Lessons learned from taxpayer losses.


Fiscal conservatives suffered a setback earlier this month when all three state-revenue-limit proposals modeled after Colorado’s Colorado’s Taxpayer’s Bill of Rights (TABOR) suffered defeat on election night. At the beginning of the year, many were optimistic. In fact 2006 was the first year that TABOR style fiscal limits were under consideration in multiple states. However, in four states, hostile judicial rulings prevented limits from even appearing on the ballot and in the other three states, revenue limits were defeated at the polls. However, fiscal conservatives should not despair. Campaigns from both this year and previous years can still teach fiscal conservatives some important lessons that might well lead to future victories.

While TABOR lost by substantial margins in both Oregon and Nebraska, it fared significantly better in Maine, winning over 46 percent of the vote in a blue state during a tough election for conservatives and Republicans nationwide. The relatively strong showing in Maine is due to a few factors. First, the campaign was spearheaded by a local activist, Mary Adams, who had been working on enacting TABOR for over two years. Furthermore, TABOR activists succeeded in winning endorsements for TABOR from a number of candidates and newspaper editorial boards, including Maine’s largest daily newspaper, The Portland Press Herald. This strong local support made many Maine voters more comfortable with the idea of a fiscal limit and less susceptible to the scare tactics used by TABOR opponents.

Despite this, it seems that voters in Maine, as well as in Oregon and Nebraska were concerned that TABOR’s revenue limit would hurt state services. Not surprisingly, TABOR opponents were of course all too eager to trot out horror stories from Colorado. Of course, Colorado’s recent fiscal pressures were largely due to a revenue crash caused by a severe drought and a mandate requiring sharp annual increases on K-12 education spending. Unfortunately, making this case to voters unfamiliar with the nuances of Colorado fiscal policy is a difficult task. Consequently, instead of talking about the revenue limit, a better strategy for TABOR advocates might be to emphasize TABOR’s voter approval requirement for tax rate increases. This strategy was effective in Colorado in 1992 and might be effective elsewhere.

Overall, despite the losses, fiscal conservatives would do well to be persistent. In Colorado, Douglas Bruce tried and failed to enact fiscal limits similar to TABOR through the initiative process in both 1988 and 1990. It was not until 1992 that TABOR received majority support. Perhaps an even better example comes from California. During the late 1960s and early 1970s, Howard Jarvis was able to win some victories for taxpayers in southern California. However, prior to the passage of Proposition 13, most of his statewide efforts were unsuccessful. In 1976, he even failed to collect enough signatures to get a proposal for property tax relief on the California ballot. It was not until he joined forces with Paul Gann of People’s Advocate in 1978 that he received enough signatures to put Proposition 13 on the ballot. The rest of course is history.

Even though TABOR advocates lost a few battles on Election Day, fiscal conservatives have already achieved a larger and more important victory in that we have finally found a strategy that is actually effective at limiting the growth of government. There is plenty of evidence from the state and federal level that statutory budget caps do very little to halt government growth. Furthermore, when voters successfully use the initiative process to lower taxes, state and local governments often respond by raising other taxes. However, TABOR’s combination of a low, constitutional limit on revenue growth and immediate rebates of surpluses, gave TABOR enough visibility and popularity to enjoy long term success in Colorado. This model can be successful elsewhere — if fiscal conservatives do not give up the fight.

– Michael J. New is an Assistant Professor at the University of Alabama and an Adjunct Scholar at the Cato Institute


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