Wednesday, October 19, 2005

From the Blue Book

Arguments Against 1) Referendum C is effectively a tax increase. It eliminates TABOR refunds for five years and reduces them each year thereafter. The state will spend roughly $3.743 billion that could be better used by Colorado's citizens and businesses. This reduction in private spending could dampen the economic recovery that began in 2003, making the state a less desirable place for business relocation. Not only are taxpayers giving up their sales tax refund, they are also voting to suspend 15 other refunds, such as a child care credit, lower motor vehicle fees, and capital gains credits. The estimated five-year total for all refund methods, including the sales tax refund, averages $1,106 per taxpayer. 2) Referendum C allows state spending to expand without being specific about the programs for which the money will be spent. The broad spending categories outlined in Referendum C cover 83 percent of state government. The new money could replace current spending on health care and public schools, essentially allowing the money to be spent for any purpose. The legislature can change the spending priorities anytime after the election. In addition, suspending the TABOR limit might lead to increases in fees and charges during the next five years because there is no limit on these increases and no requirement that these increases be approved by voters. 3) The perceived budget shortfall could be handled in other ways. TABOR allows government growth at inflation plus population, but it does not guarantee it. Government growth at a slower rate is acceptable and could encourage greater productivity and efficiency. Since TABOR passed in 1992, state spending has increased each year. Rather than spending more, the state could save money by eliminating inefficiencies, consolidating government functions, privatizing certain services, and reforming the state purchasing system.


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