Backers of Spending, Tax Limits on Notice

Even as they organize a nationwide push for the 2006 elections, conservatives seeking to impose state tax and spending limits suffered twin defeats in high-profile ballot tests this month, casting doubt on their movement’s momentum.

On Tuesday, California voters resoundingly rejected a ballot initiative to limit state spending; a week earlier, Colorado voters narrowly approved an initiative suspending that state’s strict limits on taxes and spending.

Both results cheered social-service advocates and labor unions bracing for a wave of efforts next year to restrain state taxes and spending.

Conservatives “will not be going into ’06 in a position of strength,” said Iris Lav, deputy director of the Center on Budget and Policy Priorities, a liberal think tank.

But conservatives pressing the limits say reports of their demise are exaggerated. They say as many as two dozen states could consider tax and spending limits next year, either through legislation or ballot initiatives.

These advocates note that even as California and Colorado voters were turning away from the idea, the Pennsylvania Legislature voted this fall to impose spending limits through statute and took the first step to authorize a ballot initiative to embed the proposal in the state constitution.

“This issue still has a lot of legs and a lot of potential,” said Pat Toomey, president of the Club for Growth, a conservative anti-tax group.

Debates over tax and spending limits crystallize the divisions between the two major parties about government’s size and role. Democrats and their allies usually oppose the efforts, whereas Republicans and their supporters usually back them.

Some political strategists contend a renewed push for such limits could help increase turnout of conservative voters for the 2006 midterm elections, much the way state initiatives banning gay marriage did in 2004.

Kristina Wilfore, executive director of the liberal Ballot Initiative Strategy Center, said she considered it no coincidence that almost all of the states considering the idea were holding gubernatorial elections next year. “That’s part of [the conservatives’] strategy,” she said. “Somebody aligned the map.”

States likely to see ballot initiatives to impose spending limits next fall include Maine, Ohio (where likely GOP gubernatorial candidate J. Kenneth Blackwell is the principal sponsor), Nevada, Oregon and Oklahoma. Serious legislative pushes could come in Wisconsin, Kansas and Michigan.

Still, the California and Colorado results raise questions about whether the proposals are as potent a political asset as their advocates believe.

Fully 30 states operate under some sort of tax or expenditure limits, according to the National Conference of State Legislatures. But the pace of their adoption has slowed sharply in the last decade.

Most of the limits were imposed in two waves. Fourteen states adopted them from 1978 through 1982, during the height of the tax revolt inspired by Proposition 13 in California. Through the rest of the 1980s, two other states followed.

Another wave crested in the early 1990s, drawing strength from the same disillusionment with government that powered the movement to apply term limits to state and federal legislators: From 1990 through 1993, eight more states added tax or spending limits. Since then, six states have done so.

In 2004, Maine voters decisively rejected a ballot initiative to limit property taxes. This year, Pennsylvania was the only state where the tax and spending limits made significant progress, even though 23 state legislatures considered them, according to a recent analysis by the Center on Budget and Policy Priorities.

Moreover, advocates of the tax and spending limits have grown disappointed with their effect. Many believe loopholes and exemptions render most of the existing limits ineffective.

“Nearly every academic and policy study that has examined these fiscal limits has concluded that they have only had a marginal impact on state budgetary outcomes,” Michael J. New, an adjunct scholar at the libertarian Cato Institute, wrote in a recent National Review Online article.

With that experience in mind, a constellation of conservative groups has been promoting tax and spending limits modeled on the Colorado system, generally considered the nation’s tightest.

Colorado has operated under its tax and spending limitation -- known as the Taxpayer Bill of Rights, or TABOR -- since voters approved a constitutional amendment in 1992. The amendment’s central provision established a formula that tightly limited the amount of revenue the state could collect annually. If the economy generates tax revenue above that level, it must be refunded to taxpayers.

Earlier this month, Colorado voters approved an initiative voiding $3.7 billion in tax refunds that would have been mandated over the next five years.

A bipartisan coalition that included the state’s conservative Republican governor, Bill Owens, and much of the business community argued that providing those refunds would require unacceptable cuts in public services, tuition increases at state universities and a cap on the prison population.

Opponents of TABOR limits have indicated they will use the results in Colorado -- and, to a lesser extent, in California -- as an argument against similar plans elsewhere. In Maine, for instance, Democratic Gov. John E. Baldacci told reporters, “We should be careful before we try to implement practices that aren’t working in other states.”

But spending-limit advocates say this month’s results won’t have as much impact as the critics hope. They noted that even with most of Colorado’s political establishment supporting it, the referendum to suspend TABOR passed narrowly.

Advocates for limits also brushed off the overwhelming defeat of the California proposal. Grover Norquist, president of the conservative Americans for Tax Reform and a strong supporter of tax and spending limits, said the measure was so riddled with loopholes, “I don’t know anybody in the conservative movement who would have crossed the street” to back it.

More important, proponents say, the limit proposals under consideration in most states have been revised to reduce the problem that squeezed Colorado.

“It is very important that what is being discussed in all these states improves upon what has been under effect in Colorado,” said Ed Frank, director of communications at Americans for Prosperity Foundation, a conservative group.