Wisconsin Needs a Taxpayer’s Bill of Rights

Published February 1, 2004

Although most policy analysts acknowledge weaknesses in Colorado’s tax and expenditure limitation–the Taxpayer Bill of Rights (TABOR) adopted in 1992–the measure remains the country’s leading model for how to structurally require a state to keep its fiscal house in order. Wisconsin needs something similar.

State spending grew at nearly twice the rate of population plus inflation between 1992 and 2002. Tax-spending special interest groups have tremendous influence in Madison–far more influence than is wielded by the tax-paying public. A TABOR would help defend the taxpayers’ interest by shoring up the state’s structural defenses against big spenders.

If TABOR had been in effect since 1992, Wisconsin taxpayers would have saved more than $1.5 billion in 2003 alone. That’s a one-year savings of $276 for every man, woman, and child in the state–more than $1,000 back in the pockets of the average Wisconsin household. Imagine the spending power that would mean for a family, and the investments that could be made with that money!

TABOR Defense Strategy

TABOR offers a five-part strategy for defending taxpayers and restraining state spending:

  • Limit spending growth for the state and schools to the rate of growth in the state’s population plus growth in inflation. In Wisconsin in 2003, this would have limited spending growth to under 4 percent, since the state’s population increased 0.7 percent and inflation rose 3.1 percent.
  • Similarly, the growth in spending by counties and municipalities would be restricted to inflation plus local growth. This would be calculated using the same growth in inflation as at the state level, but adjustments would be made for the faster-growing local areas. A locality with faster economic growth would be able to have a higher spending limit, since its economy would be able to support it.
  • Any increase in income, sales, franchise, or property tax rates, at the state or local level, would require the approval of voters in a referendum. Those referenda could be held only on specific dates–regular election dates. Spending proponents would not be permitted to “sneak in” a referendum at an unusual time, when they can count on voter turnout to be low.
  • Similarly, any proposal by the state or local governments to borrow money would require the approval of taxpayers in a referendum vote.
  • Establish an emergency fund and budget stabilization fund. State and local governments would be required to establish an emergency fund equal to 3 percent of their annual expenditures, and a budget stabilization fund equal to between 4 and 15 percent of annual expenditures.

A two-thirds majority vote of the state legislature would be required before the budget stabilization fund could be used, and it must be replenished at a rate of 1 percent per year.

After the emergency and budget stabilization funds are established, any revenues the government body raises in excess of permitted spending must be refunded to taxpayers.

TABOR would allow spending limits to be exceeded in case of emergency. A two-thirds majority vote in each house of the state legislature (or local school board, county board, etc.) would be required to declare an emergency, and another two-thirds majority vote would be required in each house to approve a specific tax hike to address the emergency. Emergency spending could be approved only after all the existing rainy day funds (emergency and budget stabilization) are exhausted, and any unused funds collected for the emergency must be refunded to taxpayers if not used within 180 days.

Republican Frank Lasee represents the 2nd Assembly District of Wisconsin. His email address is [email protected]. He introduced TABOR legislation as Assembly Joint Resolution 55 on November 5, 2003.

For more information …

Frank Lasee’s TABOR legislation for Wisconsin is available on the Internet at http://www.legis.state.wi.us/assembly/asm02/news/tabor.html.