TABOR and the state budget are on the ballot. Here’s why.
When Colorado voters approved the Taxpayer’s Bill of Rights in 1992, supporters said that the measure’s new spending cap would allow the state government to grow with the economy.
Decades later, the evidence is clear: That wasn’t true.
Since then, Colorado’s state general fund has shrunk dramatically relative to personal income and gross domestic product, with the TABOR limit ushering in round after round of tax cuts, and one state budget crisis after another.
That pattern has shaped Colorado state politics and its public services for a generation. In bad economic times, lawmakers have made large cuts to state programs — particularly K-12 and higher education. And in good economic times, lawmakers have tried to pump more taxpayer funds into education and other services — only to run up against the TABOR cap and fall short of their promises.
That dynamic has reached a new inflection point in recent years. Lawmakers, flush with cash after the pandemic, eliminated the state’s K-12 funding shortfall, expanded public preschool and pledged to do even more, only to run into a series of budget buzzsaws: the rapid growth of Medicaid costs, the retrenchment of federal support for social services and multiple rounds of state and federal tax cuts that ate into Colorado’s tax base.
The state budget crisis — and TABOR — are on the ballot this year in Colorado through two ballot measures backed by Democrats: Amendment 87, which would raise taxes on higher earners to fund schools, childcare and healthcare, and Proposition NN, which would redirect TABOR refunds to public education.
After decades of failed attempts to raise new tax dollars for schools and healthcare, Democrats are hoping this is the year they break through with the electorate — that the state’s shifting politics, coupled with anger at the federal government and rising inequality will finally generate the support they need to end the cycle of budget cuts.
For more on the two ballot measures, read our voters guide entries, along with our FAQ on the graduated income tax proposal.
This article isn’t about those measures. It’s about how we got here.
Colorado’s state taxes are among the lowest in the U.S.
When Colorado voters added TABOR to the state constitution in 1992, they essentially froze the state’s general fund budget in time.
From then on, tax revenue could only grow by the combined rate of inflation and population growth, for as long as voters keep the cap in place.
To put it another way — relative to inflation and population — the state general fund could never be bigger than it was in the early 1990s, when the TABOR formula first kicked in.
At the time, Colorado was a low tax state. In 1993 — the year that determined the size of the state budget in the TABOR era — Colorado ranked 48th in taxes as a share of personal income, and 45th in taxes per capita, according to a Colorado Sun analysis of U.S. census government finance data compiled by the Urban Institute.
The cap was reset in 2011, after voters passed Referendum C in 2005, granting a five-year timeout from the revenue limit. But the basic premise of TABOR remained in place — Colorado’s state budget was tied to the spending levels of a previous era.
Supporters in 1992 argued that the cap was a reasonable restriction. “The proposal allows spending to grow as the economy grows and as the demand for government services increases,” the nonpartisan state voters guide, known as the blue book, wrote in summarizing the arguments for its passage. “Only with voter approval will government be able to grow faster than the private sector.”
But the cap has proven far more restrictive than proponents argued, causing the state’s general fund budget to shrink relative to the economy.
Since then, the state’s gross domestic product has grown 450%; personal income has risen 491%. That’s nearly twice the rate that the TABOR cap has allowed general fund spending to grow.
Today, Colorado’s tax policies remain among the most conservative in the country, thanks in large part to TABOR, which has delivered billions of dollars in tax relief over the decades — both directly through taxpayer refunds and indirectly through tax cuts passed when the state was over the cap.
Relative to personal income, Colorado still ranked 45th in tax collections as of 2022, the last year census government finance data is available for all 50 states. (Colorado is closer to the middle of the pack — 33rd — in per capita tax revenue, but that’s not a reflection of the state charging close to the national average in taxes. The state’s No. 9 ranking in personal income per capita, and its high cost of living skew its ranking upward.)
To cope, lawmakers have relied heavily on enterprises — fee-based government entities that are exempt from the TABOR cap. Colorado college students now pay around $3 billion a year in tuition, hospitals pay $1 billion a year in fees to help fund Medicaid, and park visitors chip in over $200 million a year to fund outdoor recreation and wildlife. There’s also a growing number of fees for transportation projects, but not all of them are exempt from the TABOR limit.
Still, the rise in fees hasn’t been enough to solve the state’s financial problems. Colorado doesn’t rely any more on fees than the average state, ranking 26th in fee revenue as a percent of personal income. When you combine taxes and fees, Colorado ranks 44th.
It might not feel that way to many Coloradans struggling with the high cost of living. Local government tax collections here rank sixth in the U.S., largely due to high sales taxes and mountain economies that rely on tourism.
The gap between state and local taxes has largely been dictated by voters: Coloradans have consistently supported efforts to lift the TABOR cap in local elections, while keeping the state limit in place. And when given the choice, voters have repeatedly elected to cut state income taxes and rejected attempts to raise them.
Voters keep demanding more, while paying less.
When voters adopted TABOR, the state income tax rate was 5%.
Since then, the state has cut the income tax rate four times — twice through legislation, and twice through ballot measures. Each time, the state was collecting large TABOR surpluses, and had to refund the money to voters, anyway. The repeated cuts have resulted in an income tax rate of 4.4% — delivering Coloradans the equivalent of a 12% tax cut compared with 1992 levels.
Residential property tax rates, too, have fallen precipitously since then, leaving Colorado homeowners with some of the lowest taxes in the country, according to the Lincoln Institute of Land Policy. And while those taxes primarily fund local government agencies, they have an effect on the state budget, too. Every dollar that local school districts don’t collect in property taxes is a dollar the state has to chip in for education.
Meanwhile, even as taxes fell, Colorado voters have consistently supported more state services, not less.
They have repeatedly elected large Democratic majorities at the statehouse, who expanded Medicaid and other social services, along with a governor in Jared Polis who was twice elected on his promises to expand pre-K and increase teacher pay. Coloradans also voted for the state to increase spending on specific things — such as K-12, through Amendment 23; healthy school meals through Propositions FF and MM; and law enforcement, through Proposition 130.
In some cases, like the Proposition 123 affordable housing measure in 2022 and the state’s family leave program in 2020, voters provided a new funding source to go along with the extra spending.
But more often, voters and lawmakers alike have approved new programs with either insufficient funding or no new money at all to pay for them. That has compounded the financial pressures on the general fund and further hampered state Democrats’ ability to deliver on their promises to voters.
Medicaid costs are rising faster than the state can afford.
From 1994 — the first year state revenue was restricted by TABOR — to 2026, the cap has risen by 271%.
The Department of Health Care Policy & Financing, which administers Medicaid, has grown three times faster, seeing its budget increase by 828% in the same period.
The problem isn’t unique to Colorado — healthcare costs have risen precipitously across the country, particularly in recent years, as an aging population’s long-term care needs command a growing share of what states spend on the low-income health insurance program.
But Colorado faces some challenges others don’t. Our population is aging faster than most other states, causing healthcare costs to rise more quickly. Lawmakers have also expanded some services beyond what’s required, opting into the federal Medicaid expansion, allowing women to retain their coverage a year after giving birth, and extending care to immigrant children and pregnant women, regardless of their legal status.
Moreover, wealthier states are expected to cover a larger share of the federal healthcare program’s costs. But because of our low taxes, Colorado doesn’t generate the resources that other high-income states do.
Federal stimulus funds during the pandemic helped mask the budget crunch for a time, but the problem has come to a head in recent years. The state is facing annual budget deficits of over $1 billion, driven primarily by Medicaid.
K-12 and higher education have shrunk in response.
As healthcare costs have grown, Medicaid has taken up a growing share of the general fund budget, leaving less for everything else.
K-12 and higher education have paid most of the price.
In 1994, Colorado spent 42% of its general fund budget on the Education Department, which oversees K-12 schools. That was the most of any state department. Higher education accounted for 15%.
Last year, HCPF overtook the Department of Education, and continues to grow, consuming 34% of the general fund in the current 2026-27 budget year. K-12 now represents 26% of the budget. Public funding for higher education has shrunk to 9%, with tuition filling in the gap. That has resulted in a generational shift in who bears the cost of public colleges, with students now contributing more than taxpayers.
In that same period, K-12 spending has mostly kept pace with the growth in the TABOR cap — but historically, that hasn’t been enough to fully fund schools, let alone pay teachers well. From 2010 to 2024, Colorado underfunded public schools by $10 billion relative to its constitutional requirements under Amendment 23.
By one metric, Colorado has the worst paid teachers in the country by far. An Economic Policy Institute study found that teachers here make 41% less than what comparable college graduates can earn in other jobs.
School districts, meanwhile, face rising cost pressures of their own, including employee healthcare and required contributions to the state pension, which are double what they were when TABOR was adopted. More than 100 districts have gone down to 4-day school weeks to cut costs.
Lawmakers in recent years eliminated the school funding shortfall going forward, and pledged to increase the minimum required level of school funding for the first time in the TABOR era.
But their rollout of the new school finance formula has been complicated by the budget crunch.
