Researcher Exposes Dangers of TABOR

As bad as revenue caps have been for Wisconsin public schools, an even larger threat looms in the Legislature, according to speakers at a conference on tax and spending limits in Wisconsin, held Wednesday (January 19, 2005) in Madison.

The so-called Taxpayer Bill of Rights (TABOR) would be even more restrictive than the state-imposed revenue controls that are already strangling school districts, speakers said.

Andrew Reschovsky

If TABOR had been in place in 2003, school spending statewide would have been more than $2 billion lower than it actually was, University of Wisconsin-Madison professor Andrew Reschovsky said at the conference sponsored by the Robert M. La Follette School of Public Affairs.

In the Manitowoc School District, where per-pupil spending is below the state average and the average school mill rate is 20% below average, school funding would have been more than $14 million lower in 2003-2004 under TABOR, Reschovsky said.

Citing an article from the National Tax Journal that compares school performance over time in states with spending freezes and states without spending freezes, Reschovsky said there is strong evidence that a tax freeze would harm the quality of education in Wisconsin.

“Tax limits always lead to a reduction of quality of education,” Reschovsky said.

TABOR is a proposed constitutional amendment, modeled after constitutional provisions in Colorado, that would limit spending growth for public schools and essential local services. TABOR uses the Constitution to severely restrict government spending, rather than leaving spending decisions up to local or state elected officials.

Last weekend (January 15, 2005), Reschovsky also appeared before the WEAC Board of Directors, where he said TABOR is unnecessary and is based on falsehoods.

Using a Power Point presentation, Reschovsky – a professor of public affairs and applied economics – individually shot down each of the main premises and goals that supporters attach to TABOR.

Addressing the assertion that TABOR is needed to slow down government spending, Reschovsky said state and local government spending over the past decade has grown at about the same rate as personal income in Wisconsin. He said spending on K-12 education has grown more slowly than state personal income.

A few of the other points made by Reschovsky are:

• Wisconsin is not a high-spending state. In 2002, Wisconsin ranked 19th in state and local spending relative to personal income.
• For most people, property tax levies have grown less rapidly than income over the past decade. In fact, property taxes on the median-value house have grown more slowly than inflation, and property tax levies have declined as a percent of income over the past decade.
• Businesses in Wisconsin face a relatively low tax burden. When you include all business taxes plus businesses’ portion of sales, property, and gas taxes, Wisconsin ranks 36th in business taxes as a share of business profits.
• TABOR will harm educational quality in Wisconsin. Evidence from other states shows that property tax limits have led to a decline in education quality.
  

Reschovsky offered these ideas as alternatives to TABOR:

• Enact targeted property tax relief by expanding income eligibility to the Homestead exemption.
• Adopt an expanded property tax deferral program that is available to everyone.
• Consider adopting alternative local government revenue sources.
• Encourage the Legislature to adopt strict “pay as you go” rules.
• Create a “rainy day” fund.
• Reform the school funding system.
  

Reschovsky said citizens can control spending through the election process.

“If citizens believe that government in Wisconsin is too large (it provides too many services or too high-quality services), then they should elect representatives who want to reduce the size of government,” he said. “Constitutional limits like TABOR are simple, blunt instruments. By design, they are inflexible and they impose today’s standards on future generations.”

WEAC members and staff have been at the forefront of a movement to stop TABOR and other tax freeze proposals in the Legislature because of the devastating effect they would have on schools and the quality of education provided to children. Through the OnWEAC Cyberlobby, the OnWEAC Tax Gimmicks Resource Page, paid advertising, letters to the editor, and participation in demonstrations and forums throughout the state, WEAC members are getting out the message that TABOR poses a very serious threat to education and to Wisconsin’s future.

WEAC was one of the founding members of a large coalition of organizations opposing TABOR, a coalition that has grown to include dozens of member organizations representing education, local government, union and social service groups.

Resource Page on the Fight Against Tax Gimmicks (this page includes a pdf file of Reschovsky's Power Power presenation)
OnWEAC Cyberlobby (members only)

Posted January 21, 2005