Barry Poulson, PhD, Featured, Proposition CC, TABOR, Taxes, Uncategorized

Guest editorial: With Prop CC, Colorado threatens to copy California

In 1992 Coloradans had the foresight to add to their state constitution the Taxpayers’ Bill of Rights (TABOR) to limit government spending and require state and local governments to refund to their owners (the taxpayers) those tax revenues collected in excess of the revenue limit.  In November Colorado citizens will vote on Proposition CC, which would gut TABOR and allow the state to spend excess revenue forever.

Coloradans should reject Prop CC and preserve the TABOR limits on state spending, with taxpayer rebates of overcollected revenue. Without that protection, increased spending will push the state toward a fiscal cliff. Over the past decade the state has already circumvented the TABOR limits on debt by incurring ‘off-budget’ debt that does not require voter approval, such as the unfunded liability in state pension and health benefits for retired public employees. The Pubic Employees Retirement Association (PERA) estimates these unfunded liabilities at $32 billion; but with realistic interest rate assumptions the unfunded liabilities are in excess of $100 billion. In the last recession the assets in PERA fell by almost half, and we should expect a similar shortfall in the next recession.

California went through this years ago when the “Gann Limit,” which was California’s TABOR, was dismantled by a California Teachers Union (CTA) initiative, Prop 98. Without the Gann Limit in place, California has increased spending and debt at an unsustainable rate for decades. California taxpayers are now saddled with hundreds of billions in debt and unfunded liabilities in the state pension and health benefit plans for retired public employees (CALPERS). The next recession will test the solvency of CALPERS, especially at the local level. .

And now the teachers’ union is trying to destroy Prop 13 – California’s landowners’ protection initiative – with a so-called “split roll initiative,”  through which business property taxes would be jacked up immeasurably, losing Prop 13 protections.

A bright spot: Measure EE, a property tax increase in Los Angeles County, sponsored by the school union crowd and designed to feed the unions and their pension demands, recently failed at the ballot box. It augurs well for California taxpayers’ ability to beat the Prop 13 “split roll” teachers union initiative in the November 2020 election and for Colorado taxpayers to defeat Prop CC on November’s state election ballot.

Citizens in Colorado and California need to strengthen their constitutional limits on state spending and debt, rather than weaken them. They should impose a ‘debt brake’ that has proven to be effective in reducing debt burdens at both the state and local level in other countries, such as Switzerland.

The Colorado and California tax fights are of epic proportions with national implications. On November 5th Colorado voters can “fire a shot heard ‘round the nation” in defense of taxpayers by protecting and preserving the unique and innovative taxpayer protections in TABOR. The following November we will begin rescuing California by protecting taxpayers from the Prop 13 “split roll” initiative.

The states have always been considered the laboratories for innovation in America. With strong taxpayer support, Colorado and California can continue that tradition.

Barry Poulson is former Chairman of the Economics Department, University of Colorado, Boulder, and one of the architects of TABOR and other fiscal restraint concepts.

Lewis K. Uhler is Founder and President of the National Tax Limitation Committee, one of the architects of the Gann Limit (predecessor to TABOR in California) and leader in protecting California’s Prop 13.

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