Referendum C: A Blank Check and a Shell Game

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The Colorado Freedom

Referendum C: A Blank Check and a Shell Game

by Ari Armstrong

The following article was originally released by the Independence Institute on September 23, 2005.

A blank check and a shell game -- those are the phrases that best describe Referendum C, the measure that will be decided this November.

The ballot title language is inaccurate as well. It begins, "Without raising taxes..." It is true that Referendum C does not change the tax rate, but it certainly allows the state to keep and spend more tax dollars. This, by any reasonable definition, is "raising taxes."

According to recent predictions by Legislative Council, Referendum C would allow the state to keep and spend $3.743 billion more taxes over the next five years. After that period, the rate of spending would be permanently ratcheted up to highest levels.

Of course, state spending is already expected to increase every year [*] over the next five years; Referendum C would increase spending even faster.

But the $3.743 billion is just a prediction. Referendum C says the state could keep and spend all money that otherwise would be refunded to taxpayers under the Taxpayer's Bill of Rights (TABOR).

An earlier prediction was "only" $3.1 billion dollars in additional state spending. In other words, the additional predicted spending has increased roughly 20 percent.

How would this money be spent? Nobody really knows, because Referendum C is a shell game. Even though the language says the money must be spent for four things (health care, education, retirement plans, and transportation), in fact the legislature can redirect existing money away from those four categories and replace it with the new Referendum C money.

Some proponents of Referendum C even brag about the fact that the measure is a shell game, and they offer that point as a reason to support it! For example, in a September 14 article for The Gazette, Kyle Henley reports that various environmental groups endorsed Referendum C.

Henley writes, "Though Referendum C does not specifically earmark new money for environmental program, groups such as the Sierra Club and Colorado Environmental Coalition argue that the extra money will free cash for programs they back."

In other words, Referendum C is a shell game that provides no real restraints on how that estimated $3.743 billion can be spent. It can be spent basically however the legislature wishes, without additional input from taxpayers.

The language of Referendum C would create a so-called "general fund exempt account" -- money that would otherwise go to TABOR refunds -- "which shall consist of an amount of moneys equal to" the amount over the usual TABOR limits. Note the phrase "equal to." It's not as though the money from Referendum C would go straight into a distinct account. Instead, an account "equal to" that amount would be created, because really all the money would go into the same pool.

While Referendum C outlines four broad areas of spending, it does not specify how much money would be spent for each category. This year's legislature passed separate legislation (bill 1350) that says the money would be split evenly among health care, K-12, and higher education, after possible bond payments.

However, this legislation is not part of Referendum C, it is not voter-approved, and it is subject to change by any future legislature. And the legislation doesn't change the fact that the legislature can play shell games with the money and redirect existing funds to other projects.

Even the language of Referendum C is subject to legislative change, because it is a statutory, not a constitutional, provision. However, the usual expectation is that future legislatures would be hesitant to change any language approved by voters.

Where the estimated $3.743 billion would end up if Referendum C passed is anybody's guess. What is certain is that the money would come out of the pockets of Colorado's working families, out of the productive, voluntary, economy, and handed over to politicians. The main question, then, is whether Colorado families or politicians are the best stewards of that money.

The Colorado Freedom