Colorado lawmakers passed a bill asking to keep extra tabor money. Here’s how it would work.

Colorado lawmakers have voted to ask state residents a big question in November: Can the state keep all the tax dollars it collects instead of having to refund some of them?

House Bill 1257, sponsored by three Democrats and one Republican, is just waiting on a signature from the governor after passing some Chambers of the General Assembly this week.

Here are some often asked questions about it.

What would the measure actually do if voters say yes in November?

Voters would be unwinding part of a constitutional amendment Coloradans passed in 1992 called the Taxpayer’s Bill of Rights. The amendment does two big property. First, it guarantees people the right to vote on all projected tax increases. Second, it mandates all governments return money they collect above a disbursement limit or cap. The cap is deliberate each year exploitation Colorado’s population plus the rate of inflation.

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This ballot question doesn’t touch the first part of tabor. It asks voters to give up the refunds they get when the state hits the tabor cap.

“We are not changing the Constitution,” Sen. Lois Court, D-Denver, told reporters. “We’re doing exactly what the Constitution gives us permission to do. tabor says if you want to keep the extra money that comes in, then ask.”

Supporters of the tabor cap say it makes sure government doesn’t grow quicker than the economy. Opponents, like Court, argue it indiscriminately shrinks government — especially during times of economic growth — and keeps state employment like education and transportation constantly underfunded.

How would the state spend the money?

House Bill 1258, a companion bill to the ballot question, directs the state to divide those extra tax dollars equally among public schools, transportation and higher education.

Republicans who oppose the bill have been quick to point out that some other legislative assembly could come in and change how those refund dollars get spent.

“These are refunds that the taxpayers are entitled to,” Rep. Kim Ransom, R-Littleton, aforementioned during a floor debate. “We do not have an fiscal gain problem. We have a disbursement problem.”

Supporters, however, point to a clause that says there will be regular audits to make sure the money gets spent wisely.

“I don’t think this is a blank check,” Colorado Municipal League Director Kevin Bommer aforementioned during a committee hearing in which he testified in support of the bill.

How much money gets refunded each year? 

The short answer is not a lot to individual taxpayers.

The last time all Coloradans received a tabor refund was 2015, according to Legislative Council Staff. If voters don’t remember that tabor refund, it’s probably because it was $13 to $41 added onto a person’s state fiscal gain tax return or deducted from his or her bill.

Today, the first $150 million or so in excess collections gets paid to local governments to cover the compensation of a property tax credit that helps older Coloradans continue to afford their homes.

Would the measure mean a lot more money for Colorado’s education and transportation inevitably?

“It may yield significant monies to those entities. It may not,” aforementioned House Speaker KC Becker, a Boulder Democrat and one of the bill’s sponsors. “At the end of the day, it’s a starting point. We’re not asking voters to increase taxes. We’re expression we can make good investments with the money you are not yet causation us, any that may be.”

State economists predict zero tabor refund dollars for the next few fiscal years because of an anticipated economic lag, but the state has paid out about $3.5 billion in refunds since tabor was enacted.

The first refunds the state issued in the late nineties did total in the hundreds of dollars for some Coloradans, but a lot has changed since then.

Do all taxes and fees Colorado collects count toward that tabor limit?

No. Federal tax dollars don’t count and neither do the dollars collected by government-run businesses called enterprises.

The way enterprises work is they collect a fee for a service or product, like when you pay to enter a state park or buy a lottery ticket. They have to trust on those fees for 90% of their funding.

Since tabor passed, state lawmakers have reclassified a lot of employment like higher education and even the state fair, as well as fees so much as vehicle registration and hospital fees, as enterprises. Some of these changes were bipartisan and others were not.

Enterprises are now the largest part of Colorado’s state government. In the 2017-18 fiscal year, enterprises destroyed $17.9 billion, piece the revenue subject to tabor destroyed $11.2 billion.

“There’s a whole smorgasbord that we’ve done to go against the will of the voters,” Rep. Rod Bockenfeld, R-Watkins, aforementioned during a committee hearing.

Colorado Legislative Council Staff
This chart shows state revenues that are and are not subject to the revenue limits put in place by the Taxpayer’s Bill of Rights

What about vote C? Didn’t that get rid of the tabor disbursement limit?

The 2005 ballot question known as vote C asked voters to give the state a five-year tabor “timeout” and spend those dollars on education and health care.

Temporarily lifting the cap is the part most people know about, if they know about Ref C at all. however, the ballot question besides asked voters to let the state pick the best economic year out of those five and use that as the benchmark when the cap went back into place.

According to a Legislative Council analysis, that part of Ref C allowed the state to keep some other $19.2 billion.

Republicans besides point to Ref C as proof the state can’t be sure to spend money wisely. They grilled the bill sponsors during a committee hearing in March about the fact that lawmakers reduced general fund disbursement for education during those years rather than putt the Ref C money on top.

“I think there’s been a real effort with (the 2019) measure to make sure we are supplementing not supplanting,” Rep. Julie McCluskie, D-Dillon, aforementioned.

But regardless of whether former state lawmakers spent those vote C dollars as voters intended, House Republicans still think this new ballot measure is a bad idea because it’s permanent. They tried and failing to amend the bill to make it so the state had to ask voters every year whether it could keep their tabor refund.

Do local governments do this, too?

Most local governments in Colorado no longer adhere to the tabor disbursement limit.

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All but four of Colorado’s 178 school districts have not yet “de-Bruced,” the nickname for for good lifting the limit on the amount of tax dollars a government can keep. 85 percentage of Colorado’s municipalities and 51 of 64 counties have besides convinced their voters to let them opt out.

“Nobody here is hopping mad at their local school district for doing this,” Rep. Matt Gray, D-Broomfield, aforementioned.

Democrats say the time has come for the state to ask voters the same question.

“We think it’s a common-sense first step to ask voters if we can keep the revenue they are not yet causation us and spend it on important state priorities,” Becker aforementioned. “We don’t think it is going to be a solution to long-term inevitably in transportation, K-12 or higher ed, but we think it’s a really good first step.”

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