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Guest Editorial

Tax Cut Fever Won't Go Away

By Don C. Brunell

Association of Washington Business

As the debate over gas taxes heats up in Washington state, all eyes in the nation are on Colorado, which is in the midst of its own tax fight.

In 1992, Colorado residents enacted the Taxpayers Bill of Rights, or TABOR. TABOR established a formula that limits the growth in state tax collections and requires the state to refund excess tax revenues to the taxpayers. It also required that all tax increases by state and local governments be approved by taxpayers. Beginning in 1997, revenues began to exceed the limit. Over the next five years, taxpayers received annual tax rebates totaling $3.2 billion.

But in 2000, special interests started tinkering with TABOR, and Colorado is now in trouble. For example, the education lobby succeeded in passing Amendment 23, a constitutional amendment that requires education spending to increase faster than TABOR's spending limit.

Over time, a larger and larger share of Colorado's budget was set aside for education, and K-12 funding now accounts for 40 percent of the state's general fund budget. When the 2001 nationwide recession hit Colorado, lawmakers were forced to make deep cuts in other programs to protect education spending.

Now, Republicans and Democrats in the state are proposing competing constitutional amendments to revise TABOR and Amendment 23 to ease the long-term state budget dilemma. Republicans want to amend or repeal Amendment 23 and make minor adjustments to TABOR, while Democrats want to keep Amendment 23 and make big changes in TABOR.

Why should we care about what happens in Colorado? Because, despite the pressure on state budgets, voters everywhere are looking for ways to cut their taxes. California will vote on whether to limit state spending this fall, and other states, including Kansas, Ohio, Maine, Nevada, Oklahoma, and Arizona are considering similar measures.

Washington lawmakers should take note. After the Legislature approved a series of big tax increases in 1993, voters struck back by approving Initiative 601, which capped state spending and required a 60 percent majority to raise taxes. Over time, lawmakers have chipped away at 601, and this year they succeeded in virtually gutting the measure by eliminating the 60 percent requirement to raise taxes. Once that was done, legislators rushed to enact a series of new taxes and fees.

Lawmakers may have short memories, but voters do not. Washingtonians are already rankled by a series of votes in which lawmakers gutted 601 and abused the emergency clause to keep voters from overturning their decisions.

Gov. Gregoire and state legislators would be wise to craft a replacement to I-601 which has some teeth and controls spending and, therefore, tax rates. If not, our citizens may craft their own version, which would be much more punitive.

So while the nation's eyes may be on Colorado, Washington taxpayers are watching our state's lawmakers.

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