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Colorado’s Budget: TABOR Still Working

Colorado is not California. Our state has not issued IOUs; our bonds have not been downgraded; and, so far, our governor has not gone to Washington, hat in hand, begging for more federal bailout money. Colorado has not experienced a fiscal crisis like that in California primarily because of the most effective tax-and-spending limit in the country, the TABOR amendment.

TABOR has worked much the way it was intended, allowing Colorado citizens to decide how much government they want and are willing to pay for.

Since TABOR was enacted, real per capita state spending has grown at about the same rate as real per capita income. Colorado has lowered taxes and limited debt, creating one of the best business-tax climates in the country. Colorado has attracted business investment, created jobs, and improved standards of living better than most other states.

Despite this success, TABOR is under attack. Special interests, unsuccessful in weakening TABOR at the ballot box, are eroding our tax-and-spending limits through statutes and executive orders.

While Colorado is not experiencing a fiscal crisis like California, we must introduce reforms to eliminate a structural deficit in the state budget. The state should introduce priority budgeting, and do a better job evaluating and monitoring state programs. Greater efficiency could be achieved by introducing a competitive sourcing center, and an effective sunset advisory commission.

Amendment 23, which mandates increased spending for K-12 education regardless of the state of the economy, is a major source of structural deficit in the state budget and should be repealed. The money earmarked for the Education Trust Fund should be used to create a true rainy-day fund that could offset revenue shortfalls and stabilize the budget in periods of recession.

The structural deficit created in the state budget by Amendment 23 demonstrates that the state should not use earmarks and mandates to create a privileged position in the state budget for any interest group. The education lobby should not have a monopoly in the delivery of education services, and should be held accountable for student performance.

Education reforms could significantly reduce costs and deliver better quality education services. The state should vigorously pursue school choice models that have proven successful in improving student performance, including vouchers, charter schools, for-profit schools, and Internet education. Unfunded liabilities in the state pension system (PERA) have reached a critical level. The state should declare an actuarial emergency, and replace this defined benefit plan with a defined contribution plan, as other states have.

The federal bailout is not stabilizing our state budget, but is in fact exacerbating the structural deficit in the budget. One-time money is being used to fund ongoing programs such as Medicaid. When the federal bailout dollars disappear, it will be very difficult to fund these ongoing programs. The state should limit this annualization of one-time money, and introduce competition and cost savings in the delivery of health care services to the poor.

This article originally appeared in the Denver Post, July 20th, 2009.