Is Maine ready for TABOR?

Posted Oct. 16, 2009, at 6:50 p.m.

This coming Election Day, Maine voters will have an opportunity to influence two of the most contentious issues in politics: taxes and government spending.

Perennial voters should be familiar with the topic, which failed at the ballot box in November 2006.

But while the wording of the ballot question has changed somewhat, the debate over whether a Taxpayer Bill of Rights, or TABOR, will lead Maine to a more prosperous future or a world of financial hurt is pretty much the same.

TABOR II, which will appear as Question 4 on the Nov. 3 ballot, proposes to restrict the growth of government spending to the rate of inflation plus population changes. It would supersede existing restrictions, in place since 2006, that links General Fund spending rates to personal income growth.

State or local government officials can spend more, but only by getting voter approval first. Any proposed tax increases also would have to be put to a public vote.

To supporters, TABOR is a common-sense solution that will give voters control over government spending proponents claim is out of control.

It’s a familiar refrain to Maine voters, although in 2006 it wasn’t particularly effective. That year, 54 percent of Maine voters rejected a similar question.

In urging voters to reject TABOR again this year, opponents describe the initiative as a pathway to permanently under-funded schools, crumbling roads, cuts to public safety, and voter fatigue due to referendum overkill.

Today’s Poll

How do you plan to vote on Question 4?

Yes

No

“Twenty-seven other states have considered this and all have rejected it, except Colorado,” said Christopher St. John, executive director of the Maine Center for Economic Policy, a liberal-leaning group leading the opposition to TABOR.

Although raising more than three times the amount of campaign cash as TABOR supporters thus far, opponents in Maine appear to be in a tougher fight heading into Election Day, according to a new poll.

In the survey by the Portland-based Pan Atlantic SMS Group, 53 percent of likely Maine voters said they supported or were leaning toward supporting this latest incarnation of TABOR, with 39 percent opposed.

Reining in spending

Colorado’s experiences with TABOR have been a major focus of the debate in this state. But the central disagreement is over what has taken place in Maine in recent years.

“Look at how fast government has grown in the past decade,” said David Crocker, head of the TABOR Now campaign. “It has grown far beyond taxpayers’ ability to pay for it.”

TABOR Now and the conservative Maine Heritage Policy Center, which is leading the campaign for TABOR, claim that state spending grew 45 percent between fiscal years 2000 and 2008. They also claim that the number of government jobs in Maine has grown during the past decade even as private sector employment has shrunk.

According to data from the Maine Bureau of Budget, General Fund expenditures during that period grew by 35 percent, an average increase of 3.9 percent a year.

Administration officials, meanwhile, claim that there are 1,000 fewer positions in Maine state government than when Gov. John Baldacci first was elected in 2002.

TABOR’s opponents have their own way of looking at the numbers, and they contend that the Maine Heritage Policy Center and TABOR Now are skewing the data.

By beginning in 2000 — a year with a particularly large budget increase — and stopping in 2008, TABOR’s supporters are able to produce more dramatic figures, according to the anti-TABOR group Citizens Unified for Maine’s Future. Instead, TABOR’s opponents begin their calculations in 2001 and end with the second year of the current biennial budget, a period during which General Fund spending increased, on average, less than 1 percent a year.

Jeff Austin, a lobbyist with the Maine Municipal Association, accuses TABOR’s supporters of purposely leaving out the three most recent budgets that show state appropriations shrinking because of the recession.

“It’s like going to a market investor and asking, ‘Hey, how are you doing?’ and they give their percent returns as of 2008,” Austin said. “The market has plummeted since then.”

Budget figures show that Maine’s General Fund spending declined 3.5 percent between 2008 and 2009. Then, earlier this year, state lawmakers approved a two-year budget that was $500 million smaller than the previous biennial budget, something not seen in Maine in nearly three decades.

General Fund expenditures budgeted for fiscal year 2011 are 7.7 percent less than those in 2008.

Additionally, those figures do not include the $200 million in cuts that Baldacci has said will be needed because of the lingering financial crisis.

Crocker is unconvinced, however.

“Yes, spending has leveled out in the last year or so but it’s not voluntary,” Crocker replied. “It’s only because they have hit an absolute spending wall, like a bug on a windshield.”

Business groups divided

The two sides also offer starkly different predictions about what will happen if voters approve TABOR II.

Crocker and other TABOR supporters say linking spending to the rate of inflation and population growth allows spending to increase annually but without spikes or tax increases not supported by the majority of voters.

During years when incoming tax revenues exceed budgeted expenditures, 20 percent of the excess will go into a type of “rainy day” account for tough times and 80 percent will go back to Mainers as tax relief.

At the same time, the law allows towns to remove themselves — by popular vote — from the requirement that any tax or spending increase above the set limits go to the voters.

“I think people are far better versed on the issue this year,” he said.

Opponents fear TABOR’s passage will only hurt the state, especially in education and transportation — two areas key to economic growth.

By repealing the existing indexing of the gas tax to inflation, TABOR will further exacerbate the state’s troubles as it struggles to maintain Maine’s deteriorating road network, TABOR critics warn.

Opponents also predict that state government will fall further behind in its obligations to pay the majority of educational costs, thereby forcing towns to raise property taxes to pay for schools.

TABOR’s opponents also contend that adopting such strict spending restrictions during a recession, when the budget already has been cut $500 million, would prevent the state from restoring funding to education, social services and other programs.

The measure’s supporters disagree, saying the language of the bill keeps the spending floor at pre-recession levels.

“TABOR is about letting the voters choose,” Stephen Bowen with the Maine Public Policy Center wrote recently in a response to opponents’ claims. “TABOR does not cut one government budget line or one government program. All it does is say to policymakers, ‘If you want to increase spending beyond a certain rate of increase, you have to ask the voters for permission.’”

Business groups in Maine are divided over TABOR. The Portland Regional Chamber has endorsed TABOR, but the Maine State Chamber of Commerce recently withdrew its support for the initiative.

On Thursday, the Bangor Region Chamber of Commerce announced it is opposing both TABOR and Question 2 on the ballot, which would reduce the excise tax on cars less than 6 years old.

“Both proposals contain elements that the board believes could seriously undermine local infrastructure as well as Maine’s economic competitiveness,” John Diamond, chairman of the Bangor Chamber’s board, said in a statement. “In light of that, the board believes that passage of either proposal would be detrimental to our region and our state.”

The Colorado experience

Depending on your point of view, Colorado can serve as either a promise or a warning of what Maine could expect under TABOR.

Critics contend that TABOR, first adopted by Colorado voters in 1992, was largely inconsequential for years in Colorado as the state’s economy and population grew. But things changed around the time of the dot-com bust at the turn of the millennium. By 2005, Colorado voters frustrated with the lack of flexibility to deal with economic downturns had suspended major portions of the law.

Barry Poulson, an economist at the University of Colorado in Boulder, has a completely different take, however.

Poulson has said TABOR has led to $6.5 billion in tax rebates and reductions to Colorado residents, and he credited the tax measure with helping create one of the nation’s strongest business climates.

“What TABOR has done is allow government in Colorado to grow at the same pace as the private sector,” Poulson said in a recent video, posted on YouTube.com, that he recorded during a trip to Maine arranged by the Maine Heritage Policy Center.

“If any state in this country needs a TABOR amendment, it’s Maine,” Poulson said. “Maine has allowed government to grow much more rapidly than the private sector, and it has been accompanied by higher taxes, higher deficits, more debt, and it has created, frankly, a not very good business climate.”

But Charles Revier, an associate professor of economics at Colorado State University in Fort Collins, has a completely different take on TABOR in his home state. Revier described the law’s impacts as “very hurtful,” especially when it comes to funding for education.

Colorado has dropped to 48th in the nation in per capita spending on higher education, resulting in costs being passed along to students and their families. While many people in Colorado — a traditionally conservative state — like the idea of voters having control over tax increases, Revier said he expects a vote in the near future on whether to rescind TABOR altogether.

As for arguments that Colorado has flourished during the time of the spending restrictions, Revier responded: “I think the state has prospered despite TABOR rather than because of TABOR.”

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