Taxpayer Bill of Rights (TABOR)

A Taxpayer Bill of Rights (TABOR) measure is a state budget and tax-policy process that limits growth of state and local revenues to a restrictive formula, such as capping total spending and taxing to the rate of inflation plus change in population. In the one state that has adopted TABOR, a public referendum is required to increase tax revenues past this formula. Revenue that exceeds the formula is “refunded” to taxpayers unless voters decide otherwise.

Why It Matters

TABOR laws undermine the ability of governments and nonprofits to meet demands for services and to respond to future or projected changes in economic conditions, population growth, and the costs of delivering public services. TABOR has the effect of underfunding key services provided by nonprofits and therefore negatively impacts vulnerable populations served by the charitable sector.

Where We Stand

The National Council of Nonprofits opposes arbitrary and across-the-board budget cuts at any level of government and will work to inform policymakers of the impact of budget proposals on communities. When federal, state, and local revenue is reduced, nonprofits providing public services through grants and contracts with government typically receive disproportionate cuts.

National Council of Nonprofits 2015 Public Policy Agenda

Status

Since 2004, 30 states have seen serious TABOR threats: Alabama, Arizona, California, Colorado (the only enacted law), Georgia, Florida, Kansas, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Texas, Utah, Virginia, Washington, and Wisconsin.

• Arizona revisited TABOR in 2013, though it did not make the ballot.
• Colorado is the only state with an active TABOR. The United States Supreme Court is expected to evaluate the law in Kerr et al. v. Hickenlooper, a lawsuit challenging the constitutionality of the TABOR law in Colorado, as soon as January 2015. Plaintiffs argue that the law usurps from the legislative branch their authority to levy taxes and violates the constitutional mandate that each state maintain a “republican form of government.”
• Maine voters rejected the Maine Taxpayer Bill of Rights Initiative, or Question 1, in 2006.
• North Carolina considered TABOR provisions in both 2012 and 2014 legislative sessions. The provision did not make the ballot in 2012. It was proposed again in the 2014 session, but again did not make the ballot again after failing in the House.
• Tennessee: In 2004, Spring Hill, TN became the first municipality to adopt TABOR.

What Nonprofits Can Do

Nonprofits can overcome the allure of an arbitrary budget gimmick such as TABOR by demonstrating the effectiveness of the programs they perform in communities and communicating to policymakers the impact that government-funded programs have in communities. In particular, nonprofits should participate in nonprofit advocacy training and events hosted by their state association of nonprofits.

Additional Resources

• Kerr et al. v. Hickenlooper: A Constitutional Challenge to Colorado’s Taxpayer Bill of Rights.
• Colorado Nonprofit Association Files Friend-of-Court Brief in Lawsuit Challenging TABOR
• “A Formula for Decline: Lessons from Colorado for States Considering TABOR,” Center on Budget and Policy Priorities, March 2010
• “Policy Basics: Taxpayer Bill of Rights (TABOR),” Center on Budget and Policy Priorities, February 2013