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Voting on fiscal limits.


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This fall, many conservatives and libertarians have been avidly following the upcoming House and Senate elections.  However, there are other elections of considerable importance as well. Most notably, voters in three states, Maine, Oregon, and Nebraska, will be voting on fiscal limits modeled Colorado’s Taxpayer’s Bill of Rights (TABOR), America’s most well known and most effective fiscal limit. Furthermore, a TABOR-style fiscal limit is under consideration in Montana as well, though there is a possibility that it will later be declared unconstitutional by their state supreme court.

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The good news for fiscal conservatives is that the design of these proposed limits indicates that activists have learned from Colorado’s experience with TABOR. Indeed, each of these limits possesses the three characteristics that made TABOR so successful in Colorado. First, each limit is constitutional which means that they cannot be easily undermined by a hostile state legislature. Second, each sets a low limit of inflation plus population for revenue or expenditure growth. Finally, each limit has a provision requiring immediate tax relief when revenues exceed the limit. This makes the benefits of the limit more visible to taxpayers.

In each of these three states, the enactment of a TABOR-style fiscal limit would doubtless limit government growth, promote tax relief, and spur the economy. However, these elections could have an impact felt well beyond the borders of these states. When voters in Colorado voted to suspend TABOR’s revenue limit for five years last November, many on the left gleefully spun the outcome as a big setback for TABOR. As such, a victory in 2006 would allow fiscal conservatives to go on the offensive and show activists and legislators in other states that fiscal limits still enjoy widespread popularity. Additionally, a victory in at least one state would give fiscal conservatism some much needed momentum going into the 2008 Presidential elections.

Furthermore, the fact that three solid limits are on the ballot is an accomplishment by itself. TABOR’s ability to restrain spending and promote tax relief in Colorado has captured the imagination of conservatives and libertarians across the country. However, progress in many states has remained stalled.  In some cases TABOR-style fiscal limits have been prevented from appearing on the ballot by hostile judiciaries.  In addition to the legal problems that the Montana limit is facing, legal challenges have prevented TABOR style fiscal limits from appearing on the ballot this year in Michigan, Oklahoma, and Nevada. In previous years, legal challenges have prevented TABOR-style fiscal limits from appearing on the ballot in other states as well.

In other cases TABOR style fiscal limits have been undermined by the reluctance of political leaders. During the 2003 California Recall nearly all of the Republican candidates supported the idea of a TABOR-style revenue limit as a way to generate surpluses that could pay down California’s then $38 billion deficit. In fact, Governor Schwarzenegger gave the idea serious consideration after his inauguration. However, Schwarzenegger abandoned a TABOR style proposal in favor of a measure to strengthen the state’s balanced budget amendment. Similarly in Ohio, Republican Gubernatorial candidate Ken Blackwell cut a deal to remove a TABOR style revenue limit from the 2006 ballot in exchange for a weaker statutory limit passed by the state legislature.

Because of these false starts elsewhere, 2006 marks the first time in recent years that well crafted TABOR style limits will be on the ballot in multiple states.  Of course, it is not surprising that opponents of these fiscal limits are touting the suspension of TABOR’s revenue limit in Colorado as “proof” that fiscal limits do not work. Fortunately, fiscal conservatives can respond with plenty of intellectual ammunition. We can talk about TABOR’s success at promoting tax relief and economic growth in Colorado. We can also talk about how Colorado’s recent fiscal problems were primarily due to a severe drought and a poorly designed education funding mandate that required sharp spending increases on K-12 education, even when revenues declined.

However, perhaps our strongest argument is that even though TABOR’s revenue limit was suspended, TABOR placed that decision to raise taxes in the hands of Colorado voters, not self-serving politicians. Indeed, the past few years have given fiscal conservatives ample evidence of the inability of elected officials to place effective limits on their own ability to spend. Overall, it is becoming apparent that the best strategy for fiscal conservatives might well be to enact tight fiscal limits that put more power in the hands of taxpayers. That is what makes these elections so important. On November 7 voters in Oregon, Nebraska, and Maine can do more than just enact fiscal limits. Voters in these states have the ability to generate some much needed political momentum for TABOR across the country.

 – Michael J. New is an assistant professor at the University of Alabama and an adjunct scholar at the Cato Institute .



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