It's time to fix some flaws in TABOR

Imagine this scenario:

A local school district is having trouble making ends meet. Classroom computers are broken and textbooks are in short supply. For whatever reasons, the district's taxpayers haven't been inclined to help. They've repeatedly rejected the school district's ballot issues, which proposed raising taxes to buy new equipment and software updates. Residents also have voted against the district's attempts to exempt itself from the revenue limitations of the Taxpayer's Bill of Rights (TABOR) amendment to the Colorado constitution. Such an exemption would allow the district to keep additional operating funds.

A major local corporation hears about the problem and offers to help. The company has a long-standing commitment to the community, and it knows that good schools are one of the best ways to ensure that it will have educated workers in the future. It offers to give the school district a substantial financial grant to buy classroom supplies.

So far, everything sounds good. But there's a catch. Under TABOR, any grant money the district receives is counted toward the district's revenue limitations. Assuming the district is already at its revenue cap, it must either refuse the grant money or cut program funding elsewhere to make room for the grant under the cap. So much for encouraging public/private partnerships.

For many cities, counties, and special districts around Colorado, this scenario is not farfetched. If they haven't received voter approval to exempt themselves from the TABOR limitations (a process commonly called "de-Brucing" in reference to TABOR author Doug Bruce), these entities have no incentive to even pursue such grants.

While TABOR exempts federal grants from its revenue caps, other cash grants are included in its limitations.

This year marks the 10th anniversary of TABOR, originally known as Amendment 1. Most Coloradoans have enjoyed some of the benefits of TABOR, especially the state tax refunds that they received thanks to the measure. In El Paso County, where TABOR passed by more than a 2- to-1 ratio, these feelings are especially strong. Clearly, this is a community that broadly supports some limitations on government tax and spending. But over the last decade the full implications of TABOR have become increasingly clear and some of its consequences - whether intended or unintended - are raising concerns.

The grant issue, for example, has local relevance. Colorado Springs School District 11 attempted but failed to de-Bruce last year. Therefore, the district simply does not apply for many available grants because the additional revenue would put the district over its revenue cap. Another example: the city of Fountain has worked hard to obtain various non-federal grants to supplement its operating budget, but because the city exceeded its TABOR ceiling in recent years, one could argue that these grants have been included in the refund given to taxpayers. While taxpayers may appreciate the refund, the money received in grants for specific projects did not come out of the taxpayers' pockets to begin with and should remain available for use as originally intended.

The fact that non-federal grant money is counted toward TABOR revenue caps is a problem that should be rectified. TABOR should be tweaked to exempt non-federal grants from its revenue limitations. Such a change would not cost taxpayers or government entities one cent, but it would provide additional funding for much-needed programs and services. Tweaking TABOR isn't as easy as it might sound, however. Because TABOR was an amendment to Colorado's constitution, any change requires another statewide ballot issue that would have to be placed before voters by the legislature or through a massive signature drive.

Despite the fact that TABOR was approved by state voters and remains popular, we should not be afraid to examine its effects closely and change specific areas where its language may be counterproductive. By doing so, we can maintain the spirit of TABOR while ensuring that Coloradans get maximum value from their government.

- Martin is owner of Martin Business Group, Inc. and serves on the Leadership Pikes Peak Board of Trustees. Conway is employed by MCI Worldcom and is board chair of Citizens Project in Colorado Springs. The authors recently participated in the Political Leadership Development Program of the Denver-based Bighorn Center for Public Policy. This column does not necessarily reflect the views of the Bighorn Center or its board.

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