With tax day (April 15) on hand, California taxpayers are pessimistic, and with good reason. The tax code remains complex, the tax burden oppressive and prospects for tax relief dim. In fact, more than 100 bills before the Legislature would raise taxes and fees about $29 billion.

Amidst this despair, however, is a growing bipartisan recognition that the state's budgeting process needs real reform of a sort that would bring joy to beleaguered taxpayers. In considering such reforms, California could learn from Colorado.

In 1992, Colorado voters approved a state constitutional amendment called the Taxpayer Bill of Rights. It limits increases in per-capita state expenditures to the inflation rate and mandates that excess tax revenues be refunded.

As a result, between 1997 and 2002, Colorado reduced taxes more than any state, issuing six annual tax rebates totaling more than $3.2 billion. When Californians were facing a $24 billion deficit in 2002, Coloradoans had a balanced budget and received $927 million in tax refunds. This fiscal responsibility and the resulting business-friendly climate caused Colorado's economy to surge. Between 1995 and 2000, the rate of growth of Colorado's personal income and gross state product was higher than in almost any other state, and much larger than California's.

What's to be learned from Colorado and the other 25 states with formal statewide tax and expenditure limitations? For starters, that most are paper tigers. But there are successful limits, and they have five ingredients:

• All spending, including rainy-day-fund set-asides, is subject to the expenditure limit. Many states exempt education, Medicaid, prisons and other large categories, making the spending limit essentially useless.

• The growth limit is stringent and straightforward, typically limiting annual increases in state spending and tax revenues to the inflation rate plus population growth rate.

• The spending limit is automatically lowered when the state government transfers responsibility for a program to local governments. The state government can't escape the limit by simply transferring functions to the local level.

• Voter approval is required to issue debt and raise tax rates, and tax revenue in excess of the limit is immediately refunded to taxpayers in full, without earmarks for privileged interest groups.

• The spending limit and the balanced-budget requirement are embedded in the state constitution, not just in state statutes. Constitutional limits have teeth because legislators must obey them. Statutory limits are easily sidestepped--repealed or modified in a pinch by a simple majority of the legislature.

If California had Colorado-style limits in place since the start of Gov. Davis' first term, today's state spending still would be 21 percent larger than four years ago. But instead of a $35 billion deficit, we would enjoy a $5 billion surplus.

Two recent state polls show wide support for an amendment to the state Constitution limiting the growth of taxes and spending. The status quo is unacceptable. Tax day is the perfect day to contemplate a tax and spending revolt that would make California a better place for generations to come.

Dr. Lawrence J. McQuillan, coauthor of California by the Numbers: Assessing the Governor's 2003 State of the State Address and Budget, is director of the Center for Entrepreneurship at the California-based Pacific Research Institute. Contact the author at lmcquillan@pacificresearch.org.