Report says TABOR II will hinder business

Posted Sept. 30, 2009, at 8:59 p.m.

A nonpartisan public policy center released a report Tuesday predicting that the government spending restrictions proposed in an upcoming ballot measure would stymie Maine’s business climate by underfunding education, health care and road maintenance.

A proponent of the ballot measure, known as the Taxpayer Bill of Rights II, or TABOR II, strongly disagreed with the organization’s report and predicted the spending cap restrictions will find favor with many Mainers this November.

TABOR II would essentially require voter approval for any tax increase or increase in government spending beyond a formula based on the rate of inflation and population changes. The initiative would also require voter approval for spending increases at the municipal and county levels.

The ballot measure is similar to a TABOR proposal that failed at the polls in Maine in 2006.

In its analysis released Tuesday, the Center on Budget and Policy Priorities predicted that TABOR II would force significant cuts to education, highway funding and other critical public service programs. Enacting such rigid spending restrictions this year would be especially damaging, the report said, because of the recession.

The biennial budget passed earlier this year is $500 million less than the previous budget, but those cuts have come with reductions in government services.

“The rigid limit in TABOR II goes too far,” reads the report. “It would prevent the state from restoring cuts made during the recession and from making adequate investments in education, health care, environmental quality and infrastructure. The decline in services would hamper efforts to improve the state’s business climate and competitiveness.”

One of the report’s authors, Iris Lav, said Colorado’s experiences with a very similar TABOR passed in 1992 should serve as a warning to Maine. Those effects include dropping from 35th in the nation to 49th in K-12 spending as a percentage of personal income and a 31 percent drop in per-resident student funding for higher education.

In 2005, Colorado voters suspended a key provision of the law that gave rebates to residents whenever tax revenues exceeded spending.

“It was really devastating to public services in Colorado,” Lav said at a press conference organized by a campaign leading the fight against TABOR II.

“Colorado businesses spent millions suspending the law in 2005,” added Jim Hanley of Pike Industries, one of the state’s largest road construction contracting firms. “That should send a clear message that Maine businesses should oppose TABOR II.”

But David Crocker, state chairman of TABOR NOW, said the center’s statements are misleading. While Colorado residents voted to suspend the tax rebates for five years to help the state weather the economic downturn, they left the spending restrictions in place. In addition to taxpayer rebates, Maine’s TABOR bill would put a portion of excess revenues into a rainy day fund to help cover budget holes.

Crocker said Colorado’s schools have not fallen apart and that during his visits to the state, he has found the roads to be in much better shape than Maine’s. Crocker said he believes Colorado is also a much more prosperous state because of more business-friendly policies.

During the 2006 campaign in Maine, TABOR backers had to educate the public about the initiative. Crocker said he believes it will fare better at the polls this year because people want to replace what he called unacceptable rates of government spending with a more “natural expansion” of spending.

kmiller@bangordailynews.net

623-0024

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