.

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ACKNOWLEDGEMENT Much thanks to Tony Robinson, Thad Tecza and Mike Cummings for making this process the most educational of my life. They have showed great understanding and patience in the working and reworking of it all from beginning to end. I need to also thank all of the people who deal with TABOR daily for their insights. First to Fred Brown, Barry Poulson, Ray Kogovsek, Rudy Andress, James Jacobs, Jane Urschel, Lauren IGngsbery, Peggy Lamm, Mark Cavanaugh, Kenneth Conahan, Sharon Eubanks, Tom. Dunn, Rep. Todd Saliman, and Sen. John Andrews for giving of their time so that I could interview them and learn from their experiences. And also to the General Assembly who unwittingly were my guinea pigs as I observed the process from behind the glass. And lastly to Ryan McMaken, a friend and scholar who has given me perspective on the world and allowed me to bounce numerous ideas off of him during the preparation and writing of this work.

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CONTENTS Introduction .............................................................................................. viii CHAPTER 1. THE TAX REVOLT AND PROPOSITION 13 ...................................... Proposition 13 .................................................................................. 8 2. COLORADO AND THE TAXPAYER'S BILL OF RIGHTS ............. .16 Campaign '92 ................................................................................. 20 The Election and Its Aftennath ...................................................... 26 TABOR's Provisions and the following Eight Y ears .................... 30 3. TABOR'S EFFECT ON COLORADO STATE POLITICS ................ .40 Priorities ......................................................................................... 42 "Political Gymnastics" ................................................................... 4 7 Unintended Consequences ............................................................ 49 4. CONCLUSION ...................................................................................... 61 BffiLIOGRAPHY .................................................................................................. 69 INTERVIEWS CONDUCTED ............................................................................. 77 vii

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INTRODUCTION A shouting mob of more than 1,000 anti-tax protesters stormed the Capitol Thursday, pounding on office doors and breaking windows, with one broken by a rock hurled into Gov. Don Sundquist's office. Chanting ''no new tax!" the protestors banged on the locked doors of the Senate chamber where Tennessee lawmakers were debating the creation of a state income tax (Atlanta Journal and Constitution, July 13,2001, p. IA). The excerpt above sounds more like something from the late 181h Century than from a 21st Century daily. However, it proves that while the republic may have been founded over 200 years ago, the issues that the colonists and early Americans dealt with are still prevalent today. Taxation is something that U.S citizens were told was as inevitable as death, but the issue of who is taxed, on what, for how much, and to what purpose is still a driving issue in American politics. The "haves" versus the "have nots," the private sector versus the public sector, and personal gain versus the greater good are the terrain upon which the tax debate travels. While the incident in Tennessee in the summer of2001 may have been an extreme example of popular dissatisfaction with taxation, it is by no means the apex of the ''tax revolt" that occurred in the last two decades of the 201h Century. This revolt was a period initiated by the passage of Proposition 13 in California, and viii

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followed in many other states with initiative-driven measures that forced dramatically different means of revenue raising, spending and reserving. Missouri, Massachusetts, California, and Colorado are some, but not all, of the states that imposed restrictions on their state or local governments since 1978. However, Colorado's constitution was amended in 1992 to include one of the most restrictive fiscal limitations on state and local governments since the revolt began. Taking pieces of a number of other states' limitations, Douglas Bruce, a Colorado Springs resident and property owner and former citizen of California created the TABOR (Taxpayer Bill Of Rights) Amendment, which not only required voter approval on all tax increases, but also limited how much state and local governments could spend in a given year, and how much revenue those entities could retain if not spent. The 1992 initiative was not Bruce's first attempt at amending the state constitution, but it was the one that finally passed and it dramatically altered how the state of Colorado conducted its business. Tax and Expenditure Limitations (TELs) are almost always brought about through the initiative process; thus the citizens are responsible for bringing about these changes via the ballot box. However, this process does not always translate into a mass uprising or concern over the issue of taxation, and it most certainly does not translate into an understanding of the issue or the proposed solution by those who vote for these measures. In the case of the Taxpayer Bill of Rights in Colorado (labeled as Amendment 1 on the ballot), it read nearly 2,000 words and contained ix

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language not understood by general accounting professionals. It was somewhat confusing in its wording to the lawyers as well, and nearly ten years later the courts still spend time and money interpreting its many clauses. Requiring any new tax or tax increase to be ratified by the citizens was clearly a populist concept that could be widely supported, as could the idea of the government returning any excess revenue not spent in a given year to the people who earned it in the first place. However, limiting spending and revenue limits to a strict and unbendable level was not so clear cut, and in 2002 these principles are still the center of the debate. At the time of TABOR's passage, the nation as a whole was in a recession and the high-tech industry was only preparing to take the economy where it had not been. Dissatisfaction with the government was apparent with the defeat of President George Herbet Walker Bush--a man who had won a war yet presided over a deep recession-to a relative newcomer, Arkansas Governor Bill Clinton. Polls were showing a great distrust ofgovernment on the whole, as was evident with the passage of term limits in states such as Colorado. Doug Bruce's amendment was yet another manifestation of this sentiment. Many decried it as a stripping away of representative government. This amendment would tie the hands of legislators in their managing of state finances. It would remove the flexibility needed to deal with the ups and downs of an economy. No longer could revenue shortfalls be reconciled by a tax hike, and no longer could the state retain excess revenue for rainy days. For fiscal X

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conservatives of Bruce's ilk, these were all positive limitations on a government that had grown to unprecedented proportions under the New Deal and the Great Society. However, most of the voters were unaware of the magnitude to which this initiative would affect their government. In fact, as the economy rose to levels never before witnessed, the taxpayers of the state earned the fruits of their constitutional amendment as the excess revenues began to arrive every tax season in their refund checks. Times were rosy, and lawmakers were faced with an opportunity to permanently cut taxes and thus prevent the state from receiving the revenue in the first place. These cuts not only made economic sense at the time, but also provided those lawmakers with campaign ammunition. This situation would all change when the bubble burst in 2001. After rumors of a recession began to spread and the zooming economy slowed to a crawl, terrorists hijacked and crashed passenger jets into the World Trade Center in New York City and the Pentagon in Washington D.C. Economic and historical forces converged, Wall Street closed for a week, ,and grave uncertainties about the market surfaced. 2001 closed and 2002 opened with the markets down, layoffs rampant, and U.S. Armed Forces on the ground and under fire in Afghanistan. The "mini-recession" that resulted showed the citizens of Colorado how TABOR's measures could adversely affect state and local government. When the economy slowed and the revenue under the existing tax structure was not enough to balance the budget, rescissions became necessary, and state economists forecasted a bleak future for the XI

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state. As a result the politics under the dome became more focused on fiscal issues than ever before. The Taxpayer Bill of Rights amendment to the Colorado Constitution, with its unique and comprehensive restrictions on governmental taxing and spending powers has drastically altered Colorado's political environment. Given the legislative budget power, the General Assembly generally and the Joint Budget Committee more specifically are severely affected by the political challenges created by this change in state fiscal operations. State lawmakers are forced to balance their constituents' generally conservative fiscal values with their desire for government services, and as such, priorities must be more clearly stated. Politicians can utilize the measure to further their own political ideals as the budget becomes tighter and their arguments in support of or opposition to legislation can be clouded in the mist of budgetary responsibility. The TABOR amendment thus results in consequences both unintended and unforeseen by the voters. Throughout this work, I will show how the political environment has been altered in the state of Colorado, specifically in terms of education, because of actions taken by the citizens who have taken it upon themselves to guide state fiscal policy. Beginning with California and then focusing more closely on Colorado under the TABOR amendment, I hope to illustrate how tax and spending limitations have tied the hands of lawmakers and given them less room to maneuver when calculating the needs and desires of their constituents. Prioritization and federal control clash as the Xll

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state attempts to balance its own books while retaining political capital with the voters and dollars from the federal government. The first chapter will contain a short summary of the historical background of the tax revolt, but spend more time on the 1978 groundbreak.ing passage of Proposition 13 in California In doing so, I hope to develop a better understanding of the motives behind TELs as well as the campaigns and results of those elections. Early attempts in Colorado will also be examined, showing how the revolt did not occur overnight, but was building for a number of years before coming to a head in 1992 with the passage of Amendment 1. In the second chapter I will turn to TABOR specifically and give a review of the 1992 campaign with attention to the arguments for and against the amendment in that year. This review should give the reader some idea of how this initiative passed as well as the lengths both sides went to in their efforts to push or stall Amendment 1. I will also look at some of the most important aspects of the Taxpayer Bill of Rights that affect the state government. Finally, chapter two will examine how the General Assembly has dealt with TABOR during the 1990s and how legislative decisions in one year had deeper effects in later years, and how drastic changes in the economy played a role in the state's fiscal situation nearly ten years after its passage. Chapter three will examine more deeply both the intentional and the unintentional consequences of TABOR. I will focus on how legislators are forced to more stringently prioritize their wishes for spending, often at the cost of unpopular Xlll

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but perhaps necessary services. Then I will look at how such tight fiscal restraints allow for the debate to be shifted from a philosophical policy debate to a fiscal responsibility debate. And finally I will examine how all of the consequences of TABOR have affected the pOlitical environment in ways perhaps not thought often years ago. There is extensive docmnentation on Proposition 13 and its progeny, as well as many studies of how the initiative process has been utilized in the various states to shape their individual political landscapes, but the subject of Colorado's TABOR amendment has not received nearly as much attention .. It may be that up until the 2001-2002fiscal year, its effects on the state have been minimal. Thus, the vast majority of the resources utilized in the following pages will be from newspaper articles, a few scholarly works on the subjects of taxes, initiatives and the tax revolt in general, and interviews with persons who confront TABOR almost daily. These interviews include members of the Colorado General Assembly such as Representative. Todd Saliman and Senator John Andrews, support staff for the legislature such as Sharon Eubanks of Legislative Legal Services, and a number of policy analysts and political actors outside of the established lawmaking body such as Fred Brown, the former Capitol Beat reporter from the Rocky Mountain News, and Peggy Lamm and Mark Cavanaugh of the Colorado based public policy organization, the Big Hom Institute. xiv

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WhileTABOR and its effects are the central theme of this work, I will not focus on budget analysis or number crunching. Nor will this paper examine Colorado in comparison with other states' fiscal policies or provide an analysis of the fiscal changes in Colorado's budget over the past nine years. Instead, it will focus on the politics involved in a state with such restrictions, and while TABOR affects every governmental entity in the state, the General Assembly will provide the environment in which the subject will be studied. Battles over dollars continue regardless of the amount of money a state takes in and regardless of how much money a state can spend. However, under TABOR, certain programs that in the past were easily defended or compromised become strict lines with little room for give due to the permanent losses possible given the new zero-sum game and eventual ratchet-down effect. Budget balancing now drives the political process, and priorities are formed under new constraints. I hope that the work will provide the reader with a greater understanding not only of how a seemingly simple plan for controlling the size, scope and growth of government can drastically alter the very means by which the government is overseen by those in elected office, but also of how the democratic process requires more than casting a ballot. It requires serious, deep, and lengthy debate on the issue to be voted upon. There should also be a better understanding as to how TABOR specifically affects the government in Colorado and how there may be an alternative or even XV

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better means to achieve the goals of government while avoiding writing a blank check to those who manage the coffers of the people. While those who opposed TABOR have yet to see the doomsday they said would arrive with its passage, there are certainly many citizens who voted for the measure who are only now realizing the magnitude of Amendment I. Regardless of how one interprets the happenings of the last nine years, it is certain that the landscape on which the political battle is fought has been altered to include strict borders, and those borders ate likely to remain in place for a long time. Therefore, it is necessary for elected officials, voters, policy analysts, academics, and citizen bystanders to take note of how these changes affect decision making in the state. It is also important to note that the initiative and referendum of direct democracy are not likely to disappear and in fact may be an increasing means of taking popular control of the reigns of government. Those in favor of representative government as opposed to direct democracy cite confusing initiatives such as TABOR as ammunition for their cause, while true democrats announce such governmental limitations as only the beginning of the revolution. The fact of the matter is that altering the very means by which one's government operates is an awesome responsibility and should not be taken lightly-or without knowledge. XVI

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CHAPTER 1 THE TAX REVOLT AND PROPOSITION 13 Few truisms of American political thought are more hoary than this: The power of the purse is the heart of legislative authority ... Those who made the American Revolution concluded from experience in Britain and the colonies that a free people had to keep its governors on a tight fiscal leash. From the earliest days of American government, budget decisions were treated as a struggle for power (Wildavksyand Caiden, 2001, p.25). As tax revenues are the means by which a government can implement public policy, so it follows that taxes are the root of politics and the political debate. Most new programs a governmental body hopes to initiate cost money and the revenue to fi.md them must either come from increased taxes, selling government assets, charging fees for service, or cutting the budgets of other programs. Likewise, any elected or appointed official who wishes to abolish a program may attack it at its fi.mding source. Aaron Wildavsky, a long-time observer of the federal budget noted, ... inability to implement decisions nullifies them" (Wildavsky, 2001, p.5). Today there is an anti-tax contingent that believes that the government on the whole is bloated and has been growing out of control since the advent of the New Deal and

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World War II. Certainly most can agree that the government utilizes tax revenues to perform its necessary duties such as maintaining a military, police force, infrastructure, and all of the necessary tasks involved in lawmaking and adjudicating by elected persons. Aside from those and a select few other programs, liberals and conservatives alike attack the "pork" in the federal and state budgets, but at the same time, one can observe yearly increases in the amount of money that is spent on nearly every elected official's pet projects. On this point, Wildavsky comments that "Citizens want some spending more than others; they want their priorities to prevail; and among these priorities is a preference for lower total expenditures" (Wildavsky, 2001, p.168). After the 1980 election, David Stockman became the head of President Ronald Reagan's budget team and was charged with cutting excess spending from the budget. William Greider, then a writer for the .Washington Times, gave an account of Stockman's tenure in the newspaper as well as in the book The Education of David Stockman. What Stockman found in his attempt to cut or at least cutback various programs was that many portions of the budget were untouchable given each congressman's attachment to them. The result was Stockman's assertions that "The system has an enormous amount of inertia," and "I have a new theory-there are no real conservatives in Congress" (Greider, 1982, p.44). While Stockman may have been somewhat accurate in his observations, Wildavsky notes that the "big budget" winners in the governmental budgeting process are not a result of mere political 2

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inertia, but instead are programs the voters believe in. He asserts that if the public did not support these services at least to some degree, then they would simply exercise their right to remove the backers of these programs from office (Wildavsky, 2001, p.166). After witnessing government expansion for most of the latter half of the twentieth century, certain actors on the political stage utilized the initiative process to take the question of taxation and the associated issue of the size and scope of government directly to the voters. What emerged became known as the "tax revolt." It was ushered in with the passage of Proposition l3 in California, but quickly spread to other states, and Tax and Expenditure Limitations (TELs) became quite popular throughout the union. As a result, many voters in many states placed limitations on the very people they elected to conduct the business of government. While it may be unclear how the dollar amounts in each state budget have been affected, there is little doubt that these limits altered the political environment in each of those states by shifting budgetary concerns from one governmental entity to another or even to the people themselves. In all actuality, the revenue raising and spending system present at the federal and state levels in 2002 is fairly recent in its establishment, and the income tax, which quite possibly receives the most negative attention from the public, was not enacted until 1913 with the passage of the Sixteenth Amendment. During the Great Depression states needed to find a new and, at the time, popular form of taxation to 3

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make up for rapidly shrinking revenue, so many of them followed the federal government and began levying such a tax at their own level of government (Winters, 1999, p.324). States saw the benefits of the income tax in that it had a broad base and was able to generate revenue regardless of inflation. However, both income taxes and consumption taxes can result in greater, economy-related, fluctuations (Snell, 1993, p.11). Local governments on the other hand, have always viewed the property tax as a viable and relatively stable means of raising revenue. When it comes to taxation, many question not what or how the government is taxing but how much. Regardless of the means by which the money is taken, the money is still taken. Beginning with President Franklin D. Roosevelt and continuing through the rest of the century, the government grew at a rate faster than the private economy. Starting with the government taking unprecedented action to end the Great Depression, continuing with WWII and right on through the Cold War, spending by the federal government, and then later by the state governments, grew to astronomical levels. From 1902 to 1999 federal, state, and local government spending increased nearly 1 ,800%. While population growth may account for some of this, it should be noted that government grew at a rate five times that of population (Winters, 1999, pp.304-305). In the late 1970s, as the Cold War and its companion arms race were still raging, a movement began to restrict the ability of state and local governments to collect money from their citizens. During the preceding years, specifically the sixties 4

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and early seventies, the cmmtry experienced a number of social changes brought about by what many believed to be grass-roots, or at least locally-oriented movements, such as civil rights demonstrations throughout the South and anti Vietnam War protests on college campuses. So there should be little surprise that the main weapon used by those behind the tax revolt was the populist initiative. Made popular and institutionalized in many states during the Progressive Era, the initiative has been seen as the purest form of democracy in the United States, in that the petition drives needed to get theses measures ori the ballot and the votes needed to get them passed are all brought forth by the citizens themselves. Daniel Smith argues in his book, Tax Crusaders and the Politics of Direct Democracy, that these movements, specifically initiatives regarding tax-limitation measures, are not as democratic as they seem on the surface. Smith argues that, given the fanatically driven individuals and special interests behind them, "there is little procedural difference between direct democracy and representative democracy" (D. Smith, 1998, p.37). Thomas Cronin notes that while the theory behind the initiative and referendum may be populist or democratic, putting them into motion and funding the processes needed to get them on the ballot and passed are truly only available to special, organized interests (Cronin, 1989, pp.S-6). Many would argue that regardless of the democratic level of the process involved in getting such initiatives on the ballot and getting them passed, the end result of these revolts puts more power in the hands of the people, and thus it is by 5

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nature a more democratic means of government. This argument is evident in one of the very measures implemented by tax revolutionaries: the requirement for a majority of the voters to ratify any new tax placed on them. While Smith would state that these ''tax crusaders" are the real power behind the initiatives, he also quotes an Oregon tax limiter as saying that paying petitioners is every bit as democratic as "paying a politician to increase your taxes," (Cain, 1996, B3). Quite similar to this notion of allowing the citizens to vote on their level of taxation is the notion that people can vote with their feet. R.T. Smith notes that given the number of different services provided by the government, people are free to move about until they fmd the level of services at the rate they are willing to pay (R.T. Smith, 1991, pp.53-55). David Lowery and Lee Sigelman observed that right after thetax revolt began, there was a rushed and haphazard attempt by the academic world to fmd a reason behind its widespread success and that the various explanations that emerged were "untested or inappropriately tested." The authors themselves were unable to fmd a single cause for backing these limitations, but were only able to narrow the reasons to eight. These included self-interest, political ideology, perception of a lack of efficiency in government, and even a simple lack of information and understanding by the voters of the manner in which taxes are collected and the revenue spent (Lowery and Sigelman, 1981, pp.963-966). To their credit, it should be noted that the various conditions in the various states wherein these measures were supported also 6

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help to account for the wide range of reasons for the success of tax limiting measures (Rabushka and Ryan, 1982, p189). Justification for limiting the hand of government to reach into the bank accounts of individuals and private business may not be limited to dollars and cents, but may also be a message from the voters that they are dissatisfied with the men and women representing them in the political process. Smith states, ''tax revolts are symptomatic of the perception that the state has taken an unrepresentative and anti democratic turn" (D. 1998, p.39 and Lowery and Sigelman 1981, p.969). This last explanation for the tax revolt, disillusionment with those in office, seems to indicate what was stated earlier in that the people were able to attack the root of their dissatisfaction by means of budget cuts. In terms of a measure passed in Missouri, the Hancock Amendment, Terry Ganey of the St. Louis Post-Dispatch commented that it served..little other purpose than allowing special interests to "earmark" state money as opposed to letting the legislature do its job in allocating money (Ganey, Nov. 30, 1990, p.1 B). The same newspaper editorialized, "Prohibiting government from even asking the tax question is a punitive act, substituting voter resentment for good sense" (St. Louis Post-Dispatch, Nov. 19, 1992, p.2C). Daniel Smith has a more favorable view noting that tax revolts, not new to the late twentieth century, tend to bring back ''the delicate equilibrium between taxpayers and the state" (D. Smith, 1998, p.18). This approach is justified even more when the means is the ballot box, through the 7

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citizen initiative (the established means of revolt), rather than through mass protest or even violence. Just as the reasons for success in the various states were many, so were the methods of limitation. Given the variety of policies for revenue raising in the states, the tax limitation movements morphed to specifically target taxation policies deemed lacking in each of the respective states. Allowing the citizens to vote on when and how to raise taxes is a widespread and popular method to restrict the power of policy and law makers to levy taxes on those over whom they govern, but Mandy Rafool of the National Conference of State Legislatures notes that there are a couple of different limitations, including appropriation and revenue limits. Each of these, or a combination of them, can be and are used to limit either the rate of government expansion in relation to the economy or perhaps just to strip away the power of legislative bodies to adjust (or specifically to increase) the taxation rate of the populace over which they are elected to govern (Rafool, 1996). Proposition 13 While California's Proposition 13 did not represent the opening shot in the tax revolt1 its passage in 1978 was the frrst major victory for those in support of the tax revolt (R.abushka and Ryan, 1982, pp.186-187). This measure, also known as the 1 New Jersey and Colorado's state legislatures each placed a statutory limit on government spending and Tennessee voters passed a constitutional amendment tying spending to growth in the state's economy prior to 13. 8

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Jarvis-Gann Amendment for the two men who spearheaded the movement, was not even the first one in the Golden State. One of the better known and publicized proposals was guided by then Governor Ronald Reagan in 1973. Labeled as Proposition 1, it would have tied state spending to 8.3% of personal income, but it failed 46 to 54 percent at the ballot box (Rabushka and Ryan, 1982, p.18). When Prop. 13 finally did gain a majority of the California voters, it created a national tidal wave (D. Smith, 1998, p.37). Proposition 13 had two major aspects that changed the manner by which localities managed their money. First, property taxes were limited to an increase of 2% per year regardless of how much the property value went up. Second, it required approval by a vote of the people before any tax could be increased. Californians, as with other state populations that eventually passed similar measures, were dissatisfied with the rate at which their taxes were increasing and at the same time were dissatisfied with the manner in which the money was being spent. This was not even Howard Jarvis' first attempt to limit taxation in the state, but his previous attempts failed just as Reagan's did. However, that situation changed in 1978, when the sentiment among voters that their elected officials were doing nothing about government waste and rising property taxes as a result of increasing property values reached an all-time high (Rabushka and Ryan, 1982, p.31 ). Support for and opposition to Prop. 13 was not as representative of the classic dueling ideologies as one might expect. While Republicans and homeowners were 9

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vehemently in favor of the amendment, that fact did not prohibit Democrats or even traditionally Democratic-leaning groups from supporting it, at least in the voting booth. However, as one might expect, the opposition campaign was led by groups such as teacher's unions, the California State Employees Association, and other "at risk" state workers. There was also vast bi-partisan opposition by elected officials from the state house down to the various city halls (Rabushka and Ryan, 1982, pp.2223). As with many of the subsequent limitation movements, the opposition to the measure utilized a doom-and-gloom campaign in an effort to convince the voters that government could not carry out its vital functions should these lirilitations be imposed. This tactic by the opposition was lost on voters who felt that this amendment was the only way to convince the politicians that real change had to be made (Rabushka and Ryan, 1982, pp. 24-31). Immediately following the June 6, 1978 passage of Proposition 13, the nay sayers questioned the intent and wisdom of the voters in supporting such a measure, while its backers declared a victory for the people ofCalifornia and the beginning of greater things to come for states throughout the county. However, the effects brought about through drastic changes such as those implemented by TELs take time to bear full fruit, and even years later, there is mere speculation regarding how the new, and generally lower, levels of funding have affected the operation of government. Rabushka and Ryan noted a couple of short years after the passage of 13 that while the outcome is not what many politicians, pundits and some voters hoped it would be, 10

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the state survived, and "none of the disastrous consequences materialized" (Rabushka and Ryan, 1982, pp.l35-137). All of that may be true and while there is little doubt in the year 2002 that California is still a thriving state with a strong economy boosted by the high-tech growth of the late eighties and nineties, there is also little doubt that in terms of politics, state and local competition, and educational funding, the state has been altered from what it was prior to the passage of Proposition 13. This change is evident when one looks at the manner in which governments at the state and local levels collect taxes. All things being equal, states rely on income and sales taxes, as well as on federal aid, while local governments rely more on property taxes (Harrigan and Nice, 2001, p.72). However, when "13" altered the amount that could be collected through property taxes, the local governments were forced to try and find other ways to raise revenue. Most of these methods were fees on utilities or park-and-recreation use or business licenses. In order to retain a certain level of revenue for localities from the property tax, it shifted to a state tax, with monies "going to each local government determined by apportionment formulas developed by the state government," (Sexton, Sheffrin, and O'Sullivan, 1999, pp.106-107, and R.T. Smith, 1991 pp.52-53). By looking at this sort of allocation process, one can see why one writer noted in a study on the measure ten years later, "Most analysts have concluded that Proposition 13 eroded the power oflocal self-government" (R.T. Smith, 1991, p.53). Dan Walters of 11

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the Fresno Bee noted that while Howard Jarvis' alteration to the state government halted decades of government expansion, it also "led to a massive shift of financial and operational authority from locally elected government and school officials to Sacramento" (Walters, Nov. 14,2001, p.A19). Ironically, local control and school funding may well have been one of the reasons for the passage of Proposition 13. The Serrano v. Priest decision in the California Supreme Court stripped the ability for localities to fund their school districts, because of disparities in funding from district to district depending on the relative wealth ofthe district (R.T. Smith, 1991, p.67). William Fischell has argued that the Serrano decision created a belief that local control had been lost as the state Supreme Court mandated equalization in funding for school districts throughout the state (Fischell, 1989, pp.465-474). California has attempted to maintain an adequate level of spending for its K -12 system, but given the limits on the local governments, the state has taken a larger portion of the pie for spending on schools, going so far as an 80-20 split(Rabushka and Ryan, 1982, p.123). However, in the growing areas of the state, alternatives to school funding have included fees levied on developers to help fund school construction in those areas where new building is occurring (Chapman, 1991, pp.26-27). Proposition 13 did not mark the end of the tax revolt in the state of California. As the wave spread through the nation, Paul Gann, one of the major backers of the original amendment, began a new crusade, this time for a much stricter limitation on 12

PAGE 29

the spending powers of all the governmental entities in the state. Much like the Reagan initiative six years prior, Proposition 4, also known as the "Spirit of 13," limited growth in government to the rate of population growth plus either the rate of inflation or the increase in personal income (whichever was lower) while allowing for the voters to shift these levels by a simple majority of the vote. This measure was brought forth in a special election in I 979 that only managed to get a 40% turnout of registered voters, but after a subdued, nearly silent, opposition campaign led by state employee unions and education groups, it gathered 74% of those votes (Rabushka and Ryan, I982, pp.148-I5I). Whereas "13" was fairly straightforward, and easily complied with, this new measure was much more elaborate. Its complexity has allowed the legislature to utilize its powers to work around it, while at the same time, the limits imposed by it are such that they are rarely, if ever, met or exceeded by any of the entities affected by it (Rabushka and Ryan, I 982, p.208). There is little question about the success that Proposition 4 had on the heels of its more renowned predecessor, but its passage was the pinnacle of the movement in California. By the time the 1980 election rolled around, Howard Jarvis had another proposal on the ballot for the people to consider. While the first two had been attempts to limit the growth rate of the government to more closely keep pace with the rest of the economy, this new initiative, Proposition 9, nicknamed "Jarvis II" or even "Jaws II," was an attempt to actually cut income taxes, business taxes, and index rates to prevent bracket creep. While the other two movements, especially "13," 13

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showed little in early polling and finished strong at the ballot box, this attempt began with high popularity but ended with a thud as 61% of the voters decided to cast a "no" vote (Rabushka and Ryan, 1982, pp.159-161 ). Rabushka and Ryan note that by 1980 the perceptions of a number of the citizens in California had changed. Between the early polling in the '78 election and the time two years later that the vote on "9" came around, 20% more of those interviewed believed that further cuts would result in a significant decrease in the quality of service in "essential" government functions such as law enforcement and education (Rabushka and Ryan, 1982, p.178). While the inferno was turning into a slow bum in the Golden State, the fire was spreading to other states. Public opinion outside of California was strongly in favor of Proposition 13 after its passage (Ladd, 1978, p.32, and Rabushka and Ryan, 1982, p.38). Even California's governor, who had opposed the original measure, toured the nation promoting an Amendment to the U.S. Constitution for a balanced budget (Rabushka and Ryan, 1982, p.140-141 ). Folio wing on the heels of the initial tax revolt victory in California, many other state legislatures moved to prevent it from spreading into their backyards by cutting taxes (Rabushka and Ryan, 1982, pp.185189). At about the same time as 13, Nevada voters passed a very similar measure, which was impressive given the state constitutional requirement that any initiative pass in two consecutive elections (Rabushka and Ryan, 1982, p.191 ). It has been observed that such revolts as occurred in the late 70s are short lived, as is evidenced by the failure of Jarvis' 1980 measure (Rabushka and Ryan, 14

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1982, pp.201-203), but even in 1996 voters in four different states approved tax limiting measures while only two turned them down (D. Smith, 1998, p.8). Even so, the results of the tax revolt in cutting or just limiting the size and scope of government are not deep and lasting. Steven D. Gold notes that such measures have merely shifted by whom these revenues are raised and spent in terms of state or local government (Gold, 1989, p.30), and Mandy Rafool concurs that these limitations are weak if imposed only the state or local level and are strong only when both are in place (Rafool, 1996). Rafool goes on to note that other ve'ry restraining methods include a strict cap on revenue raising, spending, or both (Rafool 1996). In 1992 the voters of Colorado passed a measure that met those criteria. It was an amendment that combined many different limits at all levels of government within the state. TABOR, the Taxpayer's Bill of Rights, was noted by the St. Louis Post-Dispatch, to be "much more Draconian" than measures passed in Missouri (St. Louis Post-Dispatch, Nov .. 19, 1992, p.2C). Known as Amendment 1 on the ballot, this has drastically altered how government in the Centennial State operates. 15

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CHAPTER2 COLORADO AND THE TAXPAYER'S BILL OF RIGHTS The tax revolt in the state of Colorado found both success and failure. In 1978, the General Assembly had already taken action to keep the scope of government reigned in, by limiting the amount that could be spent in the General Fund to a 7% growth rate each year. By the mid-80s, there was yet another taxlimiting measure, this one enacted by the people and instituted in the state constitution. It was known as the Gallagher amendment, named after then State Senator Dennis Gallagher, and it limited the rate at which personal property could be taxed in comparison with business or commercial property. During the 1970s, 80s, and 90s, Colorado went through a series of booms and busts, most notably an oil bust in the early 80s which set the state back a few years in terms of revenue, and it was about this time that the state inherited a former California lawyer-turned-real-estatespeculator named Douglas Bruce, a small-government conservative with strong antitax sentiments. An observer of the events in California, Bruce was about to alter 16

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Colorado's political environment to a degree only dreamed of by Howard Jarvis or Paul Gann in the Golden State. By the time 1992 rolled around, Doug Bruce had already been hard at work. His first attempt at limiting state or local taxing authority was in the form of voter authorization for new or increased taxes. Amendment 4, as it was listed on the ballot, failed to earn the needed votes to become law (Smith, 1998, p.13 7). Bruce attempted to get similar measures passed in 1988 and 1990, each of which failed but with the margin of defeat shrinking with each attempt, over 200,000 votes. in 1988, and less than 20,000 votes in 1990 (Cronin and Loevy, 1993, p.97). Bruce gained his first success in his adopted hometown of Colorado Springs. A city known throughout the state as a fairly conservative community, it is home to the Air Force Academy, Fort Carson Army Base, and the socially conservative policy group Focus on the Family. In 1991, he successfully petitioned for, earned ballot spots, and passed two tax limiting measures in that city (Smith, 1998, p.14 7). By the time the 1992 election rolled around, Bruce was ready to strike at the state level for the fourth time. This time the General Assembly hoped to head Bruce off by referring its own measure, one more palatable to its own interest, to the voters. However, the legislators were unable even to get it passed through the legislative process so it could be placed on the ballot and the table was set for Bruce's Taxpayer's Bill of Rights [TABOR], listed on the ballot and referred to during the campaign as "Amendment 1 "( Smith, 1998p.148). 17

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One can look at the previous failures of Bruce and then at the success in 1992 and wonder what the difference was in the intervening years. If we look back at the data for those years, the evidence that the citizens of the centennial state were being taxed any more or less than those in peer or neighboring states points in both directions. In a pre-election editorial, Betty Ann Dittemore noted that taxes in the state had "remained virtually unchanged (at 10 percent) since 1975" (Dittemore, Oct. 18, 1992, p.l G). For the most part, it was agreed that the state rates were not unusually steep. Instead it was the cities, counties, and other special districts that were noted as having high rates of taxation. In fact, in local taxation Colorado ranked quite near the top (Lorch, 1997, p.343). The Office of State Planning and Budgeting, the executive office's economic forecasting and planning office, presented its own evidence that tax revenues had declined in comparison to the rate of personal-income growth. However, Coloradans were taxed overall at about the same rate as those in other states, but the state still spent $1 02 more per person than the average state in the Union (OSPB, Feb. 1, 1990). The conservative Independence Institute noted that in 1987 the graduated income tax was done away with in favor of a flat tax, and that "the average collected rate (the real tax burden) rose from 4.35% to 5%" (TABOR Legislative Handbook, 1999, p.1 ). From the aerial view one would assume that the ambiguously defmed high rate of taxation was not the major reason behind the success of TABOR in 1992. Perhaps the real reasons lie not in dollars and cents but in the fundamental beliefs of a majority of Colorado's population. 18

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Whether myth, legend, or reality, there is a prevailing-sentiment that the states of the West and Colorado in particular have a sort of rugged, individualistic population that has little trust in or reliance on government to prop them up. Thomas Cronin and Robert Loevy, observers of Colorado history and politics, note that for years prior to the tax revolt, many citizens lingered in the "Centennial State's past," and its "do-it-yourself society" (Cronin and Loevy, 1993, p.19). Daniel Smith would add to those sentiments a prevailing "skepticism towards government" (Smith, 1998, p.l35). This became evident in the 1880s as the Populist Party, which had progressive, small "d" democracy ideals such as universal suffrage as well as the initiative and referendum, did very well in Colorado elections, even gaining control of the governor's office (Larson, 1986, p.37). Former Congressman Ray Kogovsek noted that one of the reasons TABOR may have passed was the feeling that the elected officials were not doing anything to limit the growth of the state, and the people believed "this is one way they thought they could have some control" (Interview Oct. 3, 2001). Even given the conflicting evidence regarding tax rates, perhaps it was such individualistic sentiments that had polls showing many people, including those who would nonnally label themselves as liberals, feeling that they were being heavily taxed about the time Amendment 1 appeared on the ballot (Cronin and Loevy, 1993, p.116). Bruce himself noted that even if taxes were not as high as some felt, "does that mean you shouldn't have the right to vote?" (Roberts, Oct. 14, 1992, p.IA). He 19

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was speaking of one of the aspects of TABOR that allowed voters to approve or negate any new tax or tax increase. James Jacobs, an observer of the Colorado state economy, noted that while taxes may not have been exceptionally the citizens "latched onto a concept that would give them some control over government, at least at the state and local levels" (Jacobs, Mar. 29,1998, p.lJ). Mandy Rafool, of the National Conference of State Legislatures, notes that the citizens of Colorado were the first to have the power of approval for tax increases (Rafool, 1996). Campaign '92 1992 was a defining election in the state of Colorado. While the nation and the state were voting for the next president, the people of the Centennial State also found their ballots filled with initiatives and referenda. At the head of the list was Amendment 1, the latest and greatest attempt by Douglas Bruce to limit the growth of state and local government. Many pollsters and politicos viewed this as just another tired attempt from Bruce, and with a crowded ballot they focused on many other issues. Nearly two months before the election, John Sanko of the Rocky Mountain News reported that the closing margin of.defeat in Bruce's last two attempts and the fact that the opposition was forced to look at other issues, made this perhaps the best chance for Colorado's tax limitation crusader to gain victory (Sanko, Sept. 6, 1992, p.l ). Two Colorado pollsters noted that the voters were frustrated not only with the crowded ballot but by the campaigning and advertising that followed, and for that 20

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reason they might vote against all of the questions, with the single exception of Amendment 1 (Brown, Nov. 1, 1992, p.1A). Rounding out the slate that year were items such as a .1% sales tax increase for education, a measure to earmark lottery money for Great Outdoors Colorado (GOCO), and a very controversial measure that would deny protected status to homosexuals. It was the last one that perhaps drew most of the local and national media, taking attention from TABOR. However, that oversight did not translate into a friendly or calm campaign on either side of Amendment 1, with Bruce being the spearhead of the pro-TABOR movement and many government and education entities opposing the question. Daniel Smith notes that there was not an enormous "grass roots" organization for Amendment I,.and Bruce has always presented himself as a sort oflone soldier on his tax-limiting mission, so support for the amendment did not have a coherent, organized strategy. His selling ofTABOR came through "free media" press conferences and a "savvy advertising strategy of a one-person marketing firm" with low-budget television ads (Smith, 1998, p.163). Bruce's use ofless costly means of promoting his amendment is not to say there was no money in the campaign. Bruce declared that there was going to be much more money than in the previous attempts, including "up to $150,000 from the National Taxpayers Union," and he had the added support of like-minded organizations such as the Colorado Union of Taxpayers (Sanko, Sept. 6, 1992, p.7). Bruce presented most ofhis arguments in newspaper editorials and election forums. While he did attempt to get the message out that taxes 21

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in the state were much too high (Bruce, Oct. 28, 1992, p.57), the brunt of the campaign was focused on ensuring that the citizens were aware of the level of control they. would have if this measure passed. He argued that as long as the state had the unchallenged authority to tax it was, and would continue to be, a "bureaucratic Big Brother" (Roberts, Oct. 14, 1992, p.1A), and that the citizens could exercise their power to approve a tax increase "[I]f the voters are convinced there is a definite need for higher taxes" (Patty, Nov. 1, 1992, p.44). The overall thrust of the pro-TABOR campaign was not to sell it as a limitation of government spending so much as a democratic means by which the citizens at the state and local level could control the rate of taxation. Again, this tactic was a nod to the rugged individualism and populism that in the early 1900s had placed the initiative into the American political lexicon. He illustrated this point clearly by stating that voters could easily approve his measure while also approving another ballot measure that allowed an increase in sales taxes to fund schools. Quite simply, a vote for either was an affirmative vote for a democratic means oflevying taxes. "The two are not inconsistent," Bruce said. (Stevens and Roberts, Oct. 11, 1992, p.1A). While not as vociferous as it had been in previous years, opposition to Amendment 1 came from many different sources and attempted to convince the people that the amendment was not as "democratic" as its backers claimed, but was instead a legal and logistical nightmare that would cost thousands of courtroom hours, and millions of dollars in elections, while driving the Colorado economy into the 22

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ground. At the head ofthe charge was the ''No on 1" committee, which bragged of having more than a half a million dollars in its coffers.to offset Bruce's campaign (Rocky Mountain News, Nov. 1, 1992). Opponents of the measure listed like a who's who in Colorado politics and communities: former legislators Betty Ann Dittmore and Ray Kogovsek, Colorado Ski Country USA (Sanko, Sept. 15, 1992, p.14), Arapahoe County Sheriff Pat Sullivan, Arapahoe County District Attorney Bob Gallagher, and the arts and culture industry (Patty, Nov. 1, 1992, p.44). Education groups such as the Colorado Association of School Boards, the Education Association, the Colorado Association of School Executives, and the Colorado Student Association (No on # 1 Press Release) were helping the effort to defeat TABOR. On the whole, the anti-TABOR groups had reason to be worried and had logical and meaningful reasons to oppose the measure. First, Bruce was selling his amendment as a better and more democratic way to impose and increase taxes on the people, but there was also a concern that the result would be mass confusion at the ballot box and a stripping away of the deliberative process.necessary for implementing policy decisions such as taxation (Rocky Mountain News, Nov. 1, 1992, p.l8V). Even the Colorado Association of Commerce and Industry came out in opposition to all of Bruce's efforts by stating that the provisions stripped away a core aspect of representative government whereby elected officials make those types of 23

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decisions and their re-election or ousting from office is based on those decisions (CACI Advantage, July 16, 1990, p.1). Betty Ann Dittemore's letter to The Denver Post warned voters that while it might seem proper for them to vote on such issues, the ballot would become even more crowded than the one currently frustrating the citizens (Dittemore, Oct. 18, 1992, 1 G). Some did not debate the number of tax-increase proposals that may appear on the ballot or how representative government would be affected. Instead they focused on the unwieldiness of the measure itself and the problems that would arise from the limitations and forced revenue returns. The Science and Culture District of Metro Denver questioned the viability of refunding excess revenue derived from sales tax, and argued that the cutting of a sales tax in a year of high revenues would require a vote to bring it back to its initiallevel1 (Morgan, Oct. 28, 1992, p.57). Common Sense Colorado-Citizens Opposed to Amendment 1 stated simply that the government would be unable to deal with the constant surprises of the world ranging from market fluctuations to natural disasters (Position Statement). As for municipalities, school districts, and other special districts, their major concerns were that local services and services that required fees or licensees would be forced to have an election every time 1 This concern would prove to be one of the greatest arguments against TABOR, especially after its passage. When the economy was in a boom cycle, the legislature would feel the need to cut taxes, but those taxes would never be able to return to their original level should there be a revenue shortfall. This point will be discussed later. 24

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there was a need to increase that fee. lbis change, they feared, would lead to erosion of local control as the state took on more and more of the responsibilities for these functions (Ibid.). There were also concerns that the measure itself, reading nearly 2000 words and containing numerous provisions and definitions, would end up in the courts both at the state and local level on numerous occasions. John Lay, chairman of the ''No on 1" campaign, stated that the proponents of the measure were not even aware of the ramifications of TABOR's passage: "They just want to be disruptive" (Roberts, Oct. 14, 1992, p.1A). Ironically, the spark that had ignited the inferno of the tax revolt more than twenty years before Bruce's TABOR, California's Proposition 13, was used by Amendment 1 's opponents as an example of how not to run state and local government finances. Betty Ann Dittemore noted that California had once been known for the quality of its education system, but after years under Prop. 13 the state was faced with horrible per pupil funding and overcrowded classrooms (Dittemore, Oct. 18, 1992, p.1G). Bob Ewegan of the Post also noted that higher education in that state was suffering, and the police departments were stretched incredibly thin, especially in high-crime areas such as L.A. all as lasting effects of the 1978 passage ofProp. 13 (Ewegen, Sept. 28, 1992, p.7B). These points could all be considered well-reasoned and legitimate arguments against the passage of Amendment 1 in 1992, but there was also another campaign 25

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that was waged that consisted of scare tactics and a "Chicken Little" mentality. One article looking back on the election noted that opponents to TABOR had prophesied, "Prison inmates would be let out early. Colleges would have to restrict enrollment. Services would be cutback. Classrooms would be over crowded" (Sanko, Aug. 3, 1999, p.14A). Bob Ewegan even ran an editorial that predicted that localities would face so many cutbacks and layoffs in the fire and police departments that people would not have their emergency calls answered. Instead he instructed endangered citizens to call Doug Bruce (Ewegen, Sept. 28, 1992, p.7B). For year after TABOR's implementation, none of these predictions (with the possible exception of a cutback in services) came true,, and in the end this tactic may very well have backfired on the anti-TABOR crowd. In an editorial on Amendment 1, the Rocky Mountain News announced its opposition to the measure, but then could not "help but note for the record a strong distaste for the tactics of some of those most aggressively opposed to Amendment 1" (Rocky Mountain News, Oct. 14, 1992, p.58). The Election and Its Aftermath As Election Day 1992 drew close, the numbers on Amendment 1 were not revealing to either side. The Rocky Mountain News reported in mid-October that the number ofthose in favor ofthe measure had dropped from an earlier high of65% down to 52% (Sanko, Oct. 20, 1992, p.16). Just before election day, Talmey-Drake Research and Strategy, a Denver-based finn, was reporting that the percentages had 26

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swung to a plurality opposed to the measure--47% to 46% (Brown, Nov. 1, 1992, p.IA). On November 4, 1992, the majority of the citizens who cast votes did so in favor of Amendment 1. Bruce fmally had the victory he was after. With 53.6% of the vote, TABOR officially became part of Colorado's constitution (Roberts, Nov. 5, 1992, p.IA). Reaction was diverse and widespread. In Colorado, opponents stated that while the ramifications would not be felt immediately, they would be felt, and in the end they would be deep and lasting (Roberts, Nov. 4, 1992, p.1A). Many also cited the other measures on the ballot as one of the factors that led to the passage of TABOR. Those who spent their time shouting down Amendment 2 (which passed) and trying to sell the Governor Romer-backed Amendment 6, a tax increase for education (which failed), were blamed for viewing Amendment 1 as just another of Bruce's tired and played-out attempts at limiting taxes and not worth the breath to denounce it (Smith, 1998, p.130). Outside ofColorado, many tax-limitation supporters began to get the same urges that followed the passage of 13 in California While the passage of tax limits was nothing new, the passage of a voter approval measure for all new taxes was unprecedented and was latched onto by limitation proponents in states such as California, Oregon, Florida, Ohio and Washington (Roberts, Feb. 1, 1993, p.1A). For the education community, the entire election was a disaster in that Amendment 1 passed, Amendment 6 failed, and the measure that,eannarked all of the 27

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lottery money in the state for Great Outdoors Colorado (money for parks and recreation) passed. This combination was deemed as the worst-case scenario, and per-pupil spending was projected to slip to $3,437 from a projected high of$4,347, should the opposite occur (Stevens and Roberts, Oct. 11, 1992, p.1A). Cronin and Loevy pointed to the failure of Amendment 6 and the passage of TABOR as a clear demonstration that the people of Colorado were tired of what they perceived as high taxes, even when that money was going toward K-12 education (Cronin and Loevy,l993, p.301). Bruce looked back years later on his victory and humbly called it "the most important political event since statehood" (Sanko, Aug. 3, 1999, p.l4A). When the fog of war began to clear the-next day, legislators and local government officials began to do more of their homework and discovered, for the most part, that their understanding of the new restraint was too simplistic. One of the opponents of the measure looked back on Amendment 1 stating that the ballot title was a "gross oversimplification" of its true nature (TABOR: A Guide to the Taxpayer's Bill of Rights, 1993, p.97). Charlie Brown, then director of the Colorado General Assembly's research branch, stated that even after discussions with Bruce and other legal experts, he understood it "less well than I did the day before". (Stevens, Nov. 7, 1992, p.3B). As the post-election discussions emerged, local government officials' distaste for the amendment seemed to grow (Stevens, Nov. 22, 1992, p.1 A). Legislation for implementing the various aspects of the amendment would require a great deal of legal interpretation and maneuvering. Election Day had 28

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been a mere battle in Bruce's war; the next rounds would be fought in the legislature and in the courts. Tim Foster, then a State Representative from Grand Junction, noted that a number of people had even stated that it would be best if the legislature used the confusing and ambiguous language to undercut the amendment, but he and other lawmakers felt it was their duty to follow the will of the voters that passed it (Germer, Nov. 6, 1992, p.24). The Colorado Municipal League noted that between the time of TABOR's passage and 1999: The Colorado appellate courts wrestled with the meaning of TABOR on at least two dozen occasions. The Colorado General Assembly debated innumerable bills interpreting, applying, or implementing TABOR in some way, many of which were adopted into law. of course, countless state and local government officials spent untold hours in study, discussion, analysis, and implementation ofT ABOR's various requirements (TABOR: A Guide to the Taxpayer's Bill of Rights, 1993, p.93). Where there was ambiguous or uncertain language the legislature and the courts had to balance how to protect the interests of governmental functions with protection of their political interests-after all, it was their constituents who had voted in favor of TABOR. In court proceedings, gleaning the intent of the legislative body that passed the law is not without precedent, but in the case of Amendment I, attempting to determine exactly the intent of those who voted for the measure is a daunting task and the courts had never before needed to revert to campaign literature or debates in order to make their decisions (TABOR: A Guide to the Taxpayer's Bill of Rights, 1993, p.l 00). Bruce certainly felt that he, as chief drafter and proponent, had a place in the 29

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deliberative and legislative process, but rarely was that privilege granted (TABOR: A Guide to the Taxpayer's Bill of Rights, 1993, p.99). In terms of initiatives such as this, the courts will look at only comments made prior to the election, never anything discussed or testified to in the post-election (Interview Dec. 6, 2001). TABOR's Provisions And The Following Eight Years Regardless of the battles in court or the legislative debate over how best to implement it, on Nov. 5, 1992, TABOR was part ofthe state's constitution and its provisions had to be followed. Reading nearly 2,000 words, Article X Section 20 of the Colorado Constitution, also known as The Taxpayer's Bill of Rights, restricts how much the state can spend, how much it can retain in tax revenue, how it can raise those limits, and how much and for what plirposes a reserve can be kept. TABOR has nine subsections in it, arid many of the terms do not necessarily correlate with c()mmon understanding of those terms. This fact means that a true detailed description of its various components can be at best confusing and at worst misleading. In terms of revenue raising and general fund spending, TABOR works at both ends. Concerning spending by the state, the General Fund-the operating budget of the state and its departments-is 14ffited by a 6% cap over the budget from the previous fiscal year. Known as the Bird-Arvescough limit for the legislation's two 30

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prime sponsors, it was passed in the General Assembly's regular session in 1992, and it is contained in the Colorado Revised Statutes 24-75-201.1.2 A mere statutory limit would normally be amendable by passage of legislation in the General Assembly, but with the passage of Amendment 1 it is considered constitutionally protected under a section ofT ABOR that prohibits states or localities from weakening any spending limits put in place prior to Amendment 1 '.s passage (Governor's Office of State Planning and Budget, Sept. 2000, p.l). However, the provision in TABOR that limits the entire state budget is the provision that deals with revenue. While the Constitution states in Subsection 8 that there is a revenue limit, the section actually limits the expenditures of the state to the rate of inflation (measured by the Denver Boulder Consumer Price Index [CPI]) plus the increase in population. Any monies over this limit collected by the state must be returned to the taxpayers. Thus, with CPI and population growth normally larger than the 6% General Fund limit, the true level of how much the state can spend is defined by how much revenue the state takes in from total revenue sources. Specifically, the difference is made up by cash funds, capital construction dollars, and other miscellaneous expenditures or revenue by the state (Ibid.). It is only money collected over and above this revenue limit that must be returned to the taxpayers, and therefore the state is free to spend above the 6% General Fund, Bird-Arvescough limitation. 2 The General Assembly met in the spring of 1992, a few months prior to the Nov. 1992 election. 31

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Apart from the spending and revenue limits covered by TABOR, there is the major aspect of requiring voter approval of any new tax or tax increase. lbis provision directs the holding of an election for: "any new tax, tax rate increase, mill levy above that of the prior year, valuation for assessment ratio increase for a property tax, or extension of an expiring tax, or a tax policy change directly causing a net tax revenue gain to any district," (Colorado Constitution, Article X, Sec. 20.4). This part of TABOR was the most touted section of the initiative and was used to sell it to the voters. As was stated earlier, Doug Bruce certainly attempted to sell his taxlimitation measure as a more democratic method of conducting the business of revenue raising and spending. Voter approval of taxation is one of the things Grover Norquist, President of the Americans for Tax Reform, said was, "so important, a simple majority vote by elected officials is insufficient" (Roberts, Feb. 1, 1993, p.IA). When a state, county, local, or special district government passes a measure extending, implementing, raising, or exempting a tax it is now known as "de Brucing", a reference to the measure's author. Since the constitution was amended, many "de-Brucing" ballot items have been presented to the voters. By 1998, six years after TABOR was on the books, over 400 cities, counties, and local districts had passed spending or revenue measures outside ofT ABOR (The Denver Post, Mar. 29, 1998, p.J4). However, attempts at the state level to de-Bruce were not nearly as successful. Not until Amendment 23 passed in the 2000 election had any anti-32

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TABOR measure placed on the statewide ballot gained a majority of the votes (TABOR Legislative Handbook, 1999, p.2). A third major aspect of the TABOR Amendment regards reserves and emergency spending by goveinments. Under subsections (5) and (6) of Article X Section 20 an emergency fund of3% is established and allows for strictly limited tax increases in the event of an emergency. However, a problem for lawmakers exists in that nowhere is there a definition of what an emergency is, but there is a general consensus that a revenue shortfall in a depressed economy does not constitute the kind of emergency the TABOR reserve could be used for (Hartman, Feb. 19,2001, p.SA). Adding to those constraints, any emergency tax must be ratified by the voters within 60 days of the declaration or must be refunded, and any. unused portion of the emergency tax has to be repaid within 180 days of the end of the emergency, a limitation that officials say "renders the reserve effectively useless," (Ibid.). lbis was a major change from pre-TABOR standards whereby, although there were statutory limits on state General Fund spending, any monies collected over and above that spending could be held in reserve until needed at a later date. With the strict limitation on.revenue collection placed on the government, there was no "left over" revenue to be held in reserve; rather there was the 3% required by TABOR and nothing else. This provision has saddled most governmental entities with the task of maintaining two reserves, one required and restricted by Amendment 1 and another, voluntary, reserve that can be tapped for each government's definition of an 33

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emergency, i.e. the tapping the reserve for a sharp enrollment in a school district (Ibid.). All of these measures combined limit government taxing and spending to a degree not seen before November 1992. Supporters see it as a way to give the voters a greater say in the size and scope of their government, while opponents see it as a draconian attack on necessary functions of a government serving the people. Paul Grattet, the city manager of Greeley, in 1998, stated that the measure eroded many powers of state and local governments in terms of multi -year obligations, home rule, and intergovernmental agreements as well as much greater expenses for implementation of all of its sections (Grattet, Mar. 29, 1998, p.J2). Unfortunately for those who hoped that after a couple of years under such restrictions the voters could be convinced to change their minds, another constitutional amendment passed in 1994 which limited any ballot measure to a single subject. Fred Brown, a Denver reporter and observer of state politics, noted that the time for repeal was ripe because of the trouncing of another government limiting measure at the polls, but he noted that at the same time the voters approved a measure that limited ballot measures to a single subject, a restriction that would make it nearly impossible to remove the lengthy and many faceted TABOR from the constitution (Brown, Dec. 23, 1994, p.B 1 ). State Senator Norma Anderson noted that in order to amend TABOR completely or partially out of the constitution, as many as 30 separate issues would have to be put on the ballot, and passing such a bundle would probably be an insurmountable 34

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obstacle (Imse, Jan. 4, 1998, p.2A). It has never actually been determined by the courts how many provisions there actually are in T should a sweeping repeal be sought (Interview, Dec. 6, 2001). It seemed that TABOR would be on the books permanently and it was time to move forward with the day-to-day operations of government. The recession that had resulted in the election of Bill Clinton as President and had contributed to the public mood that was an underlying factor to TABOR's passage was drawing to a close. For the next few years the nation as a whole and Colorado speCifically would experience a boom in the economy sparked by the information and technology revolution. James Jacobs noted that during the period from 1992-1996, Colorado's economy grew faster than the national average, as did the rate of inflation and the per capita rate of taxation. When the rate of inflation and the rate of.taxation were figured together, "Colorado's per capita tax growth rate of 5.2 percent was less than the national increase of8.6%" (Jacobs, Mar. 29, 1998, p.J1). Colorado had nearly five years before it had to face the impact of the TABOR revenue limit. Given the base year set at 1992, and the rate at which inflation and population were growing, the CPI plus inflation cap was not reached until1997. Jacobs notes that between the years of 1986 and 1996 income rate revenue in the state rose by 130% (Jacobs, Jan. 10, 1999, p.H1). During the boom years, the state was not happy under TABOR's restraints, but it was able to operate comfortably. Programs could continue to be funded above 35

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what they were the previous years and any excess revenues reverted to the people who paid them. However, from a fiscally conservative standpoint, the Taxpayer Bill of Rights resulted in certain programs being funded at the maximum increase allowed each year regardless of what was actually needed. This fact was due to a fear of the "ratchet down" effect. The reasoning goes as follows. If the Bird-Arvescough limit ( constitutionalized under TABOR) allows for a spending increase 6% over and above the previous year's (Yl) base, and the following year's (Y2) base is established by the new base of the current year (Yl+6%), then any spending less than that maximum increase is lost forever. Thus in a year when there is a need for only a 5% increase and the legislature sets it as that, then the next year the need is for 7%, they are limited to the 6%. Therefore, while in the first year the budget is 105% of the previous year (not 106%), then in the next year the increase is 6% over 105% (not 6% over the possible 106% or even 7% over the 105% ). That lost money can never be made up and the budget is forever "ratcheted down." Peggy Lamm, a former state legislator and now the director of legislative affairs at the Bighorn Institute, a Colorado political think tank, compared TABOR to a boa constrictor, if the prey of a constrictor releases the air in its lungs and relaxes its muscles, then the snake squeezes tighter, with no intention of letting go (Interview, Nov. 29, 2001). For many fiscal conservatives, the need to maintain base funding seemed to be stronger than the cost of permanent loss of room to grow and often led 36

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them to vote for increases they might not have voted for in a less restrictive situation (Interview with Fred Brown, Sept. 28, 2001 ). Linda Morton, the mayor of the city of Lakewood during the debate over Amendment I warned, ''No local government will dare allow spending to fall below what it spent the previous year" (Patty, Nov. I, 1992, p.44). Once the TABOR revenue cap was surpassed, the state needed to find a way to refund the excess and is where the rubber met the road for policy makers. Before state legislators could figure out how to return the money to the taxpayers, they decided to delay it for a year. They passed House Billi4I4, legislation that allowed excess revenue taken in one year to be returned to the taxpayers from the general fund in the next. When it came time to actually make the returns, the House Republicans offered to refund the surplus based on the amount of income taxes paid, while the Democrats led by Governor Roy Romer felt that a different formula would give refunds to all those who contributed to the revenue surplus through sales, gas and other taxes (Bartels, May IS, I998, p.4A). Different proposals were put into place to refund the money depending on the level of surplus. These mcluded capital gains exemptions, earned income tax credit, and a temporary sales tax refund (TABOR Legislative Handbook, 1999, p.6). After the taxpayers received their checks for a couple of years, certain members of the General Assembly began to question the wisdom of taking the money in the first place. With refunds reaching roughly $350 million per year, many began 37

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to consider cutting taxes (lmse, Jan. 4, 1998, p.2A). Tax-cutting versus refunds really heated up after the 1998 election. When Republican Bill Owens was elected Governor, the voters turned down a ballot proposal that would have allowed the state to retain excess revenue for education and transportation, and the economy continued its unprecedented growth (Dally-Johnston, Dec. 27, 1998, p.B7). James Jacobs and others warned that the option of leaving things as they were was not being properly considered. He and those like him noted that while there might be good reason to cut taxes when there were booming economic times and excess revenues, the economy could tum and it would result in not only smaller returns, but quite possibly not enough revenue to even reach the TABOR limit (Jacobs, Jan. 10, 1999, p.H1). Failure to reach the TABOR ceiling could occur because the lowered (weakened) rates could not be increased again without a vote of the people, and approval of a tax increase in down economic times is not a likely scenario. If this revenue shortfall were to happen, the ratchet-down effect noted earlier would become inevitable as the base for a given year would be slashed to cover lost revenue, and it could never be regained. While some saw a temporary tax cut as an option, most legal experts warned that TABOR disallowed such an action and would probably be upheld in court should someone choose to contest it (Ibid.). In the end, the tax cuts won out. Beginning in the year 2001, fortunes began to tum. While the effects of the TABOR limits on revenue had been felt four years earlier and the state had to refund monies collected over the limits, an economic slowdown turned into near recession as 38

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a terrorist attack startled the people and the markets in the U.S. The economic slowdown translated into smaller tax revenues and led to the budget shortfalls projected by those such as Jim Jacobs. As the economy slows and dips, tax revenues decrease and the state can only make them up through tax increases. Since the Colorado Constitution prohibits such increases without a vote of the people, the state found itself in a serious crunch. The Denver Post editorialized that the state would not have felt such a pinch had it not been for the tax cuts enacted during the good times, and during those good the worst that would have happened to the state was that it would have to send out refund checks (The Denver Post, Jan. 26,2002, p.B7). Standard and downgraded the credit rating of the state, noting that various actions taken by the state (including tax cuts) would cause the state to end up more than $200' million under what it was entitled to collect and spend (Ibid.). Since TABOR's passage the state has seen revenues meet and surpass the TABOR limit resulting in refund checks for the taxpayers. There has been an economic downturn resulting in smaller revenues and eventually budget rescissions. Because of the restrictions of TABOR, the political environment has been altered as policy makers look to prioritize their interests, use the lack of state flexibility to cover their political tracks, and fmd themselves forced to deal with consequences not projected during the initial debate. These issues will be the focus of the next chapter. 39

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CHAPTERJ TABOR'S EFFECT ON COLORADO'S STATE POLITICS Previous chapters have looked at tax limitations in a broad sense, focusing for the most part on the beliefs of those who presented them and the mindsets of the people who voted for them. TABOR in particular was presented to the voting population as a populist measure which would allow the average citizen to vote on any new or increased tax and as a measure to limit the growth of a government perceived to be rapidly expanding and unresponsive. However, as has been seen, the measure contained other, more complicated measures, and has been denounced by certain policy makers for reaching beyond anything envisioned by the voters who passed it. Some criticize the measure for taking budget decision making out of the hands of lawmakers (Straayer, 2000, p. 217), as well as for exacerbating the inability of the government to do many things in good economic times to make up for its inability to do much in poor economic times (Straayer, 2000, p.331 ). This restraint of government is magnified by the fact that Colorado's constitution, as with many states, forbids the state from contracting any large, long-term debt (Lorch, 1997, p. 345). It should also be noted that given the diversified system of collecting taxes, between 40

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sales, property, income, etc., the effects of the limitations on the state can be quite different from the effects on city or local district governments (Andras, 1993). After nearly ten years under the TABOR Amendment, the state has found itself dealing with situations that perhaps were unforeseen or unintentional, but some could have been quite intentional. While it is difficult to really plumb the will of the voters nearly ten years ago, the common wisdom seems to be that the citizens were more interested in the aspect ofT ABOR that allowed for voter approval on any tax increase or implementation than in the strict revenue and spending limitations contained in its lengthy wording (Interviews with Fred Brown, Sept. 28,2001, Ray Kogovsek, Oct. 3, 2001, James Jacobs Nov. 21, 2001, and Mark Cavanaugh, Nov. 29, 2001 ). Whatever the case may be, the fact is that Amendment 1, passed by a majority of the voters and instituted in the constitution, has resulted in major changes to the manner in which the business of government at the state level is conducted. First, the restrictions ofT ABOR have led to a greater prioritization of how the state spends money, deepening the divide between budget items in the zero-sum battle for state dollars. Second, the political environment in the statehouse has changed to the point that TABOR is foremost on the minds of lawmakers in everything they do, even to the point of using the measure for their political gain. And third, the measure has led to intentional, unintentional, or perhaps just unforeseen consequences. Such consequences include a seeming push toward privatization and shifts in political powers from one center to another. Each of these can dovetail into the others to give 41

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an overall picture of how TABOR has drastically altered the environment of Colorado state politics. Priorities Republican State Senator John Andrews, the Senate Minority Leader in the Colorado 63rd General Assembly, noted that prior to TABOR "legislators could raise taxes by a vote ofthe general assembly and a signature of the governor, and the only restraint on them was a combination of conscience and [political] self-preservation" (Interview, Dec. 19, 2001). Quite simply, prior to the constraints ofTABOR, if legislators needed more money to fund new programs or increase funding for existing programs, they only needed to fmd enough votes in the state house to get it all done. However, in the TABOR era budgeting becomes a true zero-sum game. Without the ability to simply raise revenue, cuts must be made in some programs to fund others. This trade-off creates an even more politically heated budget process which demands that legislators more tightly prioritize their desires for state dollars. In this sort ofbudget environment, the state's ability to prioritize its budgetary needs can be seen in the disparities between K-12 and Higher Education. Making up over 50% of the state budget, these two budget items have vastly different places in the hearts and minds ofthe taxpayers and policy makers in the state of Colorado. 42

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Quite simply, K-12 education in the United States is a right for all citizens, 1 while higher education is perceived to be a mere privilege. However, in Colorado both of these systems are strong political actors, one backed by a multitude of parents, educators, and school boards, the other by strong administrative bodies and wellcompensated lobbyists. In the United States, education has become a right granted to everyone, and the state has a requirement to educate up through the 12th grade. As a result, admission into the K-12 system is an entitlement program, and thus must be funded at a level to provide the service to everyone within that age range. In Colorado, both the state and the individual districts provide the money needed to educate their citizens. TABOR affects both of these levels of government and therefore is a hindrance to what many view as a prime function of both the state and local governments. Robert Lorch notes that "it often costs more to run public school districts than to run the cities or counties they are located in" (Lorch, 1997, p. 353). During the initial debate over the TABOR Amendment, there were many questions about what would happen to K-12 education should the amendment pass, and after it did there were many left wondering how the state education system would look years down the road. Then Governor Roy Romer; who had concentrated his political power and influence on a tax increase for education during the same 1 Under CRS 22-33-104 unless certain criteria are met, attendance for children between the ages of 7 and 16 is compulsory. 43

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election, stated after its loss and TABOR's victory that "This is one of the dirtiest tricks you could pull on children in a long time" (Roberts, Nov. 5, 1992, p.1A). While the state collected huge revenues as its economy and population boomed in the years immediately following TABOR's passage, this surplus did not necessarily translate into more money for schools. Members of the education community such as Phil Fox of the Colorado Association of School Executives, noted that Colorado was falling behind other states in education funding, and it was not until 1998 that the state increased spending on K -12 education to keep pace with the rate of inflation plus population (Finley, Apr. 19, 1999, p.1A). Even though state funding for schools increased in 1998, the general perception of the state as doing too little too late was strong enough to give birth to another initiative in the 2000 election. Labeled as Amendment 23, it required the state to increase spending on the K -12 system by the rate of inflation plus 1% each year for the next ten years, and with its passage it became the first statewide earmarking of revenue placed in the constitution. While many local governments were successful in the nineties "de-Brucing" all or portions of their budgets by holding local elections, state measures were not so lucky. As late as 1998, the Rocky Mountain News noted that the "TABOR era has only begun" by noting that in statewide ballot questions voters consistently turned down proposals for tax increases or proposals by the state to retain surplus revenue for education or transportation (Rocky Mountain News, Dec. 2, 1998). While Amendment 23 was not necessarily a 44

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refutation of this trend, it did send a message to lawmakers and budget writers that education was important enough for funding to increase at a steady pace. Phil Fox noted before 23's passage that the only reason there were not severe shortages in school funding under TABOR was the booming economy, and when (not it) the economy turned sour "every district will be in a state of hemorrhage" (Sanko, Aug. 3, 1999, p. 14A). Higher Education, another large budget item, is prioritized quite differently from K-12 education. Not only does higher education require state dollars to operate, but it is also funded on a cash basis in the form of tuition. TABOR's limitation on cash revenues such as tuition makes higher education a target under the 6% spending limit as well as the overall revenue limitations which affect how much each of the institutions can take in the form of tuition. There are three aspects of higher .education that set it apart from K -12 in the budgetary political environment. The first is that, for the most part, colleges and universities receive their governmental funding from the state (with a small amount from the federal government), not from local governments. 2 This difference is extremely important owing to the fact that TABOR does not allow for any enrollment adjustments as allowed for in the K-12 system. Second, as stated above, a large sum comes from cash funding through tuition and fees, and some states any lack in 2 There are local district colleges-two-year institutions-that receive funding from the localities they exist in. 45

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direct state funding can be made up through rising tuition. This, however, is not the case in Colorado. Most important is the third reason-access to a post-secondary education is not a right while K-12 education is. While all of these factors play a role, it is the prioritization aspect that is perhaps the greatest detriment to state funding for higher education in Colorado. Amendment 23 constitutionalized funding for K -12 education, and at the same time sent a clear message to policy makers that it was a major concern of theirs. The colleges and universities have not earned that same place in the hearts and minds of either lawmakers or the general public. Colorado State Representative Todd Saliman, a member of the Joint Budget Committee,3 noted that in the case of budget priorities, especially in tight times, Higher Education is the "first to give." He finds it impossible to cut Medicaid or K-12 education, unfeasible to cut prisons, and unpopular to cut transportation, which leaves Higher Ed. (Interview, Nov. 12, 2001). State Senator John Andrews notes that Higher Education is not a matter of necessity or importance to the population as a whole. He would state that something like transportation "is a much more grass roots, democratized, equal benefits to everybody type of activity than is the astrophysics department at the university in Boulder" (Interview Dec. 19, 2001 ). Donald Heller of the Pennsylvania State University 3 In Colorado the legislature holds the power of the purse. While the governor has the ability to veto the budget as with any other statutes, the Joint Budget Committee is the body that sets the budget figures each year. This committee consists of6 members, three from each chamber, appointed by the leader ship in the respective chambers. 46

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Center for the Study of Higher Education notes that the media have promoted overall negative attitudes of citizens and lawmakers toward colleges and universities by bringing attention to "such less-than flattering topics as campus crime, drug and alcohol abuse by students, poor graduation rates of athletes, work habits and productivity of faculty members, and million-dollar-a-year athletic coaches" (Heller, 2001, p.3). All of these factors work against the high prioritization of government services such as higher education. Higher education is only one example of how legislators must prioritize their interests under the tight constraints ofT ABOR. It is a weaker claim than other "essential" roles government play in the day-to-day lives of people, and thus shows how TABOR limits the General Fund monies that are given to it in good times and the cuts it can experience in lean times. Should the "ratchet down" effect ofT ABOR continue for years at a time, one could see how the cuts would make their way up the ladder until programs that are mandated by the federal government or constitutionalized within the state would be all that remains. "Political Gymnastics" Certainly prioritizing is something that happens in any budget process, even outside of tax and spending limitations, but there are certainly political ramifications that very few could have predicted or measured during the debate over Amendment 1 in 1992. Prior to the financial problems that occurred during the 2001 fiscal year, 47

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many observers of state politics had already noted that the political dynamic of the state legislature's operations had been changed by the new restrictions. John Straayer noted that the Appropriations Committee now had to operate under a zero-sum mentality whereby any new program or proposed increase in a program would have to come from some other program (Straayer, 2000, p. 217). For opponents ofbills, the TABOR restrictions turned the Appropriations Committee into a "slaughterhouse" for bills, a place where legislators could defeat legislation without the risk of political damage. If a member opposed a certain piece of legislation, he or she could simply ensure that it received a hearing in Appropriations, where members may be "forced" to oppose it given financial constraints (Straayer, 2000, p.239). This fact also added to the power of the Joint Budget Committee [JBC] and its members, who were in control of the ever-tightening purse strings of the state budget. In the era of TABOR, "The long bill-the main budget as developed and introduced by the JBC-is more than ever immune to significant modification by the rest of the legislature" (Ibid.). Therefore, in the year 2002, with the country in recession, revenue down, and the state forced to refund the surplus revenues from the year before because of House Bill 98-1414, the Joint Budget Committee and the Appropriations Committees in both the House and Senate were as powerful as they had ever been. However, the politics of life under TABOR and tight economic times was not limited to those select committees and their members. Former State Legislator Peggy Lamm noted that lawmakers often do things in a sort of''winkie-winkie" fashion 48

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knowing full well that there is little or no money to work with, but they still attempt to pass something anyway for the political points With the voters (Interview Nov. 29, 2001 ). Perhaps the greatest example of legislative gymnastics was performed on the floor of the House and concerned a bill by Representative Peter Groff during the fiscally restricted 2002legislative session of the 63rd General Assembly. His bill was to mandate the use of child safety seats for children under a certain height and weight. While the bill cleared the Transportation Committee and the Finance Committee, debate on the floor only led to its being sent back to the Appropriations committee for review. One only had to listen to the floor debate on the bill to see that small government conservatives viewed the bill as yet another intrusion of government into the lives of its citizenry. Brad Young, Chair of the JBC and therefore a prominent member ofthe House Appropriations Committee, argued that this mandate would require the state to fit its vehicles with safety seats and therefore cost the state money. This tactic was a much more politically savvy means of opposing a bill that many legislators labeled a "pro-child" bill. Rep. Groff noted that this move was just a procedure to "kill the bill," while Rep. Young simply noted that he had "a responsibility to have these bills that cost money reviewed" (Ames, Feb. 27, 2002). In order to get the bill moving, it was amended to exclude the state from the mandate and therefore cost the state no money. With enough press coverage, the bill was able to get through the process. However it could be argued that this bill was the 49

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exception to the rule for bills that can be killed in tight fiscal times under the guise of fiscal responsibility. Unintended Consequences While TABOR is lengthy and restrictive and fundamentally altered the manner in which the state could tax its citizens and spend the revenue, the state legislators and the voters themselves did a number of things to exacerbate the situation. As was noted at the end of the last chapter, the General Assembly, in an attempt to deal better with some of the requirements ofT ABOR, took a number of steps that helped in the short run, but hurt in the long run. Hoping to decrease the amount the state would have to return through refunds, the state cut taxes-something made permanent to an extent, given the requirement of voter approval for any tax increase, and then the state (in an attempt to bolster the coffers in the first year of a TABOR surplus) passed House Bill1998-1414, which allowed it to refund the excess to the taxpayers in the following year. These measures resulted in few if any negative results until2001. With the economy slipping (perhaps even approaching a recession) after the 90's boom and worsening ,after the surprise attack of September 11th, revenue did not come into the state at a rate able to keep up with current funding levels. With TABOR in place, "emergency" increases in taxes were not allowed, and the refund checks from the previous year's revenue surplus, an amount nearing five hundred million dollars (Paulson, 2002), would have to be sent out regardless of the 50

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cuts the state would have to make in spending for the current year's operating expenses. The passage of Amendment 23 in 2000, requiring the state to fund K-12 education at the rate of inflation plus 1% for the next ten years, was yet another factor turning up the heat in the budget battle. Even though the effect of this amendment was to ensure K-12 funding for the coming years, it lessened the amount of funds available for other programs immediately. Prior to the 2000 election, the Office of State Planning and Budget, the governor's economic section, noted that the displacement of dollars for certain programs to K-12 education, "would magnify if the state were in an economic recession or if there was not a TABOR surplus" (McCallin, Sept. 29, 2000). Only months after 23's victorious run, OSPB Director Nancy McCallin's predictions came to fruition and the true effects of23 combined with the restrictions already in place created a budget nightmare. Cuts were made in the existing budget, and increases for the next fiscal year were projected to be extremely low. Naturally this situation meant that the state would have to perform all of its existing functions with much less money. It should be noted that these measures were intentionally implemented after TABOR, and they only magnified the Amendment's effects on the political process. This also leads to another point of clarification. Some argue that the ''unintended consequences" of TABOR are "many and varied," but this may not be the case. As was noted, many claim that Amendment 1 in 1992 was sold as a measure for control 51

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over new or increased taxes, but there is a single portion of the amendment-now in the constitution-that seems to clearly state the true "intent" of the measure, or at least the measure's author. The General Provisions of Article X, Sec. 20 (the opening paragraph ofT ABOR), states, "Its preferred interpretation shall reasonably restrain most the growth of government." Thus one could make a strong argument that by that simple statement, Amendment I was not intended to spread populist democracy into the realm of government taxation, but instead was a tool to limit the growth of government on the whole. Thus statements that TABOR has had an unintended result of tight restrictions on government may be true only to the point that they may be more restrictive than originally intended, but not that these restrictions were fully unintentional. It could also be argued that Douglas Bruce, the measure's drafter and primary proponent, had a motivation, or vision, of such limitations leading to the privatization of a number of government programs and services. If the rate of government growth is constrained by TABOR's measures then the state may fmd that an alternative route for providing those services exists, namely through the marketplace. Again, there is an aspect to the measure that leads one to believe that this possibility could indeed have been a motivation of the author, but whether or not the result was intended by those who voted in favor of the measure is unknown. Amendment I contained a section directing cash funds directed toward a state-run enterprise to be excluded from the overall revenue limit. An enterprise was 52

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defmed in Article X, Sec. 20, Subsection (2): "a government-owned business authorized to issue its own revenue bonds and receiving under 10% of annual revenue in grants from all Colorado state and local governments combined." Since TABOR restricted general fund spending as well as cash funds, this provision allowed the state to exempt certain programs or services if at least 90% of its funding came from those cash funds and not general fund or tax revenue. Prime examples of this are the Colorado Lottery, which receives its revenue from ticket sales, and the Department of Wildlife, which receives a good portion of its revenue from hunting and fishing licenses. Such an entity would basically become a free-market actor, creating a sort of pay-as-you-go program. Once the entity reaches "enterprise" status, then the dollars it takes in are no longer counted against the entire state's cash fund amountthus the payoff for entities reaching the magic 10% figure. This motivation for "privatization" is quite apparent in recent debates over higher education. Tuition dollars, paid by students, are considered cash funds, and since the entire budget exists under a revenue restriction which contains cash funds, the level of tuition has been held down in order to make room for all of the other programs that require those cash funds to operate. In fact, along with items such as unemployment insurance, college tuition is one of the largest cash revenue sources in the state (OSPB, Sept. 2000). Thus, in any year when revenue butts up against the TABOR limit and triggers a refund, a portion of the tuition students pay would be thrown into the entire surplus pot and refunded to the taxpayers. Therefore money 53

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they pay .to the schools with the belief that it is going toward student oriented services would be simply sent to the state and redistributed with the rest of the surplus revenues. Mark an analyst and TABOR expert at the Bighorn Institute, a non-partisan Colorado think -tank, noted that except for those that have reached the magic 10% level, the TABOR amendment has set up a very artificial environment that does not allow the market, if you will, to react in cash fund situations" (Interview, Nov. 29, 2001). Many small-government or free-market-minded people might find this aspect of TABOR, which seems to result in a "pay-as-you-go" government, to be a positive result. However, the problem is that the mandated restrictions circumvent serious policy issues that must be considered. Access to quality higher education is a major policy question that has ramifications in terms ofboth general fund and cash funds. First of all, Census data show that average annual household income increases by $10,000 to $15,000 for every level of education achieved, with the average income of a high school drop out hovering around $20,000 and the average high school graduate near the $37,000 mark (Jacobs, Apr. 26, 2002). Combine this consideration with the fact that the lowest income quartile has a dismal participation rate in the post secondary education system, and the conditions are present for entrapment in a welfare cycle (Jacobs, Nov. 6, 2001). It would seem that good policy would be to ensure access to higher education in order to break this cycle. However, there are two factors to consider in implementing such a policy, one is the geographic access 54

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needed to ameliorate the opportunity costs associated with moving to a "college town" to take classes, and the other is the level of tuition and with it the level of financial aid needed to attend school. In order to meet these two needs, the state is forced to decide in budgetary terms how much that it is willing to spend to ensure access to higher education and therefore meet the long-term needs of all of its citizens. It should be noted that not only does the _legislature put higher education lower on the priority list when disseminating General Fund monies, but TABOR also does not allow for enrollment adjustments in higher education like in the K-12 system. Given that individual school districts are considered local governments, they have a provision allowing for the growth of their population, or quite simply, a change in enrollment. In higher education, this is not the case. Post-secondary education is funded at the state level; a fact that translates into an allowance for increases only up to the rate of population growth within the state regardless of enrollment. In 1998, the Colorado Commission on Higher Education predicted that over the next couple of years population growth would be at 2% while enrollment in the state's colleges and universities would be closer to 4% growth (Curtin, Dec. 1, 1998). The fear was that with the rate of enrollment in the state institutions greater than the overall population growth, higher education institutions would have to cap enrollment, a major blow to the policy goal ofuniversal access (Rocky Mountain News, Dec. 2, 1998). 55

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TABOR's restrictions on general fund spending are merely one edge to the sword, but higher education also faces another threat. Tuition is considered revenue in the form of cash and therefore is calculated into the state's entire revenue restriction. What this provision means is that the state is in a bind to offer greater funding to the institutions because of other budgetary priorities, and the schools are prohibited from making up for that by increasing tuition. This problem has led to a sort of paradox for students interested in gaining an education past the 12th grade. Since the state is limited in how much it can increase the cost of attending even a major institution such as the University of Colorado has (at least in terms of tuition) remained relatively low. On average, the rate of increase for in-state tuition has been limited to an average of 1.3% per year since the state bumped into its limit and been forced to refund excess dollars (Curtin, Dec. 1, 1998, p. Bl). Thus, in the event of enrollment rising at a rate faster than the growth of the revenue limit, schools could accept the students but ''would potentially be unable to accept their tuition" (Buechner, Mar. 29, 1998, p. J2). While the overall effect is to keep the tuition down, it also serves to keep the schools from getting the money needed to maintain high quality programs. In order to operate in the higher education system within the entire United States, schools rely a great deal on reputation and comparisons with peer institutions to sell themselves to prospective students; What this reliance translates into is that in order to maintain high quality small class sizes, adequate facilities, and 56

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proper administration, schools need more money to lure professors, build buildings, and process paperwork. Increased funding to produce results is always a hot policy topic. John Brandl, a professor of political science and former Minnesota state legislator, notes that between 1960 and 1990, spending per pupil in the K-12 system in constant dollars increased by over 300%, but it is highly unlikely that the average student in 1990 learned 300% more than one in 1960 (Brandl, 1998, p. 31 ). He does not argue against the premise that more money may help students, but instead states, ''the sequence of money producing expected results is neither automatic nor even common" (Brandl, 1998, p. 32). However, there have been few studies done regarding the correlation between spending on institutions of higher education and the product produced, but those that have been done indicate a much stronger relationship between spending in higher education and the resulting education than from its counterpart for the younger citizens (Brandl, 1998, pp.39-40). Under President Elizabeth Hoffman, the University of Colorado presented a plan to the Colorado Commission on Higher Education known as "Quality for Colorado." In an attempt to lure more high-quality instructors to its school, develop better facilities, and therefore increase the achievement of its students, the school proposed a tuition increase of$300 per year over four years for a total of$1200, which would put the university more in line with its peer institutions around the country in terms of cost. However, because of the cash fund limitations, if the program went forward, the "huge increase on the Boulder campus would suck the 57

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financial oxygen out of Colorado's higher education system" (Denver Post, Sep. 9, 2001, p. F6). Over the years, as the economy recovers and state revenues return to the levels that spurred refund checks in previous years, the zero-sum pie for higher education would be overburdened by the funds required to go to Boulder through tuition receipts. 1bis shift would result in the schools from the rest of the system having to cut tuition or simply live on fewer dollars. Thus one could argue that the vise that higher education is caught in, both in terms of low prioritization in the General Fund and the inability to fund itself through cash funds, results in an inability for the state to implement policy for the success of its higher education system. Another unforeseen result could also be the transfer of control from local governments to the state. School districts felt squeezed not only because of the effect Amendment 1 would have on state spending but also because of the combination of TABOR and another Amendment 1 passed nearly 10 years earlier known as the Gallagher Amendment. This change to.the constitution was aimed at property taxes and mandated that the majority of property taxes collected must come from commercial property and not residential property. With the restriction on tax increases contained in T local governments and school districts in particular, which generate a great deal of their revenue from property taxes, could no longer increase mill levies in the years without reassessment (done every other year) unless the voters approved it. Due to such restrictions during these years, ''the State Aid component [assumed] a significantly larger portion of total program funding in the 58

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School Finance Act" (Dain Raucher, Denver Public Finance). Even though local governments such as school districts attempted to circumvent this limitation by leaning more heavily on sales tax receipts, a large portion of the burden still shifted to the state (Sanko, Dec. 12, 1998). State Representative Todd Saliman noted that there was little incentive for local districts to increase their mill levies if the state could backfill the funding, and after the 2000 election the share of funding by the state could increase even more, given the requirements of Amendment 23 (Interview Nov. 12, 2001). Inevitably this situation results in yet another unintended consequencemoving control of educational program desires from district bodies to the state, for as the budget burden shifts, so does the desire for control (Gavin, Feb. 7,1993, p. I, 4C). Jane Urschell, the Associate Executive Director of the Colorado Association of School Boards, noted that states such as Texas and Florida earmark the state dollars sent to the districts, but that has not been the case in Colorado. However, she is constantly on the lookout for it (Interview, Dec. 17, 2001). Certainly one could see a major shift in this direction with the institution of the Colorado Student Assessment Program test administered statewide to assess achievement levels for students at various grade levels. Mark Cavanaugh and Peggy Lamm note another consequence ofT ABOR lack of preventative spending. When there are no excess dollars, the state is forced to look at things that need immediate attention with immediate results. Items such as the department of agriculture's noxious-weed prevention program, or capital 59

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construction dollars to maintain instead of construct new state buildings, are cut in order to get immediate results (Interview, Nov. 29, 2001 ). If money could be spent bn these items, it could save the state money down the road. Enhanced prioritization, political masquerading, and other consequences intentional or not have greatly altered the manner in which Colorado deals with policy making at the state level. There is little doubt that the state would have different ways of dealing with these issues had TABOR not passed in 1992. Certainly there are few that could claim that these results were what the voters had in mind when they approved its placement in the but to say that everyone who voted for or even persuaded others to vote for this measure did not have one or more of them in mind would be naive. The Taxpayer's Bill of Rights has been chiseled into the political landscape and is therefore an obstacle to be dealt squarely with and not circumvented, and since the measure was initiated and passed by a majority of the voters, the manner in which the state does things will have to be accepted by them or once again be altered by them. 60

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CHAPTER4 CONCLUSION Taxes will always be a source of contention in American politics; they are the lifeblood of a government perceived by some to provide essential services for a private sector incapable of doing so and by others as a inefficient bureaucracy with more money than needed to perform its job. Differing views on the role of government manifest themselves both in representative bodies such as the state house and through direct democratic action via the initiative process. A single legislator can have a strong belief about the costs and benefits of or abolishing a program, but that legislator still must convince at least a majority of other members that his or her view is the correct one. the budget debate in a given year does not begin from a point of zero spending and then adjust for certain wants or needs. There are dollars that the state is resolute in spending before the debate even begins. For instance, any money tied to federal grants is most often off the table for reasoning being that any dollar matched by the federal government that is not spent by the state is a dollar lost. There are also entitlement programs that the state must grant to its citizens 61

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regardless of the amount needed to fund them-i.e. if there are one million persons who need Medicaid benefits, the state must come up with the money for that many citizens. Thus, any entitlement program is untouchable for those looking to save money in the budget. Many at the federal level would claim 75% of the budget as untouchable, but Aaron Wildavsky states, that given the possibility of retribution at the polls, most would see merely 10% of the federal budget subject to change (Wildavsky and Caiden, 2001, p.20). It would not be unreasonable to transfer those same figures onto the state budgets, and that estimate points to the very issue at hand. While a number of lawmakers and other politicians may state that so much of the budget is untouchable, the real issue is whether or not they are willing to pay the political price for actually cutting the budget. Wildavsky notes that budget making is not some smoke-and-mirrors exercise whereby policy makers and bureaucrats. continue certain programs by "hoodwinking the population," but instead they continue funding the programs on which the voters will likely re-elect them (Wildavsky, Budgeting, 2001, p.166). While it is certainly true that the voters could simply choose not to re-elect a representative whose budgetary priorities do not mesh with their own, it is also true that such voting behavior (either on the part of the representative or the citizen) does not always follow such a simple pattern. Those who have the job of setting budget figures may take their cues not from the desires of their constituency, but from special interests who play a large role in their election campaigns either through monetary 62

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contributions or positive advocacy. This political fact is important in our recognizing that when it comes down to figure setting, only those programs that have overwhelming public support or perhaps strong interest groups behind them will win out, leaving the weaker clients by the way-side. The only way around this is through the initiative process. If the citizens mobilize enough votes to earn a permanent place in the budget, they will prevail. The citizenry on the whole can force legislators to follow a certain policy by altering the statutes (or more commonly the constitution) through the initiative and ballot box. If the citizens successfully accomplish this goal, the impetus they put on the legislature becomes more politically potent, given the fact that "the people have spoken." There is no doubt that the initiative arises from populist notions, and is a more direct form of democracy. It is also certain that the initiative strips away power from the elected officials forced to do the business of government on a daily and continuous manner. Tax and spending limitations have been implemented by means ofthe initiative and therefore express the desire of the voters, but they drastically alter the fundamental manner in which representative democracy operates. In the late 20th century the budgets at both the state and federal level had grown to enormous proportions. While little was done to stem the tide at the federal level, at the state level the tax revolt was waged through populist sentiments and the initiative. A group of citizens such as Howard Jarvis and Paul Gann in California and later Douglas Bruce in Colorado sought to limit the fiscal growth of government by 63

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utilizing the progressive banner and the democratic shield to fight their war. Their proposed measures met early defeats, but lawmaking bodies did not act to stem the tide themselves, and eventually the limitation movements were victorious. William Greider noted that political interests in the United States are broad and multi-faceted, that changing the system on the whole would be impossible for any one group and certainly for any one man. He states that citizens mobilize for a specific mission, which is often short-lived and unable to instill permanent change (Greider, 1982, p.133). However, the 1992 election in Colorado resulted in a change that was long lasting, and it deeply affected the way the government at all levels could operate. Repealing the tax and spending limitation in a broad sense would be unlikely in an election, and given the single-subject requirement for all ballot measures, a complete -overthrow of TABOR would be impossible in a single election. In Colorado, the Taxpayer's Bill of Rights has proven to be a hydra that the state.and local governments have been forced to deal with for nearly ten years. It is unclear how the state would have been different during the 1990s had it not been for TABOR, for during that time Colorado has faced major political shifts: a Republican governor elected in 1998 for the first time in twenty years, a senate captured by the Democrats for the first time in nearly forty years, unprecedented economic growth in the country as a whole and the state specifically, and a slowdown in the economy made even worse by a terrorist attack inside the United States. The fact of the matter is that in 1992 the voters passed an amendment to the constitution that not only 64

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required a vote of the entire electorate to increase or enact any tax, but also limited government growth and ensured that any money collected by the government over and above the rate of inflation plus population growth would be returned to the taxpayers. What the 1990s did teach the taxpayers and the legislators in Colorado was that the measure was a true restriction on how business would be done after the '92 election. Political interests must act in a more confined fiscal space, but at the same time they are able to utilize that space to their political advantage. However, there are also policy decisions that are taken out of the hands of lawmakers by some of the provisions in the TABOR Amendment. Higher education is a victim of this very thing. It is caught between low prioritization in the eyes of figure-setters and the restrictions ofT ABOR on cash funds. Difficult decisions lie ahead on budget items such as higher education, and chances are they must be made in the TABOR environment, for permanent change has occurred in Colorado. Peggy Lamm notes that lawmakers, lobbyists, and pundits alike must constantly ask, "Will this have an impact on TABOR? Will TABOR have an impact on what I am trying to do?" (Interview Nov. 29, 2001). There has not been a broad, sweeping movement to repeal the TABOR Amendment, and with the single subject required for ballot proposals, it is doubtful there will ever be a repeal of the entire amendment. Mark Cavanaugh related the passing of TABOR to stepping into a room with Frankenstein's monster, and then the 65

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passage of the single-subject amendment to closing the door, locking it, and breaking off the key in the door (Interview, Nov. 29, 2001). In fact, the only way an immediate and complete repeal could occur would be through a constitutional convention, which could leave out the unpopular aspects of TABOR. Such conventions were not Wlcommon in the 1960s and 1970s in other states. However, since Colorado drew up and ratified its original constitution in 1876, the much-amended document has not been totally rewritten (Cronin and Loevy, 1993, pp.99-100). Instead of such drastic reworking of the entire constitution or even the amendment itself, what has occurred is that each political interest has attempted to remove itself from the TABOR restrictions through specific mea.Sures aimed at its individual goals. This effort translates into a loss of motive for certain political actors to use their clout to repeal parts of TABOR. Amendment 23 is a perfect example. By placing in the constitution a requirement for the state to fund K-12 education at least to a certain level each year, the K -12 interests are held hannless by any of the aspects ofT ABOR that limit other programs or the state as a whole, but at the same time the K -12 system and those with a vested interest in it have removed themselves as a viable reason for a repeal of TABOR. Local governments have operated much in the same way. Many cities, counties, and even school districts have enacted measures exempting them from certain tax and spending limitations. They no longer have such an impetus to see the state constitution amended to free it from TABOR, and thus, there is no longer a unified coalition of local governments, political actors, or 66

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motivated citizen groups that could build the needed and sustained support for a thorough and lasting repeal of Colorado's tax-limiting constitutional amendment. Removing it is also a political question. Fred Brown, formerly of the Rocky Mountain News, believes that repeal referred by the members of the General Assembly would not be politically popular, given that the measure was brought by citizen initiative in the first place (Interview, Sept. 28, 2001). As for removal via the initiative, the fact that taxpayers receive refund checks in flush years, a removal through the initiative would be unlikely. And certainly one should never forget that with all of the consequences and alterations to the way the state conducts its fiscal business, there is still a strong contingent that believes along with Professor Barry Poulson of the University of Colorado at Boulder that TABOR has insulated Colorado from wide swings such as occur in the private sector and forced the state ''to pursue more prudent fiscal policies" (Interview, Sept. 25, 2001). Ironically the situation the citizens and their elected representatives have found themselves in is one whereby an initiative promoted as a more democratic means of running the state government may indeed have proved to be just the opposite. TABOR may allow for the citizens to approve any increase in taxes and may require the government to return any excess revenue, but at the same time it shifts political power and creates distortions throughout the system. From the time the question is printed on the ballot, the citizens are never fully aware of the intentions of the person or people who drafted and presented the amendment. There 67

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is rarely if ever a true understanding of the future effects of the measure. In fact proponents and opponents of a given measure use exaggerated or possibly even downright false predictions of what may occur if an amendment is passed, and they are both able to get away with such actions merely by the fact that future repercussions are uncertain. As is the case with T such unknowns are then placed in the constitution and tie the hands of elected officials giving the citizens a distorted view of politicians who may use the constraint to veil their true intentions. TABOR also led to a shifting of power from the General Assembly as a whole to the committees who most closely monitor the pW'Se strings of the state, namely the Joint Budget Committee and the Appropriations Committees. Most voters would agree that such a concentration of power is less, not more, democratic than the entire body of delegates elected from the various districts deliberating budgetary issues in detail. The TABOR amendment also brings up more fundamental questions regarding amending the constitution through an initiative that requires a mere majority vote in a single election. In the years since Amendment 1 's passage in 1992, various aspects of it have resulted in unforeseen consequences, but it is difficult to remedy them given the fact that TABOR is imbedded in the constitution. With elected officials unable to adjust the budget and the statutes to fill needs, more constitutional amendments (such as Amendment 23) are needed. Thus, the system shifts to a more direct democracy with each new initiative carving out a place in the constitution and requiring yet another amendment to make up for any wrforeseen 68

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consequences in any other amendment. And with each successive amendment there comes the same superficial and hurried debate that surrounds such forms of democracy. TABOR has proven in the past decade that the initiative process in Colorado is flawed. Creating drastic changes in the ftmdamental document of the state government with debate on the issue being limited to a few short months leading up to a single general election is certain to lead to significant alterations in the political environment. Elected officials cannot correct any minor deficiencies by statutory change, and therefore must work within a strict and perhaps flawed framework of government. If such fundamental change is allowed to happen, it should at least require more than a simple majority vote in a single election in order to provide for a more detailed and substantive debate on the issue. In the years to come, priorities will have to be set by both the elected members of government and the people who elected them. Under the dome and at the ballot box, the citizens of Colorado will have to decide where best to spend money. If the money is not available and the restrictions on the budget are too tight in any given year, both bodies have the opportunity to change things, but only through the amendment process. Some may argue that TABOR had unintended consequences or that the voters merely approved it because of the provision of voting on tax increases, but the fact of the matter is that 10 years later it is still in place. A few local governments have "de-Bruced" and a few measures have been passed to limit the 69

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effects of TABOR, but Douglas Bruce's Amendment 1 still remains basically intact in the Constitution. If the voters-the true components of democracy-wish for this limitation to disappear, they will work toward that end, but until then, lawmakers and pundits must learn to live within the limitations imposed upon them by the people, but that fact does not mean that they cannot use any means necessary within the law to achieve their political goals. 70

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BffiLIOGRAPHY Ames, Michele. "Bill requiring booster seats dealt setback." Rocky Mountain News 27 Feb 2002: 12A. Andras, Rudy. "Amendment 1 and Financial Policy." Prepared for Dain-Bosworth Inc. 15 Apr. 1993. ---------------."Amendment 1 and The Gallagher Amendment." Prepared for Dam Bosworth Inc. 5 May 1993. "Anti-tax madness takes a step forward." Editorial. St. Louis Post-Dispatch 19 Nov. 1992: 2C. Anton, Genevieve. "Lottery flush with cash." Colorado Springs Gazette 28 Nov. 1998: 1+. Bartles, Lynn. "Fat tax surplus spawns myriad ideas for refund." Rocky Mountain News 15 May 1998: 4A+. "The Bible vs. TABOR." Editorial. Denver Post Nov. 25,2001: 6E. Blake, Peter. "Owens confuses his TABOR role." Rockv Mountain News 27 Mar. 2002: 42A. Brandl, John E. Money and Good Intentions are Not Enough. Washington D.C.: Brookings Institute Press. 1998. Brown, Fred. "After Amendment 12loss, lawmakers eye Amendment 1." Denver Post 23 Dec 1994: lB. -----------. "Bruce Amendment Trailing." Denver Post 1 Nov. 1992: lA+. 71

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Bruce, Douglas. "Should we vote on a tax hike? Yes, let's vote." Editorial. Denver Post 18 Oct, 1992: IG+-. ------------------. "Tax limits: It's either us or them." Editorial. Rocky Mountain News 28 Oct. 1992: 57. Buechner, John C. "Restraints require innovation." Editorial. Denver Post 29 Mar. 1998: 2J. "CACI opposes TABOR Amendment 1." CACI Advantage 16 July 1990: 1+. "CU-Boulder vs. everyone else." Editorial. Denver Post 9 Sep. 2001: 6F. Cain, Brad. ''Names Spell Cash for Most Petitions." The Bulletin [Bend, OR] 3 June 1996: B3. c.f. Smith, Daniel A. Tax Crusaders and the Politics ofDirect Democracy. New York: Routledge. 1998. "Caught in TABOR's ratchet." Editorial. Denver Post 26 Jan. 2002: 7B. Chapman, Jeffery I. "The Impacts of Proposition 13 on Urban Development and Land Use." Proposition 13: A Ten-Retrospective. Ed. Fredrick D. Stocker. Cambridge, MA: Lincoln Institute ofLand Use, 1991. 15-50. Cronin, Thomas E. Direct Democracy: The Politics of Initiative, Referendum, and Recall. Cambridge, Mass.: Harvard University Press. 1989. Cronin, Thomas, and Robert D. Loevy. Colorado Politics and Government, Governing the Centennial State. Lincoln: University of Nebraska Press. 1993. Curtain, Dave. "Colleges seek TABOR relief." Denver Post I Dec. 1998: IB+. Dally-Johnston, Michelle. "Tax-cutters get ready for sharp debate." Denver Post. 27 Dec. 1998: 7B. Dittemore, Betty Ann. "Should we vote on tax hikes? No, let's not." Editorial. Denver Post 18 Oct. 1992: IG+. Downes, Thomas A. and David N. Figlio. "Do Tax and Expenditure Limits Provide a Free Lunch? Evidence on the Link Between Limits and Public Sector Service Quality." National Tax Journal 52.1 (1999): 113-125. 72

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Ewegen, Bob. "Bruce's 'ratchet' is a hatchet that would Califomicate Colorado." Denver Post 28 Sept. 1992: 7B. ---------------."Law of unintended consequences creates a disaster for Colorado education." Editorial. Denver Post 9 Nov. 1992: 7B. Finley, Bruce. "TABOR restricts windfall, state revenues soar, funding levels don't." Denver Post 19 Apr. 1999: 1A+. Ganey, Terry. "Amendment has altered tax process." St. Louis Post-Dispatch 30 Nov. 1990: 1B+. Gavin, Jennifer. "Legislators to cope with amendment's effects." Denver Post 8 Nov. 1992:6C. ------------------. "Spending caps could boost Statehouse role." Denver Post 7 Feb. 1993: 1C+. Germer, Fawn. "Lawmaker's ready to deal with tax limits." Rocky Mountain News 6 Nov 1992: 24. Grattet, Paul M. "TABOR too broad a brush." Editorial. Denver Post 29 Mar 1998:J2. Greider, William. The Education of David Stockman. New York: E.P. Dutton, Inc., 1982. Harrigan, John J. and David C. Nice. Politics and Policy in States and Communities. 7th Ed. Boston: Addison, Wesley Longman, Inc. 2001. Hartman, Todd. "Public cash stands idle." Rocky Mountain News 19 Feb 2001: SA+. Heller, Donald. Introduction. The States and Public Higher Education Policy. Ed. Donald Heller. Baltimore: Johns Hopkins University Press. 2001. 1-8. Huacuja, Manlio and Cindy Baouch. "Is Colorado Taxing and Spending Too Much?" Office of State Planning and Budgeting Issue Brief. 1 Feb. 1990. Imse, Ann. "Taxing questions." Rocky Mountain News. 4 Jan. 1998: 2A. Jacobs, James. "Legislature's tax decisions will impact many for years." Editorial. Denver Post 10 Jan. 1999: 1H. 73

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I ----------------."TABOR: Taxpayers Bill of Rights or Wrongs?" Denver Post 29 Mar 1998: IJ+. Jacobs, James, Tom Mortenson, John Bliss, Robert Moore, and Rich Allen. "Higher Education Finance Project." Governor's Blue Ribbon Panel on Higher Education 26 Apr. 2002. Kane, Arthur. "Budget con:lmittee celebrates outcome." Denver Post II Mar. 2002: lOA. ----------------."Owens vetdes budget fixes, freezes state hiring." Denver Post 3 Mar. 2002: 2B+. "TABOR prbmpting musical budgets." Denver Post 21 Feb. 2002: 12A. "Keep faith with the Editorial. Denver Post 21 Jan. 2002: 7B. Knox, Don. "Lakewood bypasses voters to fund development." Denver Post 10 Nov. 1998: IC+. Larson, Robert W. Populism in the American West Albuquerque: University of New Mexico Press. 1986. Lorch, Robert S. Colorado Government: Structure. Politics. Administration. and Policy. Niwot, CO::University Press of Colorado. 1997. "Love and TABOR's Cost;'' Editorial. Denver Post 29 Mar. 1998: J4. Lowery, David and Lee Sigelman. "Understanding the Tax Revolt: Eight Explanations." American Political Science Review. 75.3 (1981): 263-274. Martinez, Julia C. "A move to hike school funding." Denver Post 3 Jan, 2002: JB+. Martinez, Julia C. and Arthur Kane. "House budget clash escalates." Denver Post 7 Mar 2002: 8A+. 74

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McCallin, Nancy and Julie Hart. "Financial Impacts of Tax Relief and Ballot Initiatives." Office of State Planning and Budgeting Memo to Members of the General Assembly. 29 Sept. 2000. McGuire, Therese J. "Proposition 13 and Its Offspring: For Good or For Evil?'' National Tax Joumal52.1 (1999): 129-137. Mendel, Ed. "Economic boom shines spotlight on Gann limit." San Diego Union Tribune 10 Apr. 2000: A3. Morgan, Rex. "Amendment endangers Colo. culture." Editorial. Rocky Mountain News 28 Oct. 1992: 57. Mumper, Michael. "The Paradox of College Prices: Five Stories with No Clear Lesson." The States,and Public Higher Education Policy. Ed. Donald Heller. Baltimore: Johns Hopkins University Press. 2001. 39-63. Patty, Mike. "Tax-limit plan-friend or foe?" Rocky Mountain News 1 Nov. 1992: 44. Paulson, Steven K. "State treasurer says education initiative technically flawed." Lexis-Nexis: Acadeln.ic Universe 17 Oct. 2000. Associated Press State and Local Wire. 8 Feb. <2002 http://web.lexis-nexis.com/universe/document?_> Poulson, Barry. "A legislative no-Brainer." 6 Feb. 2002. Independence Institute. Feb. 2002 . "Position Statement." Common Sense Colorado-Citizens Opposed to Amendment One. Jack Wolfe, Treasurer. Rabushka, Alvin and Pauline Ryan. The Tax Revolt. Stanford, CA: Hoover Press. 1982. ---------------------."Bruce: Taxpayers must seize control." Denver Post 14 Oct. 1992: 1A+. Rafool, Mandy. :The Fiscal Perspective: State Tax and Expenditure Limits." 1996. National Conference of State Legislatures: The Fiscal Letter. 1 Oct. 2001 . Roberts, Jeffrey A. "Other states copying Colorado's Amend. 1." 1 Feb. 1993: 1A+. 75

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---------------------. "Tax-liririt amendment passes." Denver Post 4 Nov. 1992: lA+. ----------------------."Tax limit hailed and decried." Denver Post 5 Nov 1992: lA+. ----------------------."Tax limit's scope shocks government." Denver Post 22 Nov. 1992: lA+. "Rocky Mountain News/9 News Voter Guide: Amendments and Referendums/ Amendment 1." Rocky Mountain News 1 Nov. 1992: 1 V+. Romer, Chris. "Can Colorado hit its fiscal target?" Editorial. Denver Post 27 Jan. 2002: lD+. Sanko, John. '"92 Election was fiscal voter's approval of TABOR changed government." Rocky Mountain News 3 Aug. 1999: 14A+. ---------------."Budget agreement reached." Rocky Mountain News 12 Mar. 2002: 16A. ---------------."Foes call tax limit initiative 'sour lemon."' Rocky Mountain News 15 Sept. 1992: 14A. ------------...,--. "State reliance on property tax falls, collections oflevies on incomes, sales have grown faSter in 20 years." Rocky Mountain News 12 Dec. 1998: 7A+. ---------------. "State's colleges and universities seek end to budget limits." Rocky Mountain News 17 Nov. 1998: 5A. ----------------."Tax-limit amendment wins by slim margin." Rocky Mountain News 4 Nov. 1992:6+. ----------------. "Tax-limit backers smell victory." Rocky Mountain News 6 Sept. 1992: 1+. Sexton, Terri A., Steven M. Sheffrin, and Arthur O'Sullivan. "Proposition 13: Unintended Effects:and Feasible Reforms." National Tax Journal 52. I (1999): 99-111. 76

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Smith, Daniel A. Tax Crusaders and the Politics ofDirect Democracy. New York: Routledge. 1998. Smith, Rodney, T. "Local Fiscal Arrangements, Home Rule, and California's Fiscal Constitution after Proposition 13," Proposition 13: A Ten-Retrospective. Fredrick D. Stocker, ed. Cambridge, MA: Lincoln Institute of Land Use, 1991. 51-111. Snell, Ronald, ed. Financing State Government in the 1990s. Washington, D.C.: National Conference of State Legislatures and National Governors Association. 1993. "Spotlight on Amendment 1." Editorial. Rocky Mountain News 14 Oct. 1992: 58. Straayer, John A. The Colorado General Assembly. 2nd Ed. Boulder, CO: University Press of Colorado. 2000. Stanford, Gully. ''Neighborhoods, schools aren't rivals." Denver Post 22 Mar 1998: 4H. Stevens, Mark. "Limits raise questions." Denver Post 7 Nov. 1992: 3B+. -----------------."Other Amendment 1 muddies tax waters." Denver Post 22 Nov. 1992: 18A+. Stevens, Mark and Jeffery A. Roberts. "Measures could alter way state operates." Denver Post 30 Oct 1992: 6B. -------------------------------------------"State's schools face triple threat." Denver Post 11 Oct. 1992: 1A+. TABOR Legislative Handbook. Golden, CO: Independence Institute. 1999. TABOR: A Guide to the Taxpayer's Bill of Rights. Denver, CO: Colorado Municipal League. 1999. "The TABOR Surplus." Issue Brief. Governor's Office of State Planning and Budgeting. Sept. 2000. "TABOR vs. the colleges." Editorial. Rocky Mountain News 2 Dec 1998: 57 A. 77

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"Tampering with TABOR." Editorial. Rocky Mountain News. 10 July 1999: 63A. Walters, Dan. "Politics still swayed by Prop. 13." The Fresno Bee 14 Nov. 2001: A19. Wildavsky, Aaron. Budgeting and Governing. New Brunswick: Transaction Publishers. 2001. Wildavsky, Aaron and Naomi Caiden. The New Politics of the Budgetary Process. 4tli Ed. Boston: Addison-Wesley Longman. 2001. Winters, Richard F. "The Politics of Taxing and Spending." Politics in the American States. 7th ed. Eds. Virginia Gray, Russell L. Hanson and Herbert Jacob. Washington D.C.: CQ Press. 1999.304-348. 78

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INTERVIEWS CONDUCTED Andress, Rudy. Conducted at Offices ofDain-Roucher TABOR Center, Denver, CO. 13 Dec. 2001. Andrews, John, Senator, Colorado General Assembly. Senate Minority Leader. Conducted at State Capitol Bldg. Senate Minority Office. 19 DEC 2001. Brown, Fred. Denver Post Capitol Beat Reporter. Conducted at Colorado Capitol Building, Room 351 28 Sept. 2001. Conahan, Kenneth. Director, Joint Budget Committee. Conducted at Legislative Services Bldg. JBC Offices. 16 Oct. 2001. Dunn, Tom, Chief Economist Legislative Council Staff. Conducted at State Capital Office #007. 29 Nov. 2001. Eubanks, Sharon, Senior Attorney, Legislative Legal Services. Conducted at Legislative Legal Services Offices, Colorado State Capital. 6 Dec. 2001. Jacobs, James. Director of Policy and Research: Colorado Commission of Higher Education. Conducted at CCHE offices, ADDRESS. 21 Nov. 2001. Kogovsek, Ray. Former Congressman. Conducted at Kogovsek and Associates, Pueblo, Colorado. 3 Oct. 2001. Lamm, Peggy, Director of Governmental Affairs-Big Hom Institute and Chairperson CCHE and Mark Cavanaugh, Sr. Policy Analyst-Big Hom Institute. Conducted at Wells Fargo Bldg, Ste. 1830, Denver, CO. 29 Nov. 2001. Poulson, Barry. Professor of Economics, University of Colorado at Boulder. Conducted at CU Boulder, Econ. Bldg. Room 108.25 Sept. 2001. 79

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Sali.man, Todd, Representative, Colorado General Assembly. Member of Joint Budget Committee. Conducted at Legislative Services Bldg. JBC Offices. 12 Nov. 2001. Urschel, Jane, Ph.D. Associate Executive Director, Colorado Association of School Boards and Lauren Kingsbery, Legal Counsel, Colorado Association of School Boards. Conducted at CASB Offices, 17 Dec. 2001. 80