Introduction

The experience of Colorado Springs under a local Taxpayer’s Bill of Rights (TABOR) and later under a state TABOR is of interest to other states. In recent years tax and spending limits have been introduced in a number of local jurisdictions around the country, some of them patterned after Colorado’s TABOR Amendment. In some cases these local TABORs are viewed as setting a precedent for a state TABOR, as has occurred in Colorado. This study explores the experience of Colorado Springs with a local TABOR and draws lessons for other states from that experience.

The Colorado Springs TABOR Amendment

Tax and spending limits have been enacted at the local level for centuries. Local governments imposed limits on property tax revenues throughout the 19th and 20th Centuries. However, it is only recently that local governments have enacted Taxpayer’s Bill of Rights (TABOR) limits. Colorado Springs TABOR Amendment was the first of these local TABORs.

In April of 1991 Colorado Springs citizens enacted Amendment 3, which imposed a TABOR-type limit on the growth of city government.  The growth of city spending was limited to population growth and local growth, defined as the annual increase in assessed value of the city. Colorado Springs could exceed this spending cap only with voter approval. Voter approval was also required to eliminate any tax exemption or issue any city bonds, including revenue bonds. The only exemption was for revenue bonds issued by a city owned enterprise that received less than 25 percent of its funding from all government sources. Voter permission was not required for increases in city fees. The city was also required to maintain an emergency reserve equal to three percent or more of its budget. The City Council could raise taxes if it declared an emergency with a two thirds vote, but only after it depleted the emergency reserve. Residents would then vote on the tax increase in the next election.

The Politics of the Colorado Springs TABOR Amendment: A Familiar Story.

For those of us who have been involved in TABOR battles over the years, the politics of the Colorado Springs TABOR is a familiar story.  The first thing that happened was an attempt by the City Council to preempt the TABOR Amendment.

A City Council member proposed a weak tax and spending cap that would have lowered the city’s property tax limit from 20 mills to 10 mills.   Since the city’s mill limit at that time was 7.266, this supposed restraint would have actually permitted a 37 percent increase in the property tax rate without a vote of the people. The scheme was endorsed by the local Chamber of Commerce. The City Council narrowly voted to reject the proposal on a 4-4 vote.  

Opponents of the Colorado Springs TABOR included the usual suspects: the Chamber of Commerce, the League of Women Voters, city officials, bond dealers, and realtors. Opponents outspent the supporters of the TABOR Amendment 7 to 1. Opponents claimed that TABOR would end government as we know it in Colorado Springs. They predicted sharp cutbacks in essential services such as police and fire protection, elimination of road improvements and other capital projects, and environmental degradation. The only surprise in this debate over TABOR was an endorsement by the Colorado Springs Gazette, a rarity in media coverage of TABOR battles.  

The Colorado Springs TABOR Amendment Sets the Precedent for a Statewide TABOR Amendment.

There is no question that the Colorado Springs TABOR was a precursor for the state TABOR Amendment enacted the following year. The taxpayer organization led by Douglas Bruce had placed a TABOR Amendment on the ballot several times prior to 1991. In fact, the 1990 ballot issue won 49 percent of the vote. Much of the debate over the Colorado Springs TABOR would be repeated in the debate over the state TABOR the following year. A number of refinements in the state TABOR were the outcome of this debate, and the lessons learned in enacting the Colorado Springs TABOR. When the state TABOR Amendment was enacted in 1992, one provision stipulated that existing tax and spending limits could not be weakened. In effect, this incorporated the Colorado Springs TABOR Amendment into the State Constitution.  

The Impact of the Colorado Springs TABOR Amendment on Revenue.

In 1991 the growth of city government was constrained by the local TABOR. The state TABOR enacted the following year imposed similar limits on the growth of city government.

Annual city property tax revenue growth is limited to the percentage change in the Denver/Boulder Consumer Price Index (CPI), plus local growth. Local growth is defined as the annual increase in assessed valuation of the city. The city cannot increase the mill levy without voter approval.

The following chart plots the city property tax mill levy over the period 1985 to 2006. When property tax revenue exceeds the TABOR cap, the city must reduce the mill levy in order to comply with the limit. Since 1990 the mill levy has been reduced eight times due to TABOR. The reduction in 1991 was due to the local TABOR enacted in the City Charter. The reductions in 1996, 1997, 1998, 2000, and 2001 were required by the local and state TABOR Amendments. The cumulative decrease in the mill levy for the period as a whole attributable to these TABOR Amendments was a reduction from about 7 mills to 5 mills.

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