While lawmakers draft a proposal to limit how quickly the state increases spending, activists pushing to get a similar plan on the ballot in 2006 as an initiative are saying they might wait until 2008 because of a potential constitutional challenge.
Chad Kirkpatrick, chairman of the Arizona Federation of Taxpayers, the group that would spearhead an initiative drive for the proposal, says the chances are “50/50” the group will hold back at least a portion of the proposed ballot measure because of concerns that amending the state constitution in one fell swoop may violate the single-subject clause of the constitution.
“We’ve been caught up on the single-subject clause,” he said. “There’s a lot of interest to get the initiative [on the 2006 ballot], but what we’re dealing with… is we’re in mid-November. If you’re going to start collecting signatures, it’s starting to get a little bit late in the game.”
The initiative, known as the Taxpayer Bill of Rights, or TABOR, would restrict increases in government spending to reflect the state’s population growth plus the rate of inflation. Any revenue the state collects beyond that amount would either be returned to the taxpayers or saved in a rainy day fund the state could tap during tough economic times.
Currently, Colorado is the only state with TABOR provisions in place, though a national effort by Americans for Tax Reform and Americans for Prosperity, among others, is pushing for similar measures in nearly two-dozen states, including Arizona.
An initiative petition to place TABOR on the 2006 ballot has not been filed with the Secretary of State’s Office.
Mr. Kirkpatrick said his group is still debating whether to draft the initiative language as a constitutional amendment or a statutory change. A major factor in the discussion, he said, is a constitutional provision that says a ballot proposition can only propose an amendment to one portion of the constitution at a time. Therefore, a proposition that amends how the constitution addresses multiple subjects is not allowed.
TABOR, Mr. Kirkpatrick says, is “the trifecta of budgetary reform,” in that it establishes spending limits, reduces income taxes and reforms accounting procedures. Investors in the Arizona TABOR initiative, he said, are split into two camps: one is gung-ho about packaging the issue as a constitutional amendment, while the other is afraid the courts will strike down such an attempt as violating the single-subject clause.
The delay in deciding how best to approach the issue at the ballot is causing the groups of investors to reconsider the feasibility of getting the item on the 2006 ballot.
“I think both camps are coming to the conclusion that maybe this is something we [put on] pause for a couple of years, until 2008, because of the timing,” Mr. Kirkpatrick said. “The question is, do we want to focus on the income tax in ’06 and the accounting reform that Rep. [Russell] Pearce is running in ’06, and come back for the third piece in ’08, or try to do all three [in 2006].”
He said the group will be meeting in the coming weeks and expects to make a decision about the initiative’s fate — at least for the 2006 election — by December.
Lawmakers have TABOR plans
In the meantime, two lawmakers are designing a TABOR plan to move through the Legislature and place on the ballot as a referendum. Sen. Dean Martin, R-6, and Mr. Pearce, R-18, are putting the finishing touches on a plan that will give the state a bit more flexibility than that sought by Mr. Kirkpatrick and his backers.
While the initiative plan would mandate exactly what would happen with revenues in excess of the established baseline, Mr. Martin said the referendum would not tie the Legislature down.
Half of the money would automatically be placed in a constitutionally created budget stabilization, or rainy day, fund. The other half would be returned to the taxpayers either in the form of a tax refund or permanently, as a tax cut.
Like the initiative, the referendum would limit state spending to population growth plus inflation. Mr. Martin says that addresses one of the biggest problems facing the state: how annual budgets are made.
“We don’t plan further than the nose on our face,” he said. “We have nothing to regulate our spending habits.”
Arizona’s TABOR, he says, won’t cut any existing spending; it will merely prevent the government from growing faster than it can be supported. He said it is designed differently than Colorado’s version, which voters in that state voted earlier this month to suspend for five years.
“There’s a lot we can learn from what [Colorado] did, and I think our bill reflects a lot of the lessons of not only our recession, but Colorado and where they ran into problems,” Mr. Martin said. “We’re much better prepared to do something like this than Colorado ever was.”
One of the pitfalls Arizona TABOR supporters are hoping to avoid is what happened to Colorado when the economic decline hit in 2001. Because of the strict limits on that state’s government revenue, a 16-percent drop in state revenues from 2001 to 2003 reset the baseline from which TABOR’s refund mechanism is triggered so low that some questioned whether the state could ever dig itself out of the hole.
In Colorado, all excess revenue above the baseline is refunded to the taxpayers.
Mr. Pearce said the budget stabilization fund will allow the state to have a safety net in the event of another recession. Also, he said the Arizona’s version will include a provision to allow the state to temporarily suspend other voter-approved spending — like health care and education — if revenues do not meet the mandated population-growth-plus-inflation level of spending.
Mr. Martin said giving the state some wiggle room in bad economic times is the ultimate goal.
“It’s solely designed to give more flexibility in a recession in exchange for less flexibility during a boom time,” he said.
Critic: A bad plan
However, some lawmakers say tweaking a bad plan to fit Arizona still leaves the state with a bad plan.
“It’s inherently going to cause problems,” Rep. Tom O’Halleran, R-1, said.
He says TABOR places “onerous” restrictions on government and has “devastated” the government of the only state that has enacted it. The proof, Mr. O’Halleran says, is in the pudding.
“Why have no other states taken it up [before now]≠” he asked, alluding to the fact that Colorado approved the measure in 1992. “There’s a reason for that — it doesn’t meet the needs of our citizens, it meets the needs of those who believe in smaller government.”
Mr. O’Halleran said the key to saving taxpayers money is not necessarily decreasing the size of government, but, rather, in making sure the money that is spent is done so wisely and efficiently.
He said there will be strong legislative opposition to any TABOR plan next session, as there was last session, when Mr. Pearce’s HCR2029 failed to garner the approval of the House during a March 16 Committee of the Whole.
“I think that people are going to look at Colorado and wonder, why would we lead Arizona down this path, when the one state that’s doing this has nothing but problems with it≠” he said.