Only a week ago, the Maine State Chamber of Commerce withdrew its formerly-stated support for Question 4 on the November ballot that would establish tax caps on state and local spending. Known as the Taxpayer Bill of Rights 2 -- or TABOR 2 -- the measure would tie limit increases in state and local budgets to about three to four percent annually -- unless voters choose to override the caps at the ballot box.
The chamber's membership was unable to reach agreement on whether TABOR 2 would be good or bad for business. But proponents of the measure say it was an easy decision for Forbes Magazine, which ranks Maine 41st in its list of Best States for Business.
"The Forbes listing that has Maine ranked 41st in terms of our economic climate is a direct result of, basically, our government becoming too large for the private sector to support," says Scott Moody, chief economist with the Maine Heritage Policy Center, which is promoting the TABOR 2 referendum question.
He says that while Maine languishes near the bottom of the Forbes list, Colorado -- which has had a TABOR policy in place since 1992 -- has flourished economically. Colorado ranks fourth on the magazine's survey and has experienced a population boom of nearly 50 percent since the TABOR plan was adopted there.
Maine's population has grown slightly more than seven percent over the past 17 years. Moody saus TABOR has redefined Colorado's economy by giving taxpayers relief and by forcing government to do more with less.
"That money goes right back into the taxpayers' wallets, into the business investment, and as a result what we see over the long term is significantly higher growth than in Maine, and that's the kind of dynamic we need here," Moody says. "We need tax cuts, certainly not tax shifts, which we've seen recently. We need actual tax cuts, and the only way to do that is to get spending under control. Spending has grown 45 percent between 2000 and 2008 at the state level. That's simply unsustainable."
"I know you've all heard, and are probably sick about hearing about Colorado," says Iris Lav, Senior Advisor at the Washington, D.C.-based Center on Budget Policy and Priorities. Lav says Colorado's experience with TABOR over the last 17 years was far from rosy and that's why voters suspended a portion of the law that returned excess tax collections to the taxpayer.
"Colorado went from a state that had pretty good, kind of in the middle of the pack, public services, to being 49th in the country in K through 12 education, to being last in the country in its ability to provide health insurance to low income children, to even a situation where schools had to lift their requirement that children be vaccinated because the state couldn't afford the vaccine," she says.
"Well, when you say people in Colorado were sorry, it all depends on who you were talking to," says David Crocker of the Yes on 4 campaign. Crocker says that when you give individuals and businesses more spending power by decreasing their share of the tax burden, the net result is a more robust economy.
"As far as it being a disaster for Colorado's economy, I would simply point to any number of studies which indicate Colorado has acutally flourished since 1992, and it's a great place to invest, it has a very high register as far as its ability to attract and retain wealth, it has a healthy influx of population," he says.
"To the degree that Colorado's economy has been successful, to attribute that to TABOR we think is a big mistake," says Christopher St. John, Executive Director of the Maine Center For Economic Policy. St. John says Colorado enjoys some financial advantages over Maine because of its unique geography and large population base. But he also says suspending tax rebates to taxpayers under TABOR is part of the success story.
"Colorado has enjoyed an influx in population because it's a sunny mountain state," St. John says. "Interestingly, if you take the period of time when TABOR was in effect, Colorado grew more slowly than the other mountain states in its region. So that's why they led a campaign to suspend TABOR for five years, and the economy has done a little bit better since then."
The back and forth over the merits of TABOR 2 continued to ramp up this week when opponents aired their first television ads urging voters to reject the plan.