Government Relations

UM Legislative Update Newsletter

November 11, 2005

Colorado voters pass measure to temporarily stall spending limits

In recent years, lawmakers and voters in several states have pushed measures to limit state spending, in an effort to avoid large increases in state budgets seen in flush budget times that become major challenges in difficult fiscal times. In a turn of events this week, however, Colorado voters passed a ballot measure, 52 percent to 48 percent, to temporarily halt their revenue limit to avoid forcing the refund of $3.7 billion to taxpayers, which would have resulted in massive cuts to higher education and other state services. Missouri has been operating under its own version -- the Hancock revenue limit -- for more than two decades, which led to tax refunds for Missourians in the late 1990s when the economy was strong. 

Missouri’s challenges are dwarfed by those in states such as Colorado. Voters there approved a measure several years ago known as the Taxpayer’s Bill Of Rights, or TABOR, which established a formula based on inflation, population growth and limited state spending. The formula worked well in economic downturns, but did not make an exception for rebuilding budgets when the economy recovered. In recent years, the “ratchet effect” of the measure has resulted in significant cuts to higher education and other services. Higher education funding decreased and institutions increased tuition – the University of Colorado had the highest tuition increase, at 24 percent, of any flagship public research institution in the nation last year. Budget forecasters predicted even more difficult times in the future, which would result in draconian cuts to higher education funding again.

As a result, voters in Colorado passed a ballot measure on Nov. 1, 2005, to temporarily halt the TABOR formula for five years and allow the state to keep sufficient revenues. Higher education was at the forefront of the battle in Colorado.

In Missouri, lawmakers are beginning to prepare for the 2006 legislative session, where they may see their own version of TABOR proposed by Rep. Carl Bearden (R-St. Charles), Speaker Pro-Tem of the House. Bearden has been a longtime supporter of a TABOR-type approach in Missouri and has said he plans to file legislation that would enact a similar proposal here.

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