TABOR is the wrong choice for Wisconsin

By Andrew Reschovsky

Andrew Reschovsky

Many members of the Wisconsin Legislature have placed a high priority on gaining approval of a constitutional amendment, which its supporters have dubbed the Taxpayer Bill of Rights.

All TABOR proposals involve placing a formula in a state's constitution that would limit the annual increase in spending by all levels of government. Although advocates have yet to agree on a specific formula, all the proposals to date would restrict the growth of government spending to a rate that is below the growth of the economy.

Such limits guarantee that, over time, the relative size of government in Wisconsin would shrink.

Supporters argue that TABOR is needed because government spending is out of control, or because taxes, especially property taxes, are too high and growing too fast.

The facts speak otherwise. Over the past decade, state and local government spending and property taxes in Wisconsin have grown no faster than the state's economy.

Wisconsin's income and property taxes are indeed somewhat higher than the national average. However, when we consider that the fees and other revenues that go to fund public services in Wisconsin are relatively low, the total amount of money the average resident pays for government services is not out of line with what residents of other states pay. Furthermore, Wisconsin residents receive high-quality public services, such as public schools that are among the best in the country, a world-renowned university system, a superlative highway system and an extensive network of state parks.

There is little question that enacting TABOR in Wisconsin will lead to a significant reduction in the level and quality of public services that we take for granted. Careful research in other states has shown that the imposition of tax and spending limits caused the academic performance of public school students to decline. In Colorado, a state that enacted TABOR in 1992, a wide range of popular public programs have been cut sharply.

The reasons that spending limits lead to service cuts is obvious. Due to forces outside the control of governments in Wisconsin, the costs of many public services will rise at rates in excess of TABOR's limits. For example, the aging of the baby-boom generation and the rapid increases in the costs of new health-care technology (including prescription drugs) mean that health-care costs will continue to grow faster than the economy. To attract high-quality teachers to educate our children, teacher pay, over the long run, must keep pace with the growth of wages in the private sector. An increasingly diverse population and continuously rising academic standards imposed by the federal No Child Left Behind legislation will also raise the cost of providing public education in Wisconsin.

Whenever the costs of public education or health care rise faster than the TABOR limits, these services must be cut, or cuts will be required in other parts of the budget.

No one can predict with certainty how state and local governments will respond to TABOR limits. But when faced with a choice between increasing class sizes in public schools and reducing health-care insurance for low-income families or delaying road construction and other infrastructure projects, it is likely that education and health care will win out.

Ironically, TABOR will make it more difficult to solve many of the state's fiscal problems. For example, TABOR is a very ineffective way of protecting the elderly and low-income families from high property-tax burdens. Although TABOR would lead to lower property-tax rates overall, the spending caps would make it more difficult to target real relief to needy taxpayers.

TABOR is a blunt instrument. In the long run, it will reduce the quality of the public services enjoyed by Wisconsin residents, weaken our physical infrastructure and jeopardize our future economic prosperity.

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