COLUMN: Joseph R. Reisert

TABOR doesn't create incentives for real change

Copyright © 2006 Blethen Maine Newspapers Inc.

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The verdict is in: Maine's tax burden is too heavy, and our taxes are apportioned in ways that discourage economic growth. And it's not just the rabidly tax-hating partisan conservatives who say so, either. Even the good people at the left-leaning Washington D.C.,-based think tank, The Brookings Institution, express concern about the effects of our high taxes in their new report, "Charting Maine's Future."

The Taxpayer's Bill of Rights (TABOR) appears to be just the solution Maine requires. In effect, TABOR aims to put our state and local governments on a budget. Expenditures would be allowed to rise from one year to the next, but only by just enough to keep up with inflation and population growth. Increases beyond this amount would require extraordinary approval by the voters.

The plan is simple, its appeal obvious: if every taxpayer has to live on a budget, taking care not to spend more than we earn, shouldn't our governments do the same?

Absolutely. But, unfortunately, TABOR won't make it happen.

Leaving aside the complex legal and constitutional problems TABOR may face in the courts, and setting aside the ambiguous evidence from Colorado's experience with a similar, but not identical measure, TABOR is still fatally flawed.

Here's why. TABOR proposes to set a limit on governmental expenditures, but it doesn't tell lawmakers and city managers how to keep spending growth in line. Nor does it create a sufficient incentive for them to do so.

Limiting expenditures is easy in theory, but hard to do in practice. Anyone who has ever had to cut their own personal spending knows that there are only two options: buy less stuff, or spend less for the stuff you buy. Our state and local governments have exactly the same two options. They can either support fewer programs, or find ways to continue the same old programs, but manage them more efficiently.

Deciding what to live without is hard, and finding ways to make government more efficient is even harder.

If TABOR does pass, we will surely find that some, and perhaps even most, of our public officials will want to make a sincere effort to identify new efficiencies and to target useless, outdated programs for cancellation. But we won't be paying them any more for doing a harder job, and we probably won't even be thanking them for it.

To the contrary, the dedicated officials who manage to find cuts will inevitably come in for harsh criticism from those who benefit from the existing programs and who profit from their inefficiency. There is no program so stupid that no one benefits from it, and there are no citizens so public-spirited as to thank the official who cuts a program from which they benefit.

People respond to incentives. That's the most important reason for lowering Maine's taxes: to reduce the disincentives to doing business in Maine.

Public officials respond to incentives, too. If canceling or trimming programs will require extraordinary efforts from them and subject them to unpleasantness from the public, and if we can provide no positive incentive for them to do these things, we should expect that our officials will look for the easy way out.

Like private individuals who spend more than they earn by paying their bills with credit cards, our fiscally strained officials will have every incentive to look for ways to defer expenditures, or move them off-budget, or to borrow. Especially since they won't be the ones paying the bill when it finally becomes due.

The other easy out for our officials will be to propose budgets that limit the rate of expenditure growth to meet the TABOR cap by proposing highly dramatic and politically unpopular cuts and then to take proposed spending increases to the voters: vote to spend more or we'll have to close down the fire department or stop teaching math in the schools.

There is a way to limit the growth of government expenditures, and ultimately to lower our taxes, but it is not by commanding officials to meet some arbitrary spending target.

Government expenditures will be restrained, and taxes will fall only when we give our leaders the right incentives by rewarding them with our votes for spending our money prudently and voting against them when they spend too much. If we don't do that, TABOR won't help; if we do, it won't be necessary.

Joseph R. Reisert is associate professor of American Constitutional Law and chair of the Department of Government at Colby College in Waterville.