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Lincoln Institute of Land Policy Economic Perspectives on State and Local Taxes
January 23, 2015 Dr. Phyllis Resnick
Property tax limits • Rate limits
• Levy limits
• Assessment limits
Fiscal cap tax and expenditure limitations
Supermajority requirements
50 States…50 systems of limits
Source: Initiative and Referendum Institute, USC. http://www.iandrinstitute.org/statewide_i&r.htm
Source: Paquin, Unpublished manuscript
Source: Paquin, Unpublished manuscript
Source: Paquin, Unpublished manuscript
…yet universal lessons
Limits Result in
“Unintended”
Consequences
0
10
20
30
40
50
60
0% 20% 40% 60% 80% 100%
Dis
tric
t M
ill L
evi
es
Percent State Share
1993-94
1993-94 Mills
0
10
20
30
40
50
60
0% 20% 40% 60% 80% 100%
Dis
tric
t M
ill
Le
vie
s
Percent State Share
2012-13
2012-13 Mills
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
1994-95 2013-14
General Fund Share of K-12 Total Program Funding
Limits May Even Result
in the Opposite of
What Was Intended
TABOR will likely require
that Colorado refund ALL
recreational marijuana taxes
in FY 15…but only for FY 15
Limits Beget
Workarounds
The College Opportunity Fund provides
a stipend to eligible undergraduate
students. Eligible undergraduate students
must apply, be admitted and enroll at a
participating Colorado institution. Both
new and continuing students are eligible
for the stipend.
The College Opportunity Fund provides
state-tax dollars to colleges and
universities on behalf of eligible
undergraduate students.
The Fund was created by an Act of the
Colorado State Legislature in May 2004
to heighten awareness that state tax
dollars are used to offset the costs of
undergraduate education.
Limits Beget Other
Limits/Mandates
And, Multiple
Limits/Mandates
Almost Always
Conflict
Limits Beget Elections (and in the process
undermine representative government)
Tax/Revenue increases
Retain excess revenue (“deBrucing”)
Create indebtedness
State Municipal
(as of
Spring
2014)
County
(as of
December
, 2013)
School
District
Special
District
Tax/Revenue
Increase
17 759
372 NA NA
Retain
Revenue
10 538 458 NA NA
Debt 4 401 65 NA NA
TOTAL 31 1,698 895
AT LEAST 2,624 * Note: Data reflect discrete number of ballot questions rather than number of elections as often more than one question is
asked at a particular election.
Limits Cast a State’s
Fiscal System in
“Soft Concrete”
3.7
3.8
3.9
4
4.1
4.2
4.3
4.4
4.5
4.6
All States Non-TEL States TEL States
Average Number of Discrete Tax Code Changes, 1992-2002
Source: Resnick, 2008
Limits Hamper Flexibility (and lead
to a culture of learned hopelessness)
Limits Provide an
Accountability Shield
for Elected Officials
Hawaii
New Hampshire Tennessee Vermont
No major state
provision
limiting property
taxation
Phyllis Resnick
Lead Economist, Colorado Futures Center
Colorado State University
303.579.8992
http://coloradofutures.colostate.edu/
Hospital Provider Fee Created
Legislatively in 2009 to Cover
Costs of Various Medicaid-
Related Programs and
Eligibility Expansion
HPF NOT EXEMPTED
FROM TABOR
Hospital Provider Fee Selected as
Mechanism to Fund State Share
of Medicaid Expansion Cost Under the ACA
Inclusion of Hospital
Provider Fee as a Revenue Subject to
TABOR Solely Responsible for Forecast TABOR
Refunds
Gap Increases Because
General Fund Pays for TABOR
Refunds
$-
$5,000
$10,000
$15,000
$20,000
$25,000
Re
ve
nu
e F
ore
ca
st,
in
Mil
lio
ns
Fiscal Year
TABOR Refunds with and without Hospital Provider Fee
GF CF GF CF TABOR LIMIT
Limits are Almost
Always Economically
Inappropriate
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
200%
All Items Education Medical Care Rx Drugs Transportation
Percent Change in Selected CPI-U Sectors: 1993-2013
Source: ITEP http://itep.org/itep_reports/2013/08/a-closer-look-at-tabor-taxpayer-bill-of-rights.php#.VAYU-fldWSo
