If you have lived in Colorado for any length of time, you are likely familiar with the near-constant claims that TABOR’s limit on government growth restricts the state’s ability to fund essential services. Without TABOR, critics say, the state could fully fund schools, repair our roads, and ensu re quality health care for all. But a closer look at how Colorado’s state government has actually grown since TABOR passed tells a different story. As explicitly stated in its ballot language, TABOR was passed to “reasonably restrain most the growth of government.” To do so, it requires voter approval for new taxes and caps state and local revenue and spending increases to a formula based on population growth plus inflation, unless voters say otherwise. TABOR was never designed to freeze government funding. It was designed to balance the needs for public services with democratic accountability. If TABOR were preventing Colorado from meeting its needs, we would expect state government to have grown near or below the TABOR limit since it went into effect in 1993. Instead, a new report from Independence Institute, Leviathan by Loophole: the Growth of Colorado’s State Government After TABOR, shows the opposite. Through deliberate legislative circumvention, the state government has grown faster than the TABOR limit, and in fact, grown faster than broader economic trends, according to historical budget and economic data.  The key to understanding how this happened starts with the structure of the state budget. Colorado’s state budget contains three main categories: the General Fund, cash funds, and federal funds. The General Fund is the only part of the state budget entirely subject to TABOR because it collects revenue directly from Coloradans through state taxes. Cash funds, by contrast, receive most of their revenue from fees and are mostly exempt from TABOR. Because the state does not receive federal funds directly from Coloradans, those funds are also TABOR-exempt. When TABOR first took effect, the General Fund was the largest segment of the state budget, accounting for 56%. Cash funds accounted for only 16%, and federal funds for only 12%. Now, the General Fund accounts for 35%, while cash and federal funds each account for 29%. Adjusted for population and inflation, the General Fund grew by 44% during that period, which is reasonable considering voter-approved changes. However, cash funds exploded by 588% and federal funds by 278%. The state’s historical budget data immediately suggests a gap in the common rhetoric surrounding TABOR — the only section of the state budget that is entirely subject to TABOR continues to decline relative to TABOR-exempt funds. Now, there is a reason for this, some argue. TABOR’s strict caps have created unintended distortions, forcing legislators to use TABOR-exempt funds out of necessity. In reality, TABOR’s “distortions” are not inherent but are the result of repeated policy choices to steer government growth into categories outside of voter oversight.  Regardless, the state government is not only growing faster than the TABOR formula but is even outpacing broader economic trends. To assess whether this budgetary shift reflects broader government expansion, the report examined several additional indicators, including state spending relative to GDP, state versus private employment, professional lobbyist income, Medicaid enrollment, and effective taxation. These metrics reveal a state apparatus that has expanded beyond population, inflation, and other economic trends. The highlights are as follows:  Since 1997, Colorado’s GDP has grown at an average annual rate of 5% while state spending has grown at an average rate of 6%, meaning that government outlays consistently claim a larger slice of Colorado’s growing economic pie.  Since 1993, Colorado’s private employment has increased by 61%, while state government employment has increased by 189%, resulting in a workforce in which state government jobs have multiplied nearly three times faster than those in the private sector. That does not even include the growth of local and federal employment. Since 1995, professional lobbyist incomes have increased by 374% when adjusted for population and inflation, which greatly outpaced the 37% growth in Colorado’s real median incomes during the same period. The state’s Medicaid enrollment has increased by over 200% since 2009, while the state’s population only increased by 20%. Since 2001, the average percentage of Coloradans’ income paid in state taxes has increased by 14%, meaning Coloradans now pay 4.2% of their income in state taxes, up from 3.69%, meaning less money in Coloradans’ pockets.  All observed metrics in the report point to faster state government growth relative to population, inflation and the broader economy.  Why does it matter to Coloradans that the state government grows not just faster than our population and inflation, but faster than broader economic trends? When the government plays an increasingly interventionist role in the economy, it means individuals keep less of their hard-earned money to save, spend or invest. While the government can also save, spend or invest, it typically does so with less efficiency and to less productive ends than would otherwise be the case in a freer economy. As an example from the report, the fact that professional lobbyists’ earnings continue to outpace inflation and population growth is consistent with an increasingly interventionist state government.  In a healthy market, businesses use their profits to raise wages, increase dividends for shareholders, and reinvest in the company to continue improving productivity and profitability. However, in an economy where the government plays an outsized role in choosing winners and losers, companies are more likely to lobby the government than to allocate funds to more productive investments. This harms healthy competition among Colorado businesses, reduces consumer choices, and increases costs for businesses and individuals alike. Similarly, Colorado’s meteoric increase in Medicaid enrollment, despite a poverty rate of only 8.2%, presents similar concern. Welfare programs, like Medicaid, were created to help people who cannot help themselves and to increase the independence of individuals who are capable of eventually becoming independent. The question is not whether programs like Medicaid should exist, but whether rapid enrollment growth without corresponding improvements in independence and outcomes reflects a system that is working as intended. Despite its controversy among elected officials, TABOR remains popular among independents, Republicans, and even a sizable share of Democrats. The popularity is logical despite not always being explicitly articulated: As the population increases, it is understandable that the state should collect more funds to maintain current levels of service. Similarly, inflation affects individuals and governments alike, again, justifying increased spending relative to inflation.  However, most Coloradans also understand that economic freedom and prosperity are at odds with limitless government. TABOR was designed to set a reasonable limit that balances Coloradans’ freedoms with the public services they value. Unfortunately, as the research shows, the state government has deliberately circumvented that balance by creating enterprises that charge TABOR-exempt fees.  The irony, then, is that despite the government continuing to grow beyond the limits set by TABOR and being only partially subject to it, it apparently is still not growing quickly enough. The state’s budget is larger and subject to fewer limits than ever, and Coloradans are paying more taxes than ever. Not to mention, the report did not even examine local governments, most of which are no longer subject to TABOR and have received revenue windfalls in recent years from increased property taxes. This all suggests that the state government has a prioritization problem, not a revenue problem. While individuals make tough budgetary decisions during tough times, the status quo for Colorado’s state government is growth. Colorado’s $850 million “budget shortfall” falls flat when the governor’s proposal would still see the budget increase by almost 5%.  The government’s antagonism toward TABOR is explicitly about revenue and spending limits. However, because it is now clear that TABOR is not restricting government growth, the real antagonism against TABOR becomes clear — state (and local) officials are increasingly uncomfortable with Coloradans’ direct involvement in their own taxation, which is arguably the most popular aspect of TABOR. Taxation with representation is a foundational aspiration of the Founding Fathers and a treasured Coloradan right. And if Colorado’s leaders believe more revenue is truly necessary, the Constitution already provides an answer: make the case to voters and let them decide. Nash Herman is a policy analyst at the Independence Institute in Denver. He holds a bachelor’s degree in international studies political science and a master’s degree in global economic affairs from the University of Denver. ...read more read less