Why I-1033 Limits on Spending Growth Won’t Work

Colorado has had the experience of living under the growth limits on government spending that Tim Eyman is proposing with I-1033 . The Colorado measure was called the Taxpayer Bill of Rights or TABOR. It was passed by Colorado voters in 1992 as a constitutional amendment and placed strict limits on spending by local and state government. The end result was a drastic decease in public services in Colorado.

The Center on Budget and Policy Priorities has a good analysis of some of the many problems Colorado has had and you can go to their website for more detailed information.

I’ve reproduced a section below from their website which addresses some of the specific problems that exist with inflation and population only growth limits like Eyman proposes in I-1033. The magic potion Eyman claims I-1033 is, is actually a very toxic potion that will act as a poison on our state in many ways.

Limiting government spending to only population and inflation growth each year like I-1033 does creates real problems and does not provide for growth of services. It is in the best of times a freeze on government programs and in the worst of times actually decreases government services.

Here the analysis done by the Center on Budget and Policy Priorities based on the real experiment with this legislation in Colorado that points out some real problems.

“Why a Population plus Inflation Growth Formula Cannot Provide a Constant Level of Public Services

There are several reasons why states cannot provide a constant level of public services under a population-plus-inflation formula.

No existing measure of inflation — neither the Consumer Price Index nor the GDP deflator nor any other measure — correctly captures the growth in the cost of the kinds of services purchased in the public sector. State governments, for instance, are major purchasers of health care, the costs of which are rising far faster than the general rate of inflation.
In most states, a rising share of the state population is utilizing public services. For instance, the number of senior citizens in most states is rising faster than the general population, putting new burdens on programs such as Medicaid.
States often face the burden of providing new or expanded services for reasons outside the control of lawmakers. These include court mandates to increase school funding or other services, response to natural disasters or public health emergencies, major economic shifts such as plant closings, or other reasons.
In an era of large federal deficits, states are increasingly expected to finance a substantial share of new domestic priorities. Some of these expectations take the form of formal mandates, such as the additional education expenditures required under the No Child Left Behind law. Others may reflect what one analyst has called “underfunded expectations,” such as the expectation that states and local governments will provide heightened levels of security as part of the war on terrorism.
New public priorities may require new funding from states above and beyond levels of inflation. Recent state initiatives in areas such as K-12 class size reduction, prescription drug coverage for seniors, college scholarships for students with high levels of academic achievement, and other initiatives generally cannot be accommodated under the population-growth-plus-inflation formula.
It is important to note that all state programs — not just those with cost pressures exceeding the population-growth-plus-inflation level — are threatened by a rigid population-growth-plus-inflation limit. This is because such limits typically cover nearly all areas of state and local spending. So, if one spending area is forced to grow faster than the rate allowed under the limit (for instance due to court order, federal mandate or popular demand), then another spending area must grow at a slower pace — which is to say that in terms of the level of service provided, that second spending area must actually shrink.”

We don’t need to repeat the Colorado experience in Washington State. Vote No on Initiative 1033 this November 3rd. Keep local control of government services and keep government flexibility to respond to changing needs.

for more information on the campaign go to www.no1033.com

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