Colorado’s economy boomed during the past five years, rebounding quickly from the pandemic and causing state revenue to soar. But here’s the catch — thanks to the Taxpayer’s Bill of Rights (TABOR), those funds couldn’t be fully tapped into. Even with a jaw-dropping $1.4 billion revenue surplus last year, the Joint Budget Committee and state lawmakers are now slashing public services by more than $1 billion — all because of TABOR’s outdated revenue cap. If state leaders don’t take meaningful action to reform TABOR this year, foundational programs, like schools, health care and public safety will not recover. 

TABOR, a 33-year-old constitutional amendment, restricts state revenues to a growth limit based on inflation and the change in population each year. However, TABOR’s formula doesn’t reflect where our tax dollars actually go. Metrics such as consumer inflation and population growth fail to capture the increasing demand for essential services funded by our tax dollars, including health care for an aging population and new technologies for students in schools. Ultimately, our revenue cap does not align with the needs of our state.

TABOR is why Colorado continues to reduce funding for essential public institutions and programs voters have strongly supported, despite having budget surpluses every year. For example, in 2020 and 2022, voters directed the state to offer at least 10 hours of free preschool per week through Proposition EE and universal school meals through Proposition FF. Both initiatives were designed to lower costs for families with children in our increasingly unaffordable state. But ironically, their success is now working against them. The more children are enrolled, the more costs climb — well beyond what voters approved back in 2020 and 2022. And though fully funding these wildly popular programs would cost just a tiny fraction of the surpluses we’ve seen in recent years, lawmakers can’t use that extra money because of TABOR.

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The chaos in Washington D.C. is only making things worse. With proposals floating around Congress such as billions in cuts to health care, housing and food assistance, which would shift even more costs onto the state, the budget is heading toward a dire future. JBC staff warn our budget is on an unsustainable trajectory with or without a recession. According to a recent report, “significant and ongoing action is necessary.”

Other states have the budget tools they need to weather recessions, federal funding cuts, or global instability. Since 2004, 29 states have successfully blocked efforts to pass TABOR-like constitutional amendments. Most of these attempts never made it to the ballot, and in the states where it did — Florida, Maine, Nebraska, Oregon, and Washington — voters rejected it outright. Those states have moved forward and are better prepared for the future. Colorado deserves the same. It’s time for an upgrade.

The last time Colorado faced a serious budget crisis, lawmakers and advocacy groups from both sides of  the aisle united to pass Referendum C in 2005. Ref C gave the state a five-year “time out” from the TABOR limit and eliminated its “ratchet down” problem, where growth was tied to the previous year’s revenue. These changes were crucial, especially when the Great Recession struck just two years later.

Now, faced with another economic slowdown, uncertain federal funding and the looming threat of a potential trade war, Colorado finds itself in a similar bind to 2005. But instead of coming together to reassess our constraints like the bipartisan Ref C coalition did back then, we’re blindly making cuts. And we’re not trimming the fat — we’re cutting to the bone. All because of a 30-year-old revenue cap that hasn’t kept up with the state’s changing needs. The ones who will suffer most? Colorado’s most vulnerable — people with disabilities, older adults and children.

So, what can we do now? It’s time to unite once again and rethink our approach, just as we did in 2005, to secure a sustainable future for our state and its most vulnerable populations. If legislators think this year’s budget is tough, major reductions to Medicaid or SNAP from federal cuts will be catastrophic. We need state leaders to be bold and introduce legislation that opens up the TABOR conversation. The time is now.

Caroline Nutter is legislative coordinator at the Colorado Fiscal Institute. She researches and analyzes state fiscal policy issues and advocates for policies that bring equity and prosperity to all Coloradans.