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the state budget in periods of recession and revenueshortfall. We should then expect increased pressureto raise taxes and issue more debt to finance thehigher levels of state spending. California experi-enced this outcome when the GANN Amendmentlimit was weakened to exempt spending for educa-tion K-12 from the limit.
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Given the fact that this increased state spending would come at the expense of tax rebates, there will clearly be an expansion of thepublic sector relative to the privatesector. Unconstrained growth in thepublic sector relative to the privatesector would create a less favorablebusiness tax climate. Higher taxes would make the state less attractiveto new business investment and jobcreation.
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Currently, Colorado’s eco-nomic growth exceeds that in mostother states. If Amendment 59 passes we should expect lower rates of eco-nomic growth, comparable to that inthe 1980s when the state was growingless rapidly than other states.
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The Impact Amendment 59 Would Have on the Design andImplementation of Fiscal Policies inColorado
In addition to the substantive impact, Amendment59 would have a procedural impact on the designand implementation of fiscal policy in Colorado. Tounderstand this procedural impact we must explorethe role of initiative and referendum (I&R) inamending the Colorado Constitution, and also a bitof the legislative background that has resulted in thisproposed amendment.I&R is a specific form of the right to petition pro-tected under the First Amendment of the U.S.Constitution. As Dennis Polhill points out in hisexcellent survey, the origins of I&R can be tracedto the Progressive era in the late 19th century, whencitizens began to challenge many of the excesses of state legislatures.
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John Shafroth, a leader of the Progressive move-ment in Colorado, promised to put I&R on theballot when he ran for Governor. Despite opposi-tion from the legislature, this measure was place onthe ballot and passed in 1910 by a 76-to-24 percentmargin. Of the 111 amendments to the ColoradoConstitution, only 42 have been the result of citizeninitiative.The original Colorado Constitution set a numberof constraints on the fiscal powers of state and localgovernments, including balanced budget provisions,debt limits, and constraints on the power to tax.Over the years a number of statutory limits werealso placed on the power of state and local govern-ments to tax and spend.
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In 1978 Colorado was one of the first states toimpose a statutory limit on state spending growth,the Kadlichek Amendment. While that limit wasinitially effective in constraining the growth of statespending, it proved to be ineffective in the 1980s.Colorado’s experience was typical of states with stat-utory tax and spending limits: statutory limits provedto be too easy for legislatures to evade or overturn.Several attempts were made toimpose constitutional limits onstate spending beginning in the1960s. However, it was not until theTaxpayer’s Bill of Rights was enactedthrough citizen initiative in 1992 thatconstitutional limits were imposedon state and local revenue andspending in Colorado. The TABOR Amendment has proven to be themost effective tax and spending limitin the country.The experience with tax and spendinglimits in Colorado is not unique. Themost effective tax and spending limitsimposed on state and local govern-ments have been constitutional ratherthan statutory; and the most effec-tive of these, like the TABOR Amendment, haveoriginated through citizen initiative. There is a fun-
Given the fact that thisincreased state spending would come at the expense of tax rebates, there will clearly be an expansion of the public sector rela
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tive to the private sector.The most effective tax and spending limits imposed on state and local governments have been con
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stitutional rather than statutory; and the most effective of these, like the TABOR Amendment, have originated through citizeninitiative.
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