The TAxpayer’s Bill Of Rights is a proposed constitutional amendment that would require lawmakers to limit new spending (and thus tax increases) to a rate equal to the state’s increase in population, plus inflation. The amendment would also require that surplus tax revenue either be returned to the taxpayers and/or used to fund a “Rainy Day Fund” and a “Budget Stabilization Fund” that would fund budget shortfalls in the event of a major emergency or economic downturn. Surplus revenues could not be spent by the government without specific permission from voters or approval by a legislative supermajority (60 percent, for instance).
TABOR was first implemented in Colorado in 1992. In 2005, however, the state partially suspended its TABOR requirements. In particular, voters decided to shelve for five years TABOR’s automatic refund mechanism, thus triggering statewide spending increases. They did, however, keep in place a provision preventing tax increases without voter approval. In the 2006 election, Maine, Nebraska and Oregon held referendums on TABOR-like initiatives that would have capped state spending; none of these proposals passed. Legislators in North Carolina have introduced a TABOR amendment five times over the past five sessions, but the proposed law has never been permitted to come up for a vote.
Critics claim that TABOR is inflexible and often prevents state revenue from keeping pace with economic growth. Supporters argue that such laws are necessary to limit irresponsible spending and to give voters more control over the budget process – and thus over how their tax dollars are spent. TABOR advocates also note that the problems that led to the suspension of TABOR in Colorado – in particular, the absence of a Budget Stabilization Fund – have been addressed in newer versions of TABOR, such as that drafted by the American Legislative Exchange Council.
TABOR is not to be confused with recent attempts at passing statutory legislation (as opposed to constitutional language) limiting spending, not to mention the “North Carolina Taxpayers’ Bill of Rights,” which is a promise of courteous service made by the North Carolina Department of Revenue.