TABOR, or the Taxpayers Bill of Rights, was passed by Colorado voters in 1992 to limit revenue growth for state and local governments and require any tax increase to be approved by voters. It is a revenue limit based on the previous year’s expenditures and reserve increases with a percentage adjustment based on growth in population plus inflation. Under TABOR excess revenue raised beyond this limit must be refunded to the voters.
Voters may choose to allow the state to keep the excess money, but TABOR limits the times when such votes may occur. Voters may also exempt their government from TABOR revenue limits for a set number of years. For example, in 2005, Referendum C was passed, allowing the state to keep excess revenue from 2005-2010. Starting in 2010, revenue limit was based on the prior year’s “Referendum C cap” adjusted for inflation and population growth, rather than the prior year’s spending. The Referendum C cap increases each year.
Both types of votes have passed in special districts, school districts and some small cities and in the city and county of Denver.
Amendment 23, which passed in 2000, is a TABOR related vote that directly impacted state education funding. It allowed the state government to retain as much of a TABOR surplus as necessary to fund the K-12 provisions the amendment included. No other such statewide vote has passed.
Starting in 2009, revenue shortfalls due to the recession negatively impacted the state budget. In order to balance the state budget, the legislature reinterpreted the meaning of Amendment 23 in 2009. This reinterpretation results in hundreds of millions of dollars in cuts to education funding each year. You may hear these cuts referred to as the “budget stabilization factor.”
Colorado is the only state in the country with a Taxpayer’s Bill of Rights that limits both the revenue the state can keep and the government’s ability to raise taxes.