By Linda Gorman and Ben DeGrow
The case against the Taxpayer’s Bill of Rights (TABOR) is built on a shaky foundation of misleading data. The latest example of weak arguments comes from the Center on Budget and Policy Priorities (CBPP). October 2006 report is a splendid guide to the art of using an ounce of truth to sell a pound of nonsense.
The CBPP is a Washington, D.C., group that advocates increased government spending and opposes laws like TABOR because they require government to justify requests for more taxpayer dollars by putting them to a vote of the people. In the fall of 2006, voters in other states weighed the decision to follow Colorado’s lead and adopt TABOR-like tax limitation proposals. During the campaign, CBPP produced a video ad implying that TABOR had destroyed Colorado’s public services.
Independence Institute Fiscal Policy Center Director Penn Pfiffner responded to the CBPP ad with a paper titled TABOR Benefits Colorado’s Citizens: A Response to Misleading Video. It revealed that many of the CBPP’s criticisms of TABOR were based on discredited statistics and misleading arguments. CBPP published its response to Mr. Pfiffner in the October 2006 report.
Since the CBPP continues to rely on misleading and out-of-context data, the Independence Institute again assumes the responsibility of educating the CBPP about the benefits of TABOR in Colorado.
Mr. Pfiffner used Census data on state spending to show that TABOR did not reduce Colorado state spending. The CBPP report responded with appropriations data from the Colorado Legislative Council for 2001-2003 to show that it did. The CBPP also tried to have it both ways, asserting that “even if spending rises, there may be program cuts.”
Unfortunately, appropriations data are not particularly accurate measures of actual spending. For example, if funds are appropriated for one purpose, and then redirected by appropriating them to another purpose, they are counted twice. The CBPP claims should also be weighed against a 2003 memo from the Colorado Governor’s office, which supported Mr. Pfiffner’s finding. The memo flatly states that “TABOR is not the cause of the state’s present financial situation.” It further notes that the “FY 2002-2003 budget was 7.3 percent larger than the FY 2001-02 budget.”
Even the CBPP’s measure of state funding adequacy is misleading. It uses state spending as a fraction of personal income and says that if Colorado’s fraction doesn’t match that of other states, TABOR has caused harm. But a number of factors that do not affect state government expenses, like increased company profits or working more hours, can reduce state spending as a fraction of personal income simply by increasing personal income while state spending remains relatively constant.
State buildings do not cost more to heat simply because private citizens work harder. Neither does educating children. And if working harder reduces poverty, then rising personal income should reduce the amount spent on state poverty programs. In some cases, reducing state spending as a fraction of personal income is a sign of efficient government.
In its defense, CBPP asserts that “spending as a share of personal income is valid since personal income measures the wealth of a state and thus, its ability to contribute to public services.” While Colorado citizens may differ in whether or not they think government needs to spend more just because it exists and they are working harder, elementary macroeconomics textbooks are unanimous in explaining that personal income is not wealth. Income reflects the amount earned over a period of time, whereas wealth measures the amount of assets possessed at a given time.
An easily refutable section of the CBPP ad recycled the old claim that Colorado is last in childhood immunizations, implying that TABOR is to blame. This assertion is a willful misinterpretation of the 2002 National Immunization Survey (NIS). Mr. Pfiffner and many others have explained that that the NIS “estimates of coverage in states with small populations are estimated from small samples and are subject to error.” When the survey’s published standard errors were considered, Colorado’s likely percentage of immunized children was statistically indistinguishable from that of a number of other states.
In rebuttal, the CBPP report’s author proclaimed, “To suggest that the NIS is unreliable is preposterous….Its estimates are subject to error (as with any survey that uses samples to extrapolate data), but it does not publish or estimate data for areas where sample sizes are too small.”
“Too small” is a value judgment, one that Mr. Pfiffner did not make. The CBPP neglected to inform readers that various NIS publications make it crystal clear that state immunization coverage rates are estimated with substantial error and “should be interpreted with caution.” Colorado’s 2002 last-place point estimate of 62.7 percent had an estimated error of ±6.6 for the percentage of children receiving the 4:3:1:3:3 vaccine series. In “How to use the NIS data,” the NIS explains confidence intervals, and warns users that differences in point estimates in states with overlapping confidence intervals may, in fact, be due to chance. Unsurprisingly, Colorado’s confidence interval overlapped those of a number of other states.
In any case, by 2004, Nevada was in last place and Colorado’s estimated coverage rate was 77.1 ± 6.2 percent. Either NIS state coverage estimates are subject to a fair amount of error or Colorado’s TABOR-deprived health system increased vaccination rates by 15 percent in just two years.
Transportation and Infrastructure
The CBPP presents out-of-context data in its struggle to make the case that TABOR had led to “insufficient investment in Colorado’s infrastructure system [sic].” The October report informed readers that “In 2003, the American Society of Civil Engineers (ASCE) gave Colorado a D+ for the condition of the state’s roads and a C+ for its bridges.” A D+ sounds bad, until one realizes that for roads, D+ was an average grade in the 2001 ASCE report, and that the 2003 grades were no better. For bridges, the average 2001 grade was a C, unchanged in 2003. Nationwide, the averages were a C on bridges and a D+ on roads. In proper context, the grades mean that the ASCE felt that Colorado’s roads were average and that its bridges were slightly better than average.
Education Spending and National Rankings
In its response to Mr. Pfiffner’s paper, the CBPP displayed a chart indicating a downward trend in Colorado’s per-pupil spending during the first eight years of TABOR (1992 – 2000). This result is accomplished by tilting the chart to make the national average a straight horizontal line. Yet even adjusted for inflation, the national average rose significantly over the eight-year period. Nearly every state (including Colorado) increased per-pupil spending faster than inflation between 1992 and 2000, but most states increased spending at a greater rate than Colorado. Education spending has not gone down under TABOR; the CBPP is unsatisfied with just how quickly it has risen.
The most recent statistics available from the U.S. Department of Education rank Colorado 28th nationally for spending a total $9,073 per student in K-12 education during the 2003-04 school year. In 1992-93, at the time TABOR was enacted, Colorado ranked 29th at $5,389 in total expenditures per student. When removing expenses for capital construction and debt financing, Colorado’s ranking slipped from 31st in 1992-93 ($4,766) to 33rd in 2003-04 ($7,478).
Colorado’s slower rate of education spending increases has not translated into reduced academic performance. The National Assessment of Educational Progress (NAEP) shows that Colorado students remained among the nation’s best achievers, even as the state increased the percentage of English language learners being taught—in part due to an influx of illegal aliens. While Colorado’s graduation rate slipped between the Class of 1993 and the Class of 2001, the fall (from 75 percent to 72 percent) was smaller than several other states with more lavish spending: including Delaware, Illinois, New York, and Wyoming.
Education Spending and Teaching Personnel Costs
The CBPP defends the measurement of per-pupil education spending as a percentage of personal income with the assertion that wealthier states need to offer educational employees higher salaries to compete with the private sector. However, the American Federation of Teachers ranked Colorado 21st in average annual teacher salaries in 2003-04. Adjusted for cost of living, Colorado teachers rank 33rd nationally but remain regionally competitive—earning more than their counterparts in neighboring states like Kansas, Nebraska, New Mexico, Oklahoma, Utah, and Wyoming.
Furthermore, the problem in recruiting and retaining high-quality teachers has less to do with how much teachers are paid, when compared to the private sector, than how they are paid. A 2006 report from the Center for American Progress shows that the lack of greater earning potential for teachers who have greater aptitude or more technical training turns many talented applicants away from the profession.
To determine whether enough money is being spent on K-12 education, and on teaching personnel costs in particular, one must consider if funds are being used effectively. A 2007 Education Sector report conservatively estimates that 19 percent of current school spending is tied up by negotiated agreements “to implement policies which research has shown have a weak or inconsistent relationship with student learning.”
Costs for Textbooks and Supplies
In his paper, Mr. Pfiffner challenged the claims that TABOR’s effect on state funding of K-12 education has placed responsibility for purchasing textbooks and supplies on certain private parent groups. In its video, the CBPP uncritically quoted a parent who said “the PTA is buying all the textbooks in the school.” It neglected to report the fact that by law, $172 per student per year is to be spent on “instructional supplies and materials.” In its October 2006 response to Mr. Pfiffner’s paper, the CBPP retreated to a new argument: “And while the School Finance Act of 1994 does mandate that a certain per-pupil amount be budgeted for Instructional Supplies and Materials this amount has not been sufficient.”
The CBPP report provides a list of instructional materials and their stated costs, yet omits the obvious fact that most textbooks, library books, instructional CDs, and computer software do not need to be purchased new for each student each year. Nor does anything in state statute or rule prevent school districts from allocating additional funds to purchase books and supplies.
Given that the CBPP’s analysis of the Colorado economy under TABOR is based on a number of misrepresentations, out-of-context assertions, and unsuitable comparisons, readers interested in basic accuracy in policy discussions should carefully consider whether it is a good source for reliable information on the effects of TABOR.
TABOR does not say that government can never raise taxes. TABOR does not fix government revenues, but it does protect citizens’ incomes from careless appropriation by government. It does this by shifting power to the people who pay the taxes. Before TABOR, those who wanted a tax increase to fund a pet project had only had to ask the legislature to pass a tax increase. Since tax increases give legislators more money to distribute and insulates them from the difficulties of cost cutting, raising taxes tends to be more popular with legislators than with the average taxpayer. TABOR simply requires that tax increase proponents seek approval from those who pay taxes rather than those who spend them.
Karen Lyons, “A Response to the Independence Institute’s Attack on ‘The Real Story Behind TABOR’ Video, http://www.cbpp.org/10-23-06sfp.htm
“The Real Story Behind TABOR,” http://www.cbpp.org/taborvideo.htm
State of Colorado, Office of State Planning and Budgeting, “Balancing Colorado’s Budget” (July 2003), http://www.state.co.us/gov_dir/govnr_dir/ospb/budget/factsheets/statewide/BALANCING-Jul2003.pdf
United States Department of Health and Human Services, Centers for Disease Control and Prevention (CDC), Morbidity and Mortality Weekly Report (MMWR), 8 August 2003, “National, State, and Urban Area Vaccination Levels Among Children Aged 19–35 Months — United States, 2002,” http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5231a2.htm; CDC, National Immunization Program, “How to Use the NIS Data,” http://www.cdc.gov/nip/coverage/how-to.htm
CDC MMWR, 29 July 2005, “National, State, and Urban Area Vaccination Levels Among Children Aged 19–35 Months — United States, 2004,” http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5429a1.htm
American Society of Civil Engineers (ASCE), 2003 Progress Report, http://www.asce.org/reportcard/index.cfm?reaction=full&page=6; ASCE, Colorado’s 2003 Infrastructure Report Card, http://www.coloradoreportcard.org/
National Center for Education Statistics (NCES), Common Core of Data (CCD), http://www.nces.ed.gov/ccd; Inflation calculations made from William D. Berry, Richard C. Fording, Russell L. Hanson, Cost of Living Index for the American States, 1960-2003, http://ssdc.ucsd.edu/ssdc/icp01275.html
National Assessment of Educational Progress: The Nation’s Report Card, http://nationsreportcard.gov; Jay P. Greene and Marcus A. Winters, Public High School Graduation and College-Readiness Rates, 1991-2002, Manhattan Institute Education Working Paper 8, February 2005, Table 8, http://www.manhattan-institute.org/html/ewp_08.htm – Colorado’s share of non-English-speaking students grew substantially during the 1990s. Children aged 5 to 17 unable to speak English well or at all more than doubled, from 1.2 percent of the population in 1990 to 2.6 percent of the population in 2000. See United States Census Bureau, 1990 Census of Population, CPHL-96, and Census 2000, Summary File 3, Tables P19, PCT13, and PCT14.
American Federation of Teachers, Survey and Analysis of Teacher Salary Trends 2004, “Table II-1: Average Teacher Salary in 2003-04, State Rankings,” http://www.aft.org/salary/2004/download/2004AFTSalarySurvey.pdf; cost-of-living adjustments made from Berry, Fording, and Hanson, Cost of Living Index.
Dan Goldhaber, Teacher Pay Reforms: The Political Implications of Recent Research, Center for American Progress, December 2006, http://www.americanprogress.org/issues/2006/12/pdf/teacher_pay_report.pdf
Marguerite Roza, Frozen Assets: Rethinking Teacher Contracts Could Free Billions for School Reform, Education Sector Report, January 2007, http://www.educationsector.org/research/research_show.htm?doc_id=436576
Copyright ©2007, Independence Institute
INDEPENDENCE INSTITUTE is a non-profit, non-partisan Colorado think tank. It is governed by a statewide board of trustees and holds a 501(c)(3) tax exemption from the IRS. Its public policy research focuses on economic growth, education reform, local government effectiveness, and Constitutional rights.
JON CALDARA is President of the Independence Institute.
DAVID KOPEL is Research Director of the Independence Institute.
LINDA GORMAN is the Director of the Health Care Policy Center.
BENJAMIN DEGROW is a Policy Analyst for the Education Policy Center.
ADDITIONAL RESOURCES on this subject can be found at: http://www.independenceinstitute.org/
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