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The Alliance of Cities is particularly interested in what AJR 55 could mean for local government in Wisconsin. This is not an easy question to answer, considering Colorado and Wisconsin's tax systems are miles apart, and constitutional mandates under which Colorado's state and local governments operate are much more restrictive than our system of government.
We have received some excellent feedback so far on where problems may arise in trying to splice a Colorado solution onto a perceived problem in Wisconsin, including a detailed analysis from W. Martin Morics, Milwaukee's comptroller. We're dedicated to making sure the amendment, if adopted, works for state and local government and the taxpayers of Wisconsin.
Among other things, that may require new restrictions on the ability of state government to issue mandates to local governments in Wisconsin, and it may require restrictions on the propensity of state government to issue local property tax exemptions at will.
We begin this debate with a certain skepticism for the enthusiasm of AJR 55's supporters in Wisconsin on the effects of TABOR in Wisconsin.
They paint a rosy portrait of the amendment's effects on Colorado. The truth may vary substantially from that assessment.
TABOR's "success story" in Colorado includes the following:
n That state's worst economic slump in 15 years, including the loss of nearly 80,000 jobs, a rate of job loss more than three times the national rate.
n A loss of more than 30,000 jobs in Colorado's much bragged-about technology sector, doubling of Colorado's overall unemployment rate and crippled educational and public health systems.
And, unlike Wisconsin, as 2004 dawns, state government in Colorado doesn't appear to be out of the woods. This year, lawmakers will have to cut about $60 million, according to the Denver Post. Because of constitutional restrictions including TABOR, they are expected to look to cut higher education, corrections and human services.
It is "highly unlikely" that Colorado's program cuts will ever be restored, the Colorado Fiscal Policy Institute says, because TABOR will require additional state budget cuts. Those cuts must total $640.1 million between 2004 and 2009, according to the Colorado Legislative Council.
The Bell Policy Institute of Colorado reported on 10 years of experience with TABOR on its Web site, and concluded the amendment is not working very well for the citizens of Colorado. See the executive summary of the report here.
"By 2000, we had fallen to 50th in K-12 spending per $1,000 of personal income. Even during the carefree '90s, the state fell behind in per capita spending for higher education and public health. By 2000, Colorado spent less than most other states on public health care services ... was at the bottom in on-time immunization rates, was at the bottom in prenatal care, had the highest rate of uninsured low-income children in the nation, was almost last among states in high school graduation rates, ranked almost last in state investment in higher education and the arts, and had a growing list of unfunded highway projects," Wade Buchman, president of the Bell Policy Center, wrote in November..
The Denver Post this month termed Colorado's fiscal situation a "fiscal perfect storm" in a story here.
Colorado State Treasurer Mike Coffman says as his state's fiscal crisis has deepened, the Colorado Legislature has turned its attention from "short-term accounting gimmicks and raids on cash funds" to four constitutional amendments, including TABOR, that limit state and local fiscal flexibility. See his February, 2003 take on Colorado's fiscal crisis here.
Local government advocates in Wisconsin also are concerned about the potential impact of TABOR on state and local bond ratings.A year ago, Standard & Poor's put Colorado on a "negative credit watch," a warning to the state to shape up fiscally or the ratings agency would formally downgrade Colorado's rating.
S&P analyst David Hitchcock said the requirements of TABOR would permanently restrict state spending — and the ability to pay back debt — now that revenue is forecast to fall by hundreds of millions of dollars.
"The revenue will be set at the point of the recession, and (the state) won't benefit from the economic recovery," Hitchcock said. "They're going to have to adjust to a permanent lower level of revenues."
According to the Chicago Tribune, in December, 2003, Michigan became the seventh state to have its credit rating lowered by the agency in the past two years, after downgrades issued for California, Kentucky, Colorado, New Jersey, Wisconsin and New Hampshire.
(Rich Eggleston is communications and community outreach coordinator for the Wisconsin Alliance of Cities.)
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