The rhetoric sounds familiar

My OpEd in the Denver Post. Originally Published Oct. 24, 2010.

Mark Twain is believed to have said, "History may not repeat itself, but it rhymes a lot." We have certainly heard the tune surrounding the anti-Amendments 60, 61, and Propositions 101 camp before.

Anti-Taxpayer's Bill of Rights (TABOR) advocates used the same hyperbolic scare tactics that we are seeing now. Fortunately (and unsurprisingly) the dooms day predictions about TABOR turned out to be completely wrong.

Colorado thrived once people were allowed to keep their money and the state did not experience "economic Armageddon." As Aerosmith put it, the rhetoric against the so-called "ugly three" is "the same old story, same old song and dance, my friend."

The anti-Amendments 60 and 61 and Proposition 101 camp recently released a TV ad claiming that these measures "will trigger a second recession," "Seventy-three thousand jobs gone. Eight thousand teachers lost," "Huge class sizes that hit schools the hardest," and "No bonding for roads, schools or water projects."

The Colorado Springs City Council recently passed a resolution calling the three measures, "evil," "dangerous" and the work of anarchists. The political class, unions, and corporate welfare schemers made these same statements about TABOR and guess what? They were all completely wrong.

During the 1992 TABOR campaign, then-Governor Roy Romer predicted that TABOR would result in "economic Armageddon," and warned of signs posted on the state line saying, "Colorado is closed for business."

Wrong.

By 2006, Colorado ranked 8th on the Tax Foundation's State Business Tax Climate Index. Between 1995 and 2000 Colorado was first among states in gross state product growth and according to the National Association of State Budget Officers, Colorado was one of only five states that did not run a deficit during the 2002 fiscal year.

An anti-TABOR brochure said the measure "limits school spending growth to the rate of inflation and growth in student population. Experts fear this will make it difficult for schools to keep up and create further impetus for cuts."

Wrong.

From 1988-89 to 2002-03, total per pupil spending grew by more than 17 percent. After adjusting for inflation, Colorado only had total per-pupil spending decreases in 1993, 1994, and 2000. However, the increases that occurred during other years more than made up for the three decreases.

The bond rating firm Moody's chimed in on TABOR predicting that Colorado would see a "long-term deterioration" of its credit rating. Then as now, opponents warned about threats to bonding for roads, schools, and water projects.

Wrong. (CONTINUE...)

Bad Solution to the Wrong Problem

On July 1st a provision of Referendum C, the five-year Taxpayer Bill of Rights (TABOR) refund suspension, came to an end in Colorado. As we cast off this bipartisan travesty, it is important to look back and see why it happened, so it never, ever, happens again. Ref. C was a bad solution for a problem that didn’t exist.

Colorado’s economy was doing quite well throughout the ’90s. However, from 2001 to 2002 the economy took a dive and general fund tax revenue decreased from $8.8 billion to $7.7 billion, a 12 percent decrease. Those who see TABOR as a threat to their power decided to do as Rahm Emanuel advocates, “Never let a serious crisis go to waste. What I mean by that is it’s an opportunity to do things you couldn’t do before.”

This was their chance to cripple TABOR.

Supporters of Referendum C blamed the need for budget adjustments on the TABOR limit and so-called “ratchet effect.” They told Colorado voters that a five year exemption from the TABOR revenue limit was needed to prevent the state from collapsing into Mad Max style chaos. In 2005, Ref. C was predicted to raise $3.7 billion over five years, making it the largest tax increase in Colorado history. All of this, however, was based on the premise that the budget shortfall was caused by TABOR in the first place.

Reality disagreed.

The economy in most states suffered during the 2001 recession. Aggregate general fund revenues declined an average of 6 percent for all states. The 9/11 terrorist attacks compounded this problem and not only damaged the nationwide economy, but hit the Colorado tourist industry particularly hard. At the time, tourism accounted for 8 percent of all jobs in Colorado. As a result of 9/11, visits to ski resorts declined by 14 percent for the first part of the season and 4.4 percent for the entire season. National Parks visits fell by 8 percent, and the rafting industry saw its first commercial decrease since 1988.

On top of the recession and terrorist attacks, Colorado also faced the worst drought in 25 years in 2002. The entire state was declared a disaster area for the first time since 1977. It was the driest year since 1703 along the South Platte basin, and since 1579 along the Colorado River. As you can imagine, this was not a good year to be a farmer or rancher. Dry-land wheat production was at 45 percent of its 10-year average. Cattle breeding stock was down 40-50 percent and Southern Colorado ranchers lost 80 percent of their herd and $460 million.

The third major problem with the budget was a result of an earlier “solution,” Amendment 23. Amendment 23 mandates yearly increases in K-12 education regardless of revenue collections. If revenues are high, the increases come out of the TABOR refund, but if revenues are low, the increases come out of the general fund. In tough economic times, education spending continues to increase, but other services decrease even more than they would have otherwise. When the budget decreased from 2001-2002 by over $1 billion (12 percent), education spending actually increased by $846 million (16 percent). From 2001-2006, state school finance spending increased by 39 percent in Colorado.

Crisis (or perceived crisis) can cause people to act irrationally and to listen to opportunists looking to expand their power. TABOR was unnecessarily handcuffed and the taxpayers suffered. The silver lining will come if we can learn from this mistake and work towards solutions to problems that actually exist, such as so much of our current state budget being tied to federal programs that require automatic state spending increases every year.

Originally appeared in the Denver Daily News, Colorado Springs Gazette, and The Independence Institute on July 16, 2010

More information on Referendum C is available in my Independence Institute paper "Referendum C: The Wrong Solution for the Wrong Problem." 

Legalized Plunder Becomes Plain Old Stealing

Governments have stolen from their citizens for as long as governments have existed. Fredrick Bastiat, in The Law, used the phrase “legalized plunder” to describe this theft. Legalized plunder is theft that becomes legitimized and legalized when the criminals make the laws. It is commonly known as taxes. The looters have conditioned us to believe that this is how it has to be; we are told the only constants in life are death and taxes. They have also led us to believe that when money is forcibly taken from us without our consent that it is ok when the government is the one holding the gun.

Due to “recent budget problems” (a.k.a. the states spent too damn much of your money) California and Kansas are going to “delay” paying income tax refunds. They will not be paying the citizens any interest or fees for keeping the money, and who knows if they will ever actually pay the money back. These states have crossed the line from legal plunder to plain old stealing.

The income tax refund is when the government takes more from you than it is legally allowed to steal so they give part of it back (without interest). Up until now, they have been nice criminals and gave back some of what they stole (in Colorado they were forced by TABOR to give it back). Wouldn’t it be great if the mugger in the park would send you a check for some of the money he took from you?

These governments have decided that in these tough economic times they need your money more than you do (just like the mugger in the park). Better be careful next time you buy a car. Use exact change because GM might decide to keep the change to help with their budget problems.

Colorado did this in 2005 with the passage of Referendum C. At least they had the decency to ask us if they could steal our money and let the tyranny of the majority punish the minority. California and Kansas didn’t bother with that formality.

Where is the moral outrage from the citizens of these states? Where are the cries of “No taxation without representation?” How much more abuse are we going to accept from our governments?