State Tax and Spending Limitations

  • Overview
  • Attorneys

With the rise in taxpayer dissatisfaction over state and local tax rates in the 1970s, '80s and '90s, many forms of statutory or constitutional debt, tax and spending limitations have been adopted at state and local levels. In some cases, such as California’s Proposition 13 or the Colorado TABOR amendment, these measures were adopted as state constitutional amendments initiated by the voters, and therefore cannot be repealed or modified by state legislators without a second initiated or referred statewide vote. In practice this has meant that the constitutionally imposed limitations are essentially permanent, and present continuing problems of legal interpretation and fiscal management for a large number of state and local governments.

New and increasingly restrictive measures of this kind continue to be proposed and placed on state and local election ballots, with mixed results. This means state and local government administrators must not only carefully deal with existing constitutional and statutory restrictions on their revenues, budgets and borrowing, but also must be continually alert to the regular appearance of new initiated measures and their possible implications if adopted.

Kutak Rock has been active on behalf of state and local governments in all phases of their efforts to cope with these new or proposed fiscal restrictions. Our support for our clients has covered a full range of activities, including (i)  analysis of proposed measures and advice concerning strategies to be implemented if they are adopted, (ii)  consistent individual and firmwide support of opposition campaigns seeking to prevent the adoption of unreasonably vague or restrictive initiatives, (iii)  advice and interpretation when the measures are actually adopted, and (iv)  representation of state and local government clients in litigation over the sometimes ambiguous provisions of newly adopted debt, spending or tax limitations. Attorneys in our public finance practice have been instrumental in our clients’ successful litigation of a number of critical issues arising under these enactments.