Invest in Education and Public Infrastructure and Don’t Take TABOR Route

Oregon’s economy would be better protected by public investments in education and infrastructure than by inserting a Colorado-style TABOR spending cap in Oregon’s constitution, based on the findings of two studies released yesterday.

“TABOR fails to accomplish what its proponents claim,” said Michael Leachman, a policy analyst at the Oregon Center for Public Policy who reviewed the reports. “TABOR does not produce economic growth. Colorado’s experience teaches us that TABOR is a poison, not a panacea.”

TABOR is a constitutional amendment that limits the growth rate of revenues to population growth and inflation. Last November, faced with growing evidence of TABOR’s destructive effect, Colorado voters suspended TABOR for five years at the urging of the state’s Republican governor and a host of business and community leaders.

In Oregon, Don McIntire’s anti-government group is circulating petitions to place a Colorado-styled measure on the November ballot. His effort is primarily financed by two out-of-state organizations. February campaign reports filed with the Secretary of State show that the effort to get Oregon to put TABOR in our constitution is being financed by Grover Norquist’s “Americans for Tax Reform” ($40,000), and the national “Americans for Limited Government” ($60,000).

A study released yesterday by the Center on Budget and Policy Priorities (CBPP), found that the sources of Colorado’s economic growth during the 1990s pre-dated the state’s passage of TABOR in 1992. Huge investments by the U.S. military during and after World War II left Colorado with high-tech firms, a young, highly educated workforce, and respected public universities. According to the CBPP study, Colorado’s job growth was somewhat greater prior to TABOR than after it passed.

According to the CBPP report, after TABOR passed, Colorado’s K-12 education spending as a share of personal income declined from 35th to 49th in the nation. In addition, the share of low-income children in Colorado without health insurance doubled, even as it fell in the U.S. as a whole.

Another study released yesterday by the Economic Policy Institute (EPI) found that TABOR “did not significantly boost Colorado’s economy.” The study, written by noted economists Therese McGuire of Northwestern University and Kim Rueben of the Urban Institute, included a statistical analysis that separated TABOR from other factors influencing Colorado’s growth. The economists found that TABOR appears to have helped Colorado’s economy slightly in the first five years after its passage, but hurt it in the next five years. According to the economists, economic growth over the full ten years following TABOR’s passage was about the same as would have occurred without TABOR.

“The lesson from Colorado is that investments in education and public infrastructure are key, and that TABOR can wreak havoc,” said Leachman. “Not only has TABOR failed to deliver stronger economic growth, but it damaged Colorado’s capacity to invest for the future.”

“Oregonians should reject the TABOR-style constitutional cap,” said Leachman. “TABOR is no economic engine. It is a sham.”

The Oregon Center for Public Policy uses research and analysis to advance policies and practices that improve the economic and social opportunities of all Oregonians.