A tax and expenditure limit (TEL) is a limit placed on the growth of government revenues and expenditures. These policies help limit government activity and taxation while stabilizing budgets over the business cycle. As outlined in the ALEC State Budget Reform Toolkit and the ALEC Tax and Expenditure Limitation Act, the most effective and successful TELs meet these criteria:
As shown in Rich States, Poor States, a total of 31 states have some version of a TEL currently in place. No two of these are identical. Some states have stronger TELs, such as Colorado’s Taxpayer’s Bill of Rights (TABOR). Other states have TELs that lack enforcement mechanisms, are easily overridden, are full of exemptions, or allow high rates of growth. Users of this website may choose a state to view whether it has limitations in place on the growth of revenues or expenditures.
The Taxpayer’s Bill of Rights (TABOR) is the tax and expenditure limit for the state of Colorado and considered the “gold standard” of TELs. TABOR is a constitutional amendment approved by voters in 1992 and limits the amount of revenue the State of Colorado can retain and spend.
TABOR allows the state to retain and spend an amount based on the prior fiscal year’s actual revenue or limit, whichever was lower, increased by the rate of inflation plus population growth. If any state or local government wants to increase taxes or spend more than the limit allows, it must first receive approval from voters on the ballot. Any surplus in excess of the TABOR limit is automatically refunded to taxpayers.
The ALEC publication TABOR Turns 30: Thirty Years of Colorado’s Taxpayer’s Bill of Rights reviews the amendment’s impact during its first 30 years. TABOR has stabilized government spending and revenue growth and returned billions to taxpayers. As of fiscal year 2023, nearly $11 billion has been returned to taxpayers through TABOR refunds.
This website shows how spending in other states would have been different if they had enacted a TEL like TABOR. Users pick the year in which a hypothetical TABOR amendment would have been enacted and are shown how spending would have been different under the limit.
Dr. Barry PoulsonDr. Barry W. Poulson is Emeritus Professor of Economics at the University of Colorado. He has been a Visiting Professor at several Universities including, Universidad Autonomo De Guadalajara, Mexico; University of North Carolina; Cambridge University; Konan University, Kobe Japan; and Universidad Carlos Tercera, Madrid, Spain.
He is the author of numerous books and articles in the fields of economic development and economic history. His current research focuses on fiscal policies and fiscal constitutions.
He has served on the Colorado Tax Commission and as Vice Chair of the State Treasurer’s Advisory Group on Constitutional Amendments in Colorado.
Professor Poulson is Past President of the North American Economics and Finance Association. He is an Advisor to the Task Force on Tax and Fiscal Policy of the American Legislative Exchange Council and serves as a consultant on fiscal policy and fiscal constitutions to a number of state and national think tanks.
Jonathan WilliamsJonathan Williams is the Chief Economist and Executive Vice President of Policy at the American Legislative Exchange Council (ALEC), where he works with state policymakers, congressional leaders and members of the private sector to develop fiscal policy solutions for the states. Williams founded the ALEC Center for State Fiscal Reform in 2011 and co-authors Rich States, Poor States: ALEC-Laffer Economic State Competitiveness Index with Reagan economist Dr. Arthur Laffer and Stephen Moore. Prior to joining ALEC, Williams served as staff economist at the nonpartisan Tax Foundation, authoring numerous tax policy studies.
Williams’ work has appeared in many publications, including The Wall Street Journal, Forbes, The Financial Times, Toronto Star, and Investor’s Business Daily. He is a contributor for The Hill and a columnist at Tax Analysts, the leading provider of tax news and analysis for the global community. Williams also serves on the Advisory Board of the State Financial Officers Foundation (SFOF) and as an adjunct fellow at the Kansas Policy Institute. He has written for the Ash Center for Democratic Governance and Innovation at Harvard’s Kennedy School of Government. In addition, Williams was a contributing author of In Defense of Capitalism (Northwood University Press).
Williams has spoken to audiences across all 50 states and provided testimony for the U.S. Congress, as well as numerous state legislative bodies. His work has been featured at the federal level by The White House, the Congressional Joint Economic Committee, and the U.S. House Committee on Ways and Means. He is a frequent guest on talk radio shows and has appeared on numerous television outlets, including the PBS NewsHour, Fox Business News, and Bloomberg News. Williams was also the recipient of the prestigious Ludwig von Mises Award in Economics.
