Tax and expenditure limitations in state constitutions—known to cognoscenti as “TELs”—vary in their scope. But if effective in curbing government fiscal powers, they are invariably controversial, and courts and legislatures regularly seek ways to undermine them. The average effective lifespan of most TELs is only five years.
A particularly famous TEL is Colorado’s Taxpayer’s Bill of Rights (TABOR), inserted into the state constitution by popular vote in 1992. Despite dire warnings that TABOR would destroy the state—and continued charges that it is starving government—Colorado has prospered since it took effect.
Although TELs such as TABOR seem harsh to some people today, their restrictions are insignificant compared with those imposed by several Western state constitutions during the latter half of the nineteenth century. TABOR, for example, grants state and local government much more fiscal leeway than did Colorado’s original, unamended charter. Indeed, almost all of the nineteenth-century Western state constitutions expanded protection for economic and personal liberties beyond that afforded by the US Constitution.
The Constitutional Liberty Trend
The 1849 California constitution provided an organizational pattern for its nineteenth-century Western-state successors. These constitutions generally began with a preamble followed by a declaration or bill of rights, sometimes with a recital of state boundaries between the preamble and the list of rights.
Following the list of rights might come an article dealing with suffrage, succeeded by three articles describing and empowering the legislative, executive, and judicial branches of state government. Ensuing articles addressed the militia, revenue, debt, education, amendments, and miscellaneous topics. Usually rounding out the document was a “schedule” laying down rules for the orderly transition from territory to statehood.
The 1849 California charter also initiated a trend of expanding freedom beyond the scope protected by the US Constitution. Its declaration of rights consisted of 18 sections, which, besides reproducing the US Constitution’s guarantees, added items such as a right of resident aliens to own property and a rule requiring population-based representation.
The declaration ended with a paraphrase of the US Constitution’s Ninth Amendment. It read, “This enumeration of rights shall not be construed to impair or deny others retained by the people.”
To one familiar with the complete history of the Ninth Amendment, this might seem an odd addition to a state constitution. The purpose of the Ninth Amendment was to reverse the legal maxim Inclusio unius est exclusio alterius so that the enumeration of rights did not imply that the federal government otherwise could exceed its enumerated powers. But of course, state governments are not limited to enumerated powers.
In view of that (and of an intervening alteration in the meaning of the word “right”), the most likely reason for including this provision was to enable the courts to protect natural rights not listed in the Constitution. Whatever the reason, similar recitals appeared in most later nineteenth-century Western state constitutions.
The California charter further included protections for economic liberties that extended beyond those in the federal Constitution. For instance, it limited state debt to $300,000, unless incurred to finance war or the voters approved a higher level in a referendum. This likely was a response to a string of recent state bankruptcies attributable to overly ambitious infrastructure projects.
The trend toward liberty continued with the 1859 Kansas constitution. Its bill of rights supplemented the California list with protections against being exiled from the state and a ban on “hereditary emoluments.” It also limited state debt to a million dollars, unless certain special procedures were followed.
The 1866–67 Nebraska constitution contained a 20-section bill of rights, which the framers of that state’s 1875 charter expanded to 26 sections. The constitutions of Illinois (1870) and Arkansas (1874) widened protection from eminent domain to require compensation for government “damage” as well as seizure, and the 1875 Nebraska framers followed suit. Their constitution limited state debt to $100,000, or about $3 million in 2026 money. It restricted local government debt to $1.50 per $100 of assessed property valuation.
The Colorado Constitution
The Colorado pioneers went well beyond what their predecessors had done. Extensive protections for economic and personal freedom pervade their constitutional handiwork.
Article X, entitled “Revenue,” authorized only one kind of statewide tax: the property tax. The constitution initially limited this levy to six mills (tenths of a cent) on each dollar of assessed valuation. Then, as the tax base grew, the constitution mandated a series of rate reductions down to two mills. The only way to exceed the maximum was by a vote of those electors who actually paid property levies.
To ensure that the tax base remained broad and not corrupted by favors to special interests, the Colorado charter banned all exemptions except for a few itemized religious and charitable purposes. Further, it banned the use of state funds to subsidize county and city governments: Local people would bear the full consequences of their own decisions.
In not just one but in two places, the document required the state to operate on a balanced budget. It prohibited pay raises for public officers during their terms of office, prohibited compensation to employees and contractors beyond that contracted for, required competitive bidding for state contracts, and interdicted handouts to private persons and entities.
Under the 1876 Colorado constitution, total state debt could not exceed three-fourths of a mill for each dollar of taxable valuation. Debt spent on public buildings could not exceed half a mill. Most state debt was capped at $100,000. Further debt was limited to financing public buildings, but only if approved by a vote of the people. Incurring public debt to subsidize private interests was prohibited. The document imposed similar debt restrictions on local governments.
An expansive bill of rights (28 sections) broadened the US Constitution’s protection against ex post facto laws to include retroactive laws of any kind, civil as well as criminal. It adopted the Illinois-Arkansas formula requiring compensation when government damaged or seized property. The Colorado bill of rights enlarged protections for religious liberty, banned imprisonment for debt, prohibited needless imprisonment to force testimony, and, in criminal cases, required the court to appoint legal counsel for the defendant if he had none.
Ensuing States—Especially Montana
The next states admitted to the Union were North and South Dakota (1889), Washington (1889), Montana (1889), Idaho (1890), and Utah (1895). All their original constitutions, except perhaps that of Washington, showed signs of Colorado influence. Both Dakotas imposed tight limits on state property taxes. Utah imposed limits on local levies. Idaho required successive property tax cuts down to one-and-a-half mills per dollar of assessed valuation.
But Montana was the state that most closely followed Colorado’s constitutional formula. Large parts of the 1889 Montana constitution simply tracked their Colorado counterparts. Some of the deviations reflected Montana’s more populist traditions. For example, the 31 sections in Montana’s declaration of rights mostly paralleled Colorado’s 28, but with strikebreakers in mind, Montana added a guarantee against the importation of armed personnel from out of state. Unlike the Colorado constitution, which limited the state to a property tax, the Montana charter authorized a corporate license levy as well. However, the Montana constitution compensated for this by ending its phased-in property tax caps at one-and-a-half mills per dollar of assessed valuation, compared with Colorado’s two mills.
Like the Colorado charter, the Montana constitution severely limited both state and local debt. In Montana, as in Colorado, any proposal to waive the limit had to be specific and targeted. In Montana, such a proposal had to be approved by a vote of all electors—not merely of property taxpayers, as in Colorado.
What Happened?
It is beyond the scope of this essay to explore all the reasons nineteenth-century Western state constitutions were written as they were, although one reading the 1889 Montana constitutional convention proceedings is impressed to see how careful the delegates were to make government inexpensive so taxes could be low. Certainly, the content of these constitutions reflects a level of respect for individual freedom much less common today.
Aside from their provisions mandating state-run schools, much of the original Colorado and Montana constitutions read like a libertarian wish list. Both established systems of governance very different from those that now prevail in those two states, where fiscal limits are comparatively weak (in Colorado) or almost non-existent (in Montana). In both states, government favors to special interests are common, and property rights are often subordinated to government policy.
There are some apparent parallels between modern usage and the original systems, but they sometimes prove illusory. For example, apologists for the current Montana bill of rights emphasize that it also contains provisions additional to those in the US Bill of Rights. But as interpreted by the courts (and in some cases as intended by their framers), those provisions often restrict liberty rather than protect it.
The changes in each state occurred differently. Many of the alterations in Colorado were wrought by amendments—176 of them. One amendment authorized a state income tax. Others were of the “only this” kind—that is, they were promoted as departures from usual practice in “only this” case. Some of these created special funds outside the control of either TABOR or the legislature for the benefit of special interests. In other instances, government began to exercise an unconstitutional power and was not promptly and effectively challenged, as when the Colorado legislature decided to impose an “emergency” sales tax.
Many more changes in Colorado have been the product of apparently conscious judicial deconstruction. Montana, by contrast, adopted an entirely new constitution. In the late 1960s and early 1970s, pro-government interests began a full-court press to persuade the voters to adopt a more “up-to-date” and “flexible” charter. Advocates received assistance from government funds, including grants from the US Department of Housing and Urban Development.
Still, under prevailing election rules, the proposed 1972 Montana constitution likely did not receive the votes necessary for ratification. However, the governor “certified” the constitution’s approval in defiance of those rules, and under dubious circumstances, his decision was upheld by a 3-2 state supreme court majority.
Despite the sad fate of both the original Colorado and Montana constitutions, they offer lessons of two kinds. First, they provide preliminary “checklists” for freedom-loving framers of future state constitutions. Second, the histories by which they were destroyed illustrate the kind of events one must prepare for in the future.
