Tax & Expenditure Limitations and Public Policy Efficiency

In "Fiscal Management Implications" Christine Martell and Paul Teske explain the downsides of limiting the size and scope of government.

Colorado state has amended its constitution in 1992 with a Taxpayer Bill of Rights (TABOR), the strictest Tax & Expenditure Limitations (TELs) to date. By limiting the scope and size of government, TABOR has also limited the governmental capabilities of weathering economic recessions and employing sound fiscal management practices.

The reasons for this loss of fiscal control is the increasingly part of budget already earmarked, privatization, and the shift of responsibilities. In the financial and educational field, binding TELs reduced Colorado ability to invest in a rainy-day fund and the access to quality public education.

Authors conclude affirming that public administrators have to determine whether the trade-offs of increasingly restrictive budgets - through earmarks, mandatory expenditure and direct democracy - are worth the adoption of a TEL.

http://onlinelibrary.wiley.com/doi/10.1111/j.1540-6210.2007.00752.x/abstract