Slim comparison · four candidate growth formulas

Four Ways to Grow the TABOR Cap

Current law against three alternatives, tested on the same five years of published TABOR results. One of the four beats current law on both growth and stability — which is rare, and worth understanding before picking.

Option 1 · baseline

Current law

Population + Denver CPI

growth = population
+ Denver-Aurora-Lakewood CPI

5-yr average4.78%

Volatility (σ)2.23

Range2.20 – 8.50%

The status quo. Indexed to a consumer basket rather than what government buys, and the reason every other option exists.

Option 2

Barely differs

BEA state & local IPD, floored at 0%

growth = population
+ max(0, BEA S&L deflator)

5-yr average4.87%

Volatility (σ)2.59

Range2.65 – 8.66%

Conceptually the right index — built from actual government spending. But over these five years it produced almost exactly the same result as current law, and was worse in two of them.

Option 3

Strongest, least stable

Greater of current law OR real personal income + deflator

growth = max(
population + CPI,
real personal income + deflator)

5-yr average8.65%

Volatility (σ)3.19

Range5.90 – 14.81%

Using real income fixes the double-counted-inflation flaw. The "greater of" means it can never fall below current law. But it spikes to 14.81% in one year.

Option 4 · Connecticut

Dominates on both axes

Population + greater of 5-yr average personal income or CPI

growth = population
+ max(5-yr avg personal income,
CPI)

5-yr average7.30%

Volatility (σ)1.16

Range5.55 – 8.50%

Higher average growth than current law and half the volatility. The five-year averaging is what does it. Modeled on Connecticut General Statutes §2-33a.

The result worth leading with. Options usually trade growth against stability — more of one costs you the other. Option 4 does not. It delivers a 7.30% average against current law's 4.78% while cutting volatility from σ 2.23 to σ 1.16, the lowest of all four. The mechanism is Connecticut's five-year averaging of personal income: it captures the higher long-run growth of income while smoothing away the year-to-year swings that make personal income dangerous as a cap index. It is also, by construction, never lower than current law — because it takes the greater of income growth or CPI, and current law is population plus CPI.

01The five-year backtest

Each formula run against published TABOR results, FY2020-21 through FY2024-25. Compounded is the honest test — it is how a constitutional formula actually operates.

02Cap paths against actual revenue

1 · Current law 2 · IPD floored 3 · Greater of 4 · Connecticut Actual revenue

03Growth versus stability

Up is faster cap growth; left is more predictable. Upper-left is strictly better.

04What to take from this

Option 2 is the cautionary result. BEA's deflator is conceptually the correct index and ranks strongest in forward projections using its 3.65% long-run average. Against actual history it came in at 1.45% and 1.95% in two of these five years — below Denver CPI — and its five-year total landed within $4M of current law under the static method. A formula is not its average.
Both "greater of" designs are ratchet-proof by construction. Options 3 and 4 can never produce less growth than current law, because each takes a maximum that includes the current formula's components. Option 2 has no such floor, and duly underperformed in two years. If nothing else survives from this comparison, the "greater of" structure should.
Option 3 buys its strength with volatility. An 8.65% average is the highest here, but σ 3.19 and a 14.81% spike in FY2022-23 make it hard to budget against and easy to attack. Real personal income is the right correction to the earlier nominal-income proposal, but the year-to-year swings remain.
Connecticut's smoothing is the transferable idea. Five-year averaging is what turns personal income from a volatile index into a stable one. It is a drafting technique, not a policy concession, and it could be applied to any of these options — including the BEA deflator.
Every option reduces refunds, and that is the political cost. Under the compounded test the five-year reduction in revenue above the cap runs from about $1.3B for Option 2 to $6.8B for Option 3. Proposition CC asked for roughly $348M a year and lost 46–54. These are larger asks.

Data provenance. Certified growth rates, official revenue and caps are published TABOR figures; the FY2024-25 cap and 5.9% rate match LCS Table 10B exactly. Population is derived as certified growth minus lagged Denver CPI and reproduces LCS's published 0.6% for FY2024-25 within rounding. Personal income and deflator rates are taken from the source memo. Real personal income is computed as nominal income minus CPI. The five-year personal income averages require four pre-2019 years that are estimated, not sourced — Option 4's exact figures should be rebuilt from BEA data before external use, though its low-volatility result is driven by the averaging mechanism itself and is unlikely to reverse.