NCPA - National Center for Policy Analysis

TAXPAYERS RIGHTS WOULD HELP WISCONSIN'S FINANCIAL WOES

November 29, 2004

A Taxpayer's Bill of Rights (TABOR) would have spared the state of Wisconsin its current estimated budget shortfall a whopping $2.8 billion, according to Barry Poulson, a distinguished scholar with the Americans for Prosperity Foundation.

How did this happen? First, Wisconsin's income per capita growth rate has been slower than the national average since 1990 -- less than 3 percent per year. Furthermore, the state has shown little job creation. But, the state and local tax burden is among the highest in the nation, consuming about 11.1 percent of annual income.

Additionally:

  • During the 1990s, state expenditures increased at a faster rate than tax revenues.
  • In 1994, the state changed the way it funded education, by committing to fund an average of two-thirds of revenue needed to run local school districts; as a result, education spending consumes 55 percent of the state budget.
  • This commitment was worth $5 billion, with no corresponding tax revenues to support it.

A Taxpayer's Bill of Rights in the state's constitution would prohibit state expenditures and debts to grow faster than the annual population growth plus inflation. Surpluses would be refunded back to taxpayers, and additional spending would require voter approval.

Had the TABOR been in effect for Wisconsin since 1989, the state would have accumulated $2 billion in a "rainy day" fund to help their current fiscal crisis.

A state with a personal income per capita below the national average and a tax rate above the national average needs some controls on government growth, says Paulson.

Source: Poulson, Barry, "A Taxpayer's Bill of Rights for Wisconsin," Americans for Prosperity Foundation, September 2004.

 

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