19.11.07

WHY WE TEACH COST-BENEFIT ANALYSIS. Destination: Freedom makes common cause with opponents of tax-limitation policies sold under the rubric "taxpayer bill of rights."

‘Taxpayer Bill of Rights’, or TABOR, ballot measures attempt to place tight caps on state and local revenues. These caps limit public sector spending and investment based on a formula linked to population growth and inflation. Voter approval is typically necessary to override the caps. The measure sounds reasonable but ignores the nature of investment and on-going operational expenses for many public services. TABOR has become a favorite tool for some libertarian and conservative anti-government activists.

These measures can have dramatic and disastrous effects on the ability of states and communities to deal with an array of infrastructure improvements and investments. In 1992, Colorado became the first, and remains the only, state to adopt a TABOR amendment. Despite its robust growth and relatively high per capita income, a recent study ranked Colorado 35th in transportation funding, sixth-worst in the nation on highway and transportation maintenance. The state received a “D+” from the American Society of Civil Engineers for the condition of its infrastructure. In 2005, Colorado voters decided to place a temporary moratorium on TABOR in order to invest in needed transportation and other projects.

I suspect advocates of tax-limitation would use the vote as evidence that the law is working: the rent-seekers who otherwise would enjoy untrammelled access to the public purse must convince voters that the transportation projects are indeed useful. The American Society of Civil Engineers, after all, has a membership whose salaries often depend on a steady stream of government spending on bridges, road widenings, and housing projects.

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