Poge 1

Whol does kelerendum C do?

Rcfcicndum C auhoiizcs hc sac o incicasc
spcnding cach vcai bv lcing i kccp hc cxccss
ax icvcnucs ha hc TABOR Amcndmcn would
ohciwisc icquiic bc icfundcd o axpavcis. Rcf C
lcs hc sac do his foi hc ncx fivc vcais. ! also
incicascs hc allowablc govcin-
mcn spcnding basc o hc high-
cs sac icvcnuc lcvcls icccivcd
bcwccn IY 2OO5-O6 and IY 2OO9-
1O plus $1OO,OOO,OOO.
Whv hc cxia $1OO,OOO,OOO? Whv
no? Likc cvcivonc clsc, hc pco-
plc clcccd o hc lcgislauic cniov
spcnding ohci pcoplc`s moncv. Bu bcfoic hc lcgis-
lauic can spcnd ohci pcoplc`s moncv, i mus fiis
akc i fiom hosc who havc caincd i.

Thc TABOR Amcndmcn was dcsigncd o piocc
axpavcis fiom hc unfoiunac fac ha cvcivonc
likcs o spcnd bu no onc likcs o cu coss. This
gocs doublc foi clcccd officials, bccausc hosc who
spcnd public moncv icccivc all kinds of accoladcs
fiom hc pcoplc gcing hc cash. As a icsul, gov-
cinmcn has a nauial cndcncv o cxpand. Thcic
is alwavs anohci piogiam, anohci bikc pah,
anohci subsidv, oi anohci faciliv ha would bc
icallv nicc o havc as long as somconc clsc is pav-
ing. To cuib hc cxpansion and lc pcoplc makc
hcii own spcnding dccisions, TABOR limis oal
sac govcinmcn spcnding o las vcai`s cxpcndi-
uics plus hc pciccnagc populaion incicasc and
hc pciccnagc inflaion incicasc. Govcinmcn is
no allowcd o giow ius bccausc pcoplc havc had
a good vcai. Whcn sac govcinmcn icvcnucs aic
highci han hc TABOR limi in
good cconomic imcs, TABOR
icquiics ha hc cxccss icvcnucs
bc icfundcd o axpavcis.
Thc spcnding limi cnsuics ha
govcinmcn shaics in pcoplc`s
cconomic pain as wcll as hcii
cconomic gain. ! picvcns iiic-
sponsiblc lcgislauics fiom iving
o avoid hc diiv busincss of cos
cuing bv aibiiaiilv iaising axcs
on busincsscs and houscholds
ius bccausc a icccssion causcs a
fall in ax icvcnucs. Limiing govcinmcn spcnding
is good cconomic policv. Govcinmcns ha plug
icccssion-causcd dcficis bv aking moic moncv
fiom pcoplc and busincsscs siuggling o suivivc a
icccssion haim hc mos pioducivc sccois of hc
cconomv. This icaids cconomic iccovciv.
Referendum C
Reaar4iae |he Ca|ara4a Geaera| Assemb|v
/ar Behariae Irresaasib|v
IB-2005-F Oc|aber 2005
Bv Dr. Lia4a Garmaa
Issue Backgrounder
13952 Denver West Parkway Suite 400 Golden, Colorado 80401
www.IndependenceInstitute.org 303-279-6536
Like erervaae e|se,
|he ea|e e|ec|e4
|a |he |eeis|a|are
ea/av sea4iae a|her
ea|e's maaev.
Gareramea|s |ha|
|ae recessiaa-
caase4 4e/ici|s bv
|akiae mare maaev
/ram ea|e aa4
basiaesses s|raee|iae
|a sarrire a recessiaa
harm |he mas| ra-
4ac|ire sec|ars a/ |he
ecaaamv.
Poge 2
Coloiado`s cuiicn pioblcms scm fiom hc fac ha
hc Coloiado Gcncial Asscmblv was iiicsponsiblc in
mccing is icfund icquiicmcns sincc 1998, whcn i
vocd o spcnd cxccss icvcnucs iahci han scing
hcm asidc o icfund o axpavcis in hc following
vcai. This woikcd whcn icvcnucs wcic iising. Bu
whcn icvcnucs fcll shaiplv in IY 2OO1-O2 and hc
Gcncial Asscmblv had alicadv spcn hc $927.2 mil-
lion cxccss ha had o bc icfundcd in IY 2OOO-O1,
i cicacd a iahci laigc mcss. Rcfcicndum C would
givc an alicadv iiicsponsiblc spcnding auhoiiv
cvcn moic moncv. This is no a iccipc foi long-cim
cconomic hcalh.
As hc chai shows, Coloiado`s oal cxpcndiuics
coninucd o iisc cvcn hough sac icvcnucs
dcclincd shaiplv in hc icccssion of 2OO2. !n pci cap-
ia cims, gcncial icvcnuc fcll fiom $3,13O pci pci-
son in 2OO1 o $3,O78 pci pcison in 2OO3, whilc pci
capia oal cxpcndiuic iosc fiom $3,54O in 2OO1
o $3,89O in 2OO3.
1
Whilc pcoplc wcic losing hcii
iobs and busincsscs, caining lcss and buving lcss, hc
Coloiado lcgislauic kcp iigh on spcnding.
A 1ulv 18, 2OO5 mcmo o Govcinoi Bill Owcns
fiom Hcniv Sobanc and Bill Skcwcs of Coloiado`s
Officc of Sac Planning and Budgcing makcs i
clcai ha TABOR spcnding limis havc nohing o
do wih hc sac`s fiscal pioblcms. '! is impoian
o noc ha hc budgcaiv shoifalls ha aic occui-
iing aic no hc icsul of TABOR, hc mcmo savs,
'Thc budgc shoifalls ha occuiicd in IY 2OO1-O2
and IY 2OO2-O3 aic hc icsul of dcclining icvcnucs
and bccausc sac cxpcndiuics wcic no icduccd
cnough o compcnsac foi hc dcclinc in hc amoun
of icvcnucs collcccd.
2

Where did lhe money go?
Thc ablc bclow shows how sac govcinmcn
spcnding changcd in vaiious funcional cacgoiics
bcwccn 2OO1 and 2OO3. Iducaion cniovcd a 16
pciccn incicasc of $846,163,OOO. Whchci anv of
ha moncv has bccn wcll spcn icmains an opcn
qucsion. Toal hcalh and hospial pavmcns, which
includc boh Mcdicaid and public hcalh funcions,
incicascd bv $539,8O8,OOO oi almos 116 pciccn.
Bccausc i is unlikclv ha hc hcalh cxpcnscs of
Coloiado`s nccdv moic han doublcd in ius hicc
vcais, hc daa suggcs ha hc lcgislauic was busv
cxpanding piogiams dcspic hc financial disicss of
hc Coloiado cconomv.
And, as hc daa foi wagcs and salaiics makc clcai,
hc disicss fcl bv hosc who pav Coloiado axcs
was no shaicd bv hosc who woikcd foi sac
State of Colorado Revenues and Expenditures, 1992-2003
$0
$5,000,000
$10,000,000
$15,000,000
$20,000,000
$25,000,000
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Year
T
h
o
u
s
a
n
d
s

o
f

D
o
l
l
a
r
s
Revenues
Expenditures
Poge 3
govcinmcn. Whilc pci capial pcisonal incomc
icmaincd csscniallv fla, falling in 2OO2 and cking
onlv a O.1 pciccn incicasc ovci hc hicc-vcai pcii-
od, wagcs and salaiics foi sac cmplovccs wcn up
bv almos 15 pciccn.
Rcfcicndum C suppoicis invaiiablv claim ha hc
addiional funding will bc uscd foi hcalh, cduca-
ion, ianspoiaion, policc, nauial icsouiccs and
hc likc. Onc would hopc hcv
aic coiicc, bccausc hcsc aic
hc hings on which sacs havc
iadiionallv spcn moncv. Wha
suppoicis fail o mcnion is ha
i is no clcai ha spcnding moic
moncv foi hcsc hings is likclv
o impiovc oucomcs, and ha
lcaving hc moncv in hc hands of
hosc who caincd i mav, in fac
pioducc bcci icsuls.
To scc how moncv is wascd cvcn
in piogiams ha sound bcvond
icpioach, considci hc lcgislaivc
shcnanigans suiiounding picsumpivc cligibiliv foi
Mcdicaid fundcd picnaal caic. Two vcais ago hc
Owcns adminisiaion discovcicd ha abou half of
hc womcn cciificd as picsumpivclv cligiblc foi
Mcdicaid picnaal caic wcic no, piimaiilv bccausc
hcv wcic illcgal alicns. ! cndcd picsumpivc cligi-
biliv and icquiicd ha pcoplc piovc hcii cligibiliv
bcfoic iccciving caic. Thc savings fiom his wcic
csimacd a abou $9,OOO,OOO a vcai.
Communiv hcalh ccncis, clinics ha icccivcd a
subsanial fiacion of hc picnaal pavmcns, wcic
paiiculailv vocal in hcii condcmnaion of his
acion. !n cxchangc foi fcdcial subsidics, hc ccn-
cis aic icquiicd o ica all comcis foi a nominal
fcc. Bu if a paicn is cligiblc foi Mcdicaid, fcdcial
law savs ha hc ccncis can bill Mcdicaid foi hcii
coss. Thosc coss happcn o bc abou $1OO highci
han a piivac Mcdicaid paiicipaing phvsician
would icccivc foi hc samc scivicc.
!n shoi, hc hcalh ccncis havc a laigc financial
inccnivc o sav ha anv picgnan woman, cvcn onc
ha hcv know ius go off hc bus fiom Mcxico, is
cligiblc foi Mcdicaid. !n spic of his, hc 2OO4-O5
Gcncial Asscmblv passcd a law icquiiing ha hc
sac icsumc picsumpivc cligibiliv foi picnaal
caic. Thc onlv changc is ha a woman dcsiiing caic
mus affiimaivclv dcclaic ha shc is cligiblc foi
Mcdicaid, in anv languagc, bcfoic shc can cniov ax-
pavci financcd sciviccs.
No saisficd wih lcgislaing hcalh caic foi illcgal
alicns, hc Gcncial Asscmblv also iicd o pass an
idcologicallv moivacd Mcdicaid picsciipion diug
piogiam ha would havc lc hc sac supplan
phvsicians in picsciibing picsciipion diugs foi
Mcdicaid paicns. Lcgislaois doggcdlv iusificd hc
piogiam, claiming ha i would savc moncv. !n fac,
Coloiado Mcdicaid alicadv had icgulaoiv icsiic-
ions on cciain picsciipion diugs ha wcic high
cos oi subicc o misusc. Thc icsiicions covcicd
Colorodo 5lole Governmenl Generol Expendilures by Funclion
(lhousonds ol dollors}
2001 2002 2003 Percent change 2001-2003
Iducaion $5,287,541 $5,798,172 $6,133,7O4 16.O
Public wclfaic 3,312,898 3,131,52O 3,442,625 3.9
Hospials 157,39O 253,652 297,784 89.2
Hcalh 3O9,353 792,62O 7O8,767 129.1
Highwavs 1,342,195 1,421,381 1,378,238 2.7
Policc 95,O73 1O3,O53 1O5,653 11.1
Coiiccions 7O4,421 734,457 723,572 2.7
Nauial Rcsouiccs 233,924 193,235 198,642 -15.1
Paiks and Rccicaion 64,377 69,3O7 72,418 12.5
Govcinmcn Adminisiaion 393,523 422,O5O 457,652 16.3
Wagcs and Salaiics 2,471,751 2,765,O58 2,841,O45 14.9
Per Capita Personal Income 34,491 34,O32 34,542 O.1
Bha| saar|ers
/ai| |a mea|iaa is
|ha| i| is aa| c|ear
|ha| sea4iae mare
maaev /ar |hese
|hiaes is |ike|v |a
imrare aa|cames,
aa4 |ha| |eariae |he
maaev ia |he haa4s
a/ |hase aha earae4
i| mav ia /ac| ra-
4ace be||er resa||s.
Poge 4
diugs foi A!DS and biain-bascd mcnal illncss, abou
16 pciccn of oal Mcdicaid diug spcnding. !n a bow
o poliicallv powciful paicn gioups, hc pioposcd
picsciipion diug piogiam would havc climinacd
hosc icsiicions, climinaing a piogiam ha savcd
and csimacd $2,9O8,747 in 2OO4-O5 alonc.
Highci cducaion, which is iifc wih opciaois likc
Waid Chuichill in piogiams such as womcn`s sud-
ics, black sudics, and chnic sudics, mav bc anohci
fciilc aicna foi cos cuing. Thc chai bclow shows
sac spcnding on highci cducaion saff fiom 1992
o 2OO4. Thc uppci sccion of hc bais shows hc
piopoiion of pavioll spcn on non-insiucional saff.
Thc boom sccion of hc bais shows hc piopoiion
of spcnding on insiucional saff. As hc chai makcs
clcai, hough paviolls havc climbcd iapidlv ovci hc
las dccadc, caching has bccn a iclaivclv low piioi-
iv.
Poge 5
Copviigh 2OO5, !ndcpcndcncc !nsiuc
!NDIPINDINCI !NST!T\TI is a non-piofi,
non-paiisan Coloiado hink ank. ! is govcincd
bv a sacwidc boaid of iusccs and holds a
5O1(c)(3) ax cxcmpion fiom hc !RS. !s public
policv icscaich focuscs on cconomic giowh, cduca-
ion icfoim, local govcinmcn cffccivcncss, and
Consiuional iighs.
1ON CALDARA is Picsidcn of hc !ndcpcndcncc
!nsiuc.
DA\!D B. KOPIL is Rcscaich Diiccoi a hc
!ndcpcndcncc !nsiuc, and a columnis foi hc
3PDLZ.PVOUBJO/FXT.
DR. L!NDA GORMAN diiccs hc Hcalh Caic
Policv Ccnci a hc !ndcpcndcncc !nsiuc.

NOTH!NG WR!TTIN hcic is o bc consiucd
as ncccssaiilv icpicscning hc vicws of hc
!ndcpcndcncc !nsiuc oi as an acmp o influcncc
anv clccion oi lcgislaivc acion.
PIRM!SS!ON TO RIPR!NT his papci in wholc
oi in pai is hcicbv giancd piovidcd full cicdi is
givcn o hc !ndcpcndcncc !nsiuc.
Endnoles
1
All numbors on Colorudo sponding uro rom lho U.S. Consus
8urouu, Slulo Govornmonl Finuncos, vurious yours. hllp.//www.
consus.gov/govs/www/slulo.hlml.
2
Cuoslions Pogurding lho Slulo 8udgol, Momo lo Govornor
8ill Cwons rom Honry Sobunol und 8ill Skowos, Cico o Slulo
Plunning und 8udgoling, 1uly T8, 2005.