The eyes of the nation are on Colorado. What happens on Nov. 1 has national implications in the emotionally charged debate over how much tax money should go to the government.
"The national spending limitation movement sees Colorado as a key state," said Chris Kinnan, a spokesman for FreedomWorks, a tax-limitation group whose co-chairman is Dick Armey, former U.S. House majority leader.
Colorado voters will decide on Referendums C and D, measures that would alter the Taxpayers Bill of Rights (TABOR) and allow the state to spend more money on education, healthcare, road repair and firefighter and police pensions.
The national implications are massive, as both sides in the tax debate want to use the results of Colorado's ballot measures as an example of public sentiment toward taxation.
There are currently several states looking at measures similar to TABOR, the 1992 spending-cap bill C and D aim to amend.
Referendums C and D would allow the state to keep and spend an additional $3.7 billion over the next five years. The money is slated mostly for road repair, healthcare and education.
In addition, the measures would suspend for five years the ratchet clause of TABOR, a powerful provision that restricts state spending to increasing at population growth plus inflation from spending based on previous year's revenue.
When the state suffers an economic downturn as it did in 2001, for example, the spending limit is restricted to increasing at population growth plus inflation from that low year. This means state spending, in real dollars, could never exceed downturn levels.
COLORADO A LESSON?
The Center on Budget and Policy Priorities, a non-partisan national think tank, released a report last week titled "A Formula for Decline: Lessons from Colorado for States Considering TABOR," in which researchers state the TABOR formula is insufficient to fund the ongoing cost of government.
"By creating a permanent revenue shortage," the report states, "TABOR pits state programs and services against each other for survival each year and virtually rules out any new initiatives to address unmet or emerging needs."
Healthcare, K-12 education and higher education have absorbed severe budget cuts under TABOR, the report states.
Higher education funding per resident student dropped 31 percent after adjusting for inflation, and higher education funding as a share of personal income declined from 35th to 43rd to 48th in the nation, according to the report.
"Colorado's experience provides an important cautionary tale for other states considering TABOR-like measures," the report states.
Some prominent anti-tax groups with a national reach are strongly opposing C and D, organizing grassroots campaigns and conducting automated telephone campaigns in Colorado to defeat the referendums, measures many opponents view as a direct attack on TABOR.
Americans for Tax Reform (ATR), headed by anti-tax crusader Grover Norquist, has been conducting an automated telephone campaign in Colorado.
Chris Butler, ATR spokesman, said he doesn't want to go into details about specific strategy or types of voters targeted, but said Norquist and the group are watching the ballot measures closely.
"Colorado (under TABOR) is seen as a model of sound fiscal management," he said. "We want to see (Referendums C and D) go down in defeat."
In fact, Colorado has become one of the most tax-friendly states in the nation. In 2001, for example, the state collected $8.9 billion, but had to refund $1 billion to taxpayers under TABOR.
This has caused the state to squeeze and slash several programs, and the defeat of C and D would only exacerbate funding problems, proponents argue.
The state must somehow save $365 million in order to offset a possible defeat of C and D, wrote Henry Sobanet, Gov. Bill Owens' budget director, in a memo to Owens.
This led Sobanet to prepare a massive list of programs and services that could be cut to save money. A 10 percent cut in higher education funding could save $60 million and a 20 percent cut could save $120 million, he wrote.
"If Referendum C fails, significant cuts across state government are unavoidable," he wrote.
Higher education would likely bear the brunt of a C and D defeat, since it's the easiest program to trim from. Cutting prison funds would be a safety concern and K-12 education is mandated to increase because of Amendment 23.
In addition, several entire programs will have to be eliminated to balance next year's fiscal year budget, including programs for sick senior citizens, the needy and disabled.
The elimination of an aid program that provides payments to the disabled while they await eligibility for federal aid could save the state $9.6 million, at the expense of more than 5,400 disabled Coloradans that depend on the service.
Axing an instant criminal background check program that allows firearms dealers to screen buyers to ensure felons don't purchase weapons could save the state about $230,000.
Currently, victims of poisoning can call the state's Poison Control Hotline, but the service costs the state $1.1 million. Its elimination would force poison victims or potential poison victims to contact 911 instead.
The elimination of the Office of Suicide Prevention, a public information office that provides and coordinates suicide prevention information, would save the state $275,000.
Many programs such as these will either have to be cut entirely or take deep cuts across the board. This in addition to already being cash-strapped.
"While some of the cuts in recent years may not have affected the general public, this subsequent round of reductions would diminish public safety and result in higher tuition for families and reduced consumer protection and services to the elderly," Sobanet wrote.
LIVING WITHIN ITS MEANS
Nationwide, opponents of TABOR are pointing to slashing of critical Colorado services and programs as a warning of the amendment's destructiveness. But proponents tout the model of fiscal conservatism they say forces spend-happy politicians to live within their means.
Opponents of C and D point out that expected first year revenue for the ballot measures is $507 million, which exceeds the expected budget shortfall resulting from a C and D defeat of about $365 million.
"Referendums C and D go far beyond any ratchet clause," Kinnan said. "This is about an open-ended tax increase."
Proponents of C and D indicate the tax rate won't increase a penny, but rather the state would simply withhold revenue beyond TABOR limits instead of returning it to taxpayers.
But to Kinnan and other C and D opponents, if it smells like a tax increase, it's a tax increase.
"If C passes, (Colorado citizens) will give an estimated $3.7 billion (that could otherwise be theirs) to the state," Kinnan said. "That's a tax increase."
TABOR has forced the state to live within its means and Referendums C and D would give the state more slack and legislators an easy way out, opponents say. TABOR as it stands makes politicians trim government fat, they say.
"If next year my income goes down, I have to live on a lower income," said Tim Gillespie, volunteer chapter leader for the Oklahoma branch of FreedomWorks. "I don't see why the state government shouldn't have to do the same."
Rich Jones, director of policy and research at the Bell Policy Center, said both sides of the tax debate are closely watching the results of the Colorado election.
"Both sides want to point to the November elections (to bolster their cause)" he said. (Anti-tax advocates) are promoting TABOR-type amendments in other states and they're using Colorado as an example."
Butler said Republican Gov. Bill Owens' pro-referendum stance has done immeasurable damage to his national reputation among fiscal conservatives.
"Owens was someone who was on everyone's short list to be president, now he's not on anyone's short list," he said.
Opponents of the measures tout the political harm done to Owens, but proponents ask why Owens would throw his lot behind measures that increase spending and would hurt him politically.
When Rep. Jim Welker, a Republican from Loveland, was asked why, he responded, "It doesn't make sense to me," but added the Republican Party doesn't have an official stance on Owens.
Owens said he supported TABOR in 1992 and continues to today, but he sees C and D as not only reasonable, but necessary to offset severe cuts in several areas, especially higher education.
Anti-tax advocates in Oklahoma and other states are in the midst of introducing legislation similar to Colorado's minus the ratchet clause. FreedomWorks is spearheading the grassroots campaign there and in other states to enact TABOR.
"Some have come to the point where they believe my money is their money," Gillespie said. "People are ready to see government live within its means."