April 08, 2020

Bill Owens’ Rocky Mountain distortions

Colorado governor Bill Owens, whose state voted last fall to suspend its Taxpayer Bill of Rights because of the damage it was doing to public services, is featured in a new TV ad in Maine claiming that “The Taxpayer Bill of Rights has been a tremendous success here in Colorado – more jobs, lower taxes, and young people choosing to stay in our state.” These claims simply aren’t true, as ample competent, objective analyses have shown.

Let’s first look at the issue of jobs. As an economic development executive for 16 years, I thoroughly examined how TABOR affected the business climate in Colorado after it passed in 1992. I found that it had no positive direct impact on job growth at all.

Other researchers agree. A study conducted by two prominent economists in the area of state and local public finance, Therese J. McGuire of Northwestern University’s Kellogg School of Management and Kim S. Rueben of the Urban Institute, found that TABOR did little or nothing for Colorado’s economy.

Colorado had been a high job-growth state – outperforming the U.S. average – in the four decades preceding TABOR’s enactment. But under TABOR, Colorado’s neighboring states often experienced greater job growth than did Colorado.

In fact, I found in my research that TABOR was hurting potential job growth by undermining state services that employers demand. A quality higher education system and well-maintained infrastructure are critical elements of regional and global economic competitiveness, but TABOR caused serious declines in these services over the years. For example, in constant dollars, state general fund appropriations for higher education in Colorado have reached the lowest level in over two decades. In the past four years, the Department of Higher Education saw a decrease of 21.3 percent in state funding due to TABOR – the largest decrease among all areas of the state budget.

That’s why the Colorado business community ultimately became a strong voice against TABOR, spearheading the effort to suspend TABOR for five years. More than 80 businesses and business groups, including ten Chambers of Commerce, endorsed the suspension of TABOR, which Colorado voters approved last November.

As for Gov. Owens’ claim that TABOR means tax cuts, there are no provisions in Colorado’s TABOR that explicitly lower taxes. In the boom years from 1994 to 2001, when the entire country experienced high economic growth, 42 other states joined Colorado in enacting tax cuts. None of them had TABOR. New York, New Jersey, Massachusetts, Delaware and Connecticut all enacted tax cuts that were larger than Colorado’s as a share of total tax revenue. A state doesn’t need TABOR to cut taxes.

In fact, residents of Colorado municipalities and counties have approved more than 350 tax increases since TABOR was enacted. Voters saw the damage that TABOR’s unrealistically low spending limits were doing to the public services they cared about, and they refused to let it continue. Maine residents would likely find themselves in a similar situation if TABOR were to pass.

Lastly, Gov. Owens’ claim that TABOR has caused young people to decide to stay in Colorado is simply silly. The facts are that according to the U.S. Census Bureau, Colorado was a “young” state long before TABOR.

As a 2005 report by the Federal Reserve Bank of Kansas City explains, the most likely causes of the large net inflows of people to Colorado during the second half of the 20th century were, “the abundance of scenic amenities in the state and the high educational attainment of the population. Also, the proximity of the Denver metro area to skiing and other recreational activities made it an attractive destination for people from other states.”

Colorado’s young population has increased only slightly under TABOR. In 1992, when TABOR was adopted, 63 percent of Colorado’s population was aged 18-64. By 2005, that share had gone up two percentage points, to 65 percent – but the share of the overall U.S. population between 18 and 64 also grew by two percentage points during that period (from 61 percent to 63 percent), so it can hardly be said that TABOR is the reason Colorado is staying young.

Maine can indeed learn a lot from Colorado’s experience with TABOR, but it’s not what Gov. Owens is telling you. TABOR’s promise is a lie, one that I recommend Mainers reject on Nov. 7.

Robert K. (“Rocky”) Scott is president of McWhinney Centerra, a project of the leading community-real estate development firm in Northern Colorado. He was president of the Greater Colorado Springs Economic Development Corp. from 1989 to 2005, is past president and life member of the statewide Economic Developers Council of Colorado and

has served on the board of the American Economic Development Council.

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