TABOR

22 May 2005

Bill Hobbs reports on a discussion about Senator Bryson’s proposal for a Taxpayer’s “Bill of Rights”. The description Bill gives of Bryson’s new proposal differs from bills I’ve read in the past (as in this one) slightly in that it relies on the per-capita income growth rate rather than CPI-U + population growth for its limitation, although the effect is largely the same. The intent of this legislation is to limit government growth, and one of the effect is that governments with such legislation would be severely impeded in new endeavors. Obviously, this is the point of the legislation, which boils down to a philosophical debate we don’t need to get into, but the limitation has more extensive and odious effects than merely “freezing” growth of current government services:

The legislation ties allowed government growth to the economy, but government spending growth does not grow at the same rate as the economy. Governments typically spend money in high-growth areas, for example health care and education, which typically grow at nearly twice the rate of measures like CPI or income/wages. The rate of government spending necessary to maintain current services differs significantly from the growth rate it’s restricted to. The result is that extensive cuts in the services a government is able to provide will be necessary.

If one must limit government growth, you would want to tie it to a measure that accurately reflects the changes in spending that governments typically face. Unfortunately, neither CPI nor per-capita income come anywhere close. (We should be so lucky as to see per-capita income rising as quickly as, say, health care costs.)

While small-government proponents of this legislation likely envision that these spending caps will result in wiser allocation of money, the truth is that the spiraling costs of healthcare, education, etc. are well out of the realm of control of state and local governments. The only result of this legislation will be to cripple state and municipal governments with limitations that prevent them from keeping up with the costs of existing services. Colorado enacted TABOR-style legislation in 1992, as Bill notes. He’s quick to cite a few examples of the resulting prosperity, but the truth is much less encouraging for the people of Colorado, where they have seen extensive cuts in all areas of government services.

This no doubt pleases the small-government advocate, but an honest debate about this sort of legislation should acknowledge that it goes far beyond “freezing” service levels, but rather ties spending to a growth rate that will mean drastically cutting services.

You can read more about the weaknesses of TABOR legislation propals here.