Looks May Be Deceiving: Tempting as they appear, high-stakes ballot initiatives to curb state spending carry hidden costs

In Oregon, it's called the Rainy Day Amendment. In Nebraska, it's the Stop OverSpending initiative, or SOS for short.

Yet no matter what their sponsors call them, all are repackaged versions of TABOR, the "taxpayer bill of rights" amendment approved by Colorado voters in 1992. TABOR limited increases in state spending to the rate of inflation plus population growth, contributing to a budget squeeze so confining that Coloradans voted in 2005 to suspend the measure for five years.

But where some see fiscal pain, others see political promise. TABOR-style initiatives are on the November ballot in Maine, Nebraska and Oregon. Legal challenges derailed TABOR petition drives in Michigan, Missouri, Montana, Nevada and Oklahoma, and sponsors withdrew a TABOR initiative in Ohio.

Proponents say voter approval of TABOR amendments in just a handful of states is all that's needed to launch a big round of state spending restrictions, much as California's Proposition 13 inspired other states to cut taxes in the late 1970s. The overarching objective, they say, is to reinvigorate the conservative movement and advance the cause of limited government.

"It's the first in a series of waves," says Grover Norquist, president of Americans for Tax Reform, an advocacy organization in Washington that is among several conservative groups backing the measures. "They'll run this year, then we'll do them again in two years. The goal is to get a TABOR enacted in each of the initiative states"—24 states where citizen initiatives are allowed.

"There is a concerted effort by a small number of anti-government organizations with an even smaller number of deep-pocketed funders that are pushing these things in hopes of creating a groundswell," says Nicholas Johnson, state fiscal project director at Washington's Center on Budget and Policy Priorities (CBPP), which opposes TABOR.

The same conservative coalition is pushing initiatives limiting the ability of government to acquire private property through eminent domain. This drive follows a U.S. Supreme Court ruling that a Connecticut town could condemn residential property for economic development.

Frustrated by their inability to restrain federal spending, some conservatives have made state-level TABOR amendments their political priority. "There's a lot of disenchantment among conservatives with the Republican Party, certainly at the federal level," says Stephen Slivinski, budget studies director at the Cato Institute, an advocate of TABOR-style spending limits.

"You're seeing staggering deficits. You're seeing massive unfunded liabilities," he says. "As a result, a lot of conservatives are not very eager to pull the lever for GOP candidates in November. In states where you've got these initiatives on the ballot, you'll see a lot more interest among conservatives about actually coming out to vote."

Thirty of the 50 states already have tax or spending limitation measures on the books, according to the National Conference of State Legislatures. But except for Colorado's TABOR, none of the existing limits bind state purse strings as tightly as would the measures on the ballot this year.

If a TABOR-style spending cap had been in effect in all 50 states since 1990, total state spending in 2004 would have been 20 percent lower—$631 billion rather than $794 billion, according to a CBPP analysis.

"TABOR is about bankrupting government, shrinking government, no matter what effect it has on services," says Kristina Wilfore, executive director of the Ballot Initiative Strategy Center in Washington, a TABOR opponent. "These are people who really believe that government doesn't serve its purposes."

The pending ballot measures vary slightly from state to state, but all of them contain the three essential elements of TABOR: They are constitutional amendments, they use the same basic formula to restrict state spending, and they require voter approval to override the spending limits.

The formula allows state spending to rise no faster than the combined rates of inflation and population growth. If the consumer price index rose 2 percent and a state's population grew 1 percent in a given year, state spending could go up no more than 3 percent. If lawmakers decide they need more money, the amendments require them to get voter approval.

The intent, say sponsors, is to limit the growth of spending so that government does not grow faster than people's ability to pay for it.

The problem, according to opponents, is that the formula does not necessarily maintain a state's status quo. The cost of health care, education, corrections and other programs tends to rise faster than the cost of consumer goods. Some segments of the population, such as the elderly, require more public services than others. If those segments grow faster than the overall population, the cost of government could rise faster than TABOR limits allow.

That's essentially what happened in Colorado. A CBPP analysis found, for example, that after TABOR's enactment in 1992, the state's per-student spending on higher education declined by nearly a third after adjusting for inflation, leading to tuition increases and faculty layoffs.

Other services were squeezed. In 2001 the state suspended vaccinations for public school students because it couldn't afford the vaccine, the report said. The shots were reinstated in 2002. Spending for public education, including teachers' pay, fell sharply before Colorado voters last year reversed course.

Much of the funding for this year's petition drives has been provided by organizations affiliated with Howard Rich, a New York developer and contributor to conservative and libertarian causes. Rich also founded U.S. Term Limits, a group that sponsored an earlier round of petition drives to limit the number of terms lawmakers in more than a dozen states can serve.

According to an analysis of state campaign finance reports by the Ballot Initiative Strategy Center, groups linked to Rich contributed $7.5 million to sponsors of 2006 ballot initiatives. Americans for Limited Government, which Rich chairs, declined to provide its own figures.

"We hope to give as much funding as we possibly can to Americans all over the country who are trying to do initiatives that protect private property and that put citizens in charge of state spending instead of politicians and special interests," says Paul Jacob, a senior fellow at Americans for Limited Government.

The TABOR movement is opposed by a coalition that includes AARP, the National Education Association, the American Federation of State, County and Municipal Employees, and the Service Employees International Union.

"TABOR has been sold as a bill of rights. It's really a bill of goods," says Fred Griesbach, AARP's director of advocacy management. "We have to demonstrate how much of a false promise it is—in person, on radio, on TV and in the newspapers."

Opposition to TABOR has also come from some businesses concerned that spending limits on state services and infrastructure improvements could hurt their ability to recruit employees.

Opponents acknowledge it will be difficult to persuade voters to reject proposals that promise to curb tax increases and restrict government spending. However, AARP's surveys in TABOR initiative states indicate that support tends to slip as members learn more.

Warren Vieth covered the White House for the Los Angeles Times.

More on this Story

A Gathering Force in Maine Spelled TABOR (October 2006)