Wednesday, February 23, 2005

Spreadsheeting TABOR.

I modeled my little exercise (see below) in a spreadsheet.

Here are the assumptions I use:
Inflation steady at 3%/year
Pop Growth steady at 2%/year
This creates a 5%/year cap on spending growth.

I assumed a recessionary year would create a 7% drop in revenues and that without any cap a budget would grow at 7%/year.

Starting at $100 in the first year with recessions in year 4 and 8 (of ten years total). The ending budgets are:
With a revenue cap: $121.70 (about a 2.1% year growth over the ten years)
With only a pop + inflation cap: $155.13 (about a 5.5%/year growth over the ten years)
Without any cap: $183.85 (8.5%/year growth over the ten years).

Now some may say well the revenue cap is the best because it has the smallest increase.

That is going to be my next TABOR blog.