The Economist Convinces Me to Move to Colorado By Saying the Gov't There Will Have Trouble Increasing Spending Once the Recession is Over!

Allen Saucier sends along this article from The Economist, which has turned into the classical liberal equivalent of mushy peas in the face of the intergalactic-financial-panic-that-was-intensified-up-the-ying-yang-by-bad-government-policy-and-can-only-be-cured-by-endless-public-sector-spending-and-taxing:

According to Standard & Poor's, house prices in Denver dropped only 4% last year, the smallest fall of the 20 largest American cities, where the average decrease was 18.5%.

Colorado's economy remains healthier than many others. Unemployment in March stood at 7.5% compared with 4.6% a year ago, but still below the national rate of 8.5%. And years of economic diversification away from manufacturing and the cyclical oil and gas industry have improved prospects for growth....

This year's budget, signed on May 1st, overcomes a $1.4 billion deficit by tapping into emergency reserve funds and cutting state services, while injecting federal stimulus money.

But it is after the recession that the problems start. Colorado has a number of libertarian anti-tax laws and spending restrictions that make it difficult for state funding to recover after a downturn. A 1992 amendment to the state constitution, known as the Tax Payer Bill of Rights (TABOR), requires voter approval to raise state and local taxes, and any yearly revenue increase (adjusted for inflation and population growth) must be refunded. Another statute does not allow general-fund spending increases of more than 6% over the previous year's budget, unless they go towards transport or capital projects.

WTF? Is it possible, even in the slightest, that Colorado had a rainy day fund due to fiscal discipline stemming from TABOR? And just where the hell do Centennial State voters get off on demanding that they get to vote on tax increases? That's just anarchy! To recap: Colorado is in fact doing better than most states (in part because the housing bubble popped there a coupla years early), but they are in for a world of hurt when economic recovery comes and the government can't just jack up spending irrespective of citizens' input.

Whole story here.

Read all about TABOR (TABOR!) at the site of one of its biggest champions (and like all measures, it's got warts aplenty), Colorado's own Independence Institute.

[Update (Related to Matt Welch's post about Calif. spending too): Here's some information on spending in Colorado, spending that was supposed capped at seriously low levels. In 2000, the state spent about $26 billion on a population of about 4.3 million. By 2008, the state was shelling out almost $42 billion for 4.7 million people. State budget woes are almost always the result of spending problems, not revenue issues. That is also one of the reasons why they are hard to combat.]

[Even more update: Denver Post and Reason.com columnist explains how Colorado pols have gotten around TABOR]

Tim Cavanaugh gets an all-access pass to The Economist's 2009 Consensus Lunacy Tour.

Fleeting mention of Economist article suggesting that the U.S. can learn a lot from Europe "particularly about running a welfare state":

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  • Kyle Jordan||

    Don't get too excited Nick. They have all kinds of dumbass water laws and regs since they're running out. That's what took Colorado off my top list of places to relocate to.

    It is funny though how the author of the article makes it sound like a bad thing that Colo voters have this contol.

  • Alan Vanneman||

    Mushy peas in the face! Doesn't sound pleasant at all! Hard times indeed!

  • ||

    Colorado has a number of libertarian anti-tax laws and spending restrictions that make it difficult for state funding to recover after a downturn.

    WTF?

    srsly?

    *sighs, bangs head on desk*

  • ||

    Visualize Whirled Peas

  • Xeones||

    Remember, P Brooks, libertarianism is bad. It's why we're in a recession, after all.

  • ||

    To conservatives and liberals, there is no such thing as a libertarian, only those wanton libertines trying to destroy America (by agreeing to only half of the platforms of the major parties).

  • ||

    intergalactic-financial-panic

    Unless, you are just slinging some street jive I'm not hip enough to ogle.

  • ||

    SugarFree,

    Investment in Milky Way-based companies has taken a dive, because investors are worried about the impending collision with Andromeda.

  • Brandon||

    Cavanaugh's post from last week had a discussion about the supposedly free marketeer Economist having run off the rails. Then I happened to read this article over the weekend and I thought, "Well...here's the slam dunk!" Looks like they've waved the white flag in their "severe contest".

  • ||

    Investment in Milky Way-based companies has taken a dive, because investors are worried about the impending collision with Andromeda.

    If you aren't looking three billions years out, what's the point of investing?

    Andromedeans are kinda hot*, though, so we might be OK...

    *Even in shameless rip-offs. And remakes.

  • Jon||

    "They have all kinds of dumbass water laws and regs since they're running out." You mean the same laws and regs in play in every state west of Kansas? Unless you plan on buying water rights (putting you in a very small minority), that doesn't matter.

    I really doubt that TABOR is the reason for Colo.'s economic stability (or even a dominant factor). The housing rates are relatively stable because of the high demand. The Denver area was one of the fastest growing areas because of things like skiing and other forms of recreation in the mountains. In short, people want to live Colo. but not because of TABOR.

    On a related note, courts have found ways around TABOR recently during these troubled times (surprise surprise) by playing on the tax vs. fee distinction. In other words, cities can assess "fees," which are supposed to be used to defray the specific expenses that are the subject of the fee, and then move those funds and mix them with the general fund (gathered through tax assessments).

  • ||

    As a Colorado resident, I'll point out that the state has found a way around TABOR. Rather being fair and putting any tax raise up for a vote, the government has taken to instituting usage fees. For instance, Colorado Springs instituted what they're calling a Stormwater Enterprise. Basically, the city makes up some kind of number loosely associated with the amount of hard surface on your property, and therefore the amount of runoff you have. Then, based on this number (pulled directly from their collective ass) they send you a quarterly bill to cover the cost of improvements to waterways and drainage.

  • ||

    Didn't see Jon's post above. But the Stormwater Enterprise is a perfect example of the sort of fee he's talking about.

  • ||

    Is the laft left (sorry R C -- no law for you!) and the MSM so craven that they think that all they have to do is to keep up this narrative of "you're all so fucking selfish!" and the public will fall into line? Do they honestly expect them to come marching in, wallets open and flagellating themselves for their fiduciary failings?

    I don't have the deepest respect for my fellow citizens' intelligence considering the current political landscape, but they're not complete idiots.

  • ||

    Investment in Milky Way-based companies has taken a dive, because investors are worried about the impending collision with Andromeda.

    You fool! The galactic core explosion will get us first!

  • ||

    Rather being fair and putting any tax raise up for a vote, the government has taken to instituting usage fees.



    Fair enough. However, while certainly they can be abused, in general usage fees are superior to other forms of government funding. Of course the formula can be gamed, and government can even impose a "usage fee" that doesn't tax the thing used or go to pay for the thing use, but in general charging the people who use a government service for it is better than paying for it out of general funds.

  • ||

    Don't worry, you paleotoid Coloradans; an army of enlightened Californicators, fleeing the leaky, listing hulk which is their homeland, will show you the way.

  • ||

    Thankfully, the invasion of Californians tends to be somewhat stymied every time it sleets/snows/rains/gets chilly and the roads become the least bit slick.

  • ||

    Irrelevant aside:

    Have you ever looked at the tires on those Mercedes-Benz "SUVs" Californians love so well? I doubt you could get traction on wet level grass, much less Berthoud Pass, in one of those things.

  • ||

    Colorado has a number of libertarian anti-tax laws and spending restrictions that make it difficult for state funding to recover after a downturn.

    Why do I get the feeling that the author considers "libertarian" to be a synonym for "stupid" or perhaps "evil" in this sentence?

  • ||

    Tulpa--Evil, (E-e-e-e-e-e-vil!) for sure. Always bet on black.

  • ||

    In addition to the fee shenanigans, as I recall TABOR was gutted in the Democrat landslide that ousted the Republicans from control of Colorado's legislature. In addition, the CO Supreme Court substituted a new standard for what is in the plain text of the state constitution and then used that new standard to find a plainly unconstitutional tax freeze constitutional.

  • GILMORE||

    The Economist Knows All. We Must Simply Obey.

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