Colorado’s state and local tax burden was the sixth lowest in the U.S. in fiscal 2016, according to a recent report produced Key Policy Data (KPD), a joint venture between Public Choice Analytics and Visigov.
The report relies on an income-based analysis dividing the state’s total tax collections by its private sector personal income. The national average using this methodology was an overall local and state tax burden of 14.3 percent of income; Colorado’s was 11.8.
KPD compared the burden of tax systems across states by measuring tax collections against the size of the economy. It defines this as the “total private sector share of personal income, which is personal income minus government compensation and personal current transfer receipts” such as Social Security, Medicare and Medicaid.
In 1992, the Taxpayer’s Bill of Rights (TABOR) Amendment was adopted by Colorado voters to limit government growth and to put Coloradans in control of tax and debt increases. Under TABOR, the state and local government cannot raise taxes or increase the debt without voter approval.
TABOR is unique to Colorado. Currently, no other state in the union has a Taxpayer’s Bill of Rights.
There are important reasons why TABOR is not only justifiable, but necessary.
More Democratic – Referendums are a more democratic way to make decisions on government spending. When it comes to raising taxes or increasing the debt, voters, not legislators—who may be beholden to outside interests—should have the final say. After all, taxpayers are ultimately the ones on the hook for tabs run up by the state. Remember the whole “No taxation without representation” thing? This is about the consent of the governed, a principle so important… it sparked the U.S. Revolution.
Financial Freedom –Under TABOR, lawmakers lack the power to impose higher taxes without consent from the voters. As Grover Norquist, President of Americans for Tax Reform, put it:
Colorado lawmakers have all but signed off on the biggest budget in state history. The $28.9 billion spending plan invests taxpayer dollars in roads, schools and the state’s troubled pension fund.
Unlike in previous years, lawmakers had a $1.3 billion surplus to split between their different priorities. The extra money is thanks to a booming a economy and the federal tax reform package, according to state economists. While a surplus has eased tensions among lawmakers jockeying for priorities, it also has them scrambling for the extra dollars.
The Senate added a number of changes to the budget Wednesday night. The chamber is scheduled to take a final vote on it’s version this week before a bipartisan committee begins ironing differences with the House version. The deadline for final passage is the end of next week. Here’s where the money is — and isn’t — headed.
No TABOR Refund
In Colorado, the Taxpayers’ Bill Of Rightslimits the amount of money lawmakers can spend before they have to supply refunds to taxpayers. Lawmakers don’t expect to hit the TABOR cap over the next fiscal year, so Coloradans won’t be getting a refund check next year. Part of the reason for that has to do with a major financial compromise struck last year. It recategorized a fee paid by hospitals, which created room for spending beneath the TABOR limit.
Fix Roads And Bridges
The budget allocates $495 billion for one-time spending on road projects. That’s a fraction of the $9 billion the Colorado Department of Transportation says it needs to modernize transportation infrastructure around the state. But the spending is in line with a request from the governor and a compromise transportation bill approved in the Senate last week. That plan would use the money to buy time for voters to consider a citizen initiative in November to raise sales taxes for road funding. If that fails, the compromise would trigger another initiative asking voters for new transportation bonds in 2019. Continue reading →
Some Republican state legislators remind us that no one’s life is a complete waste — some simply serve as bad examples. One of those bad examples can be found in Colorado. (AP Photo/P. Solomon Banda)
Congress just proved an amazing thing happens when Republicans remember to govern as Reagan Republicans.
The most substantial tax overhaul since the Reagan years has sparked our economy. Republicans in Congress gathered the courage to face down the pro-tax media, special interests, and the opposition of every single Democrat in Congress to help families keep more of what they earn. Already tax reform has resulted in at least 285 companies announcing wage increases, bonuses, and higher 401(k) matches for 3 million workers. Utility companies are reducing rates in response to the Tax Cuts and Jobs Act. Continue reading →
To comprehend how that’s possible, we need to understand the largest betrayal of Republican values in Colorado political history: the tax-hiking, debt-raising, TABOR-busting Senate Bill 267, sponsored by Republican state Sen. Jerry Sonnenberg and enabled by the schizophrenic leadership of Senate President Kevin Grantham.
The beauty of our Taxpayer’s Bill of Rights is that taxes and debt can grow as high as any communist would like, all you have to do is ask the voters first. But elected officials, doing their best Bernie Madoff, don’t want to ask for consent when they know the answer is going to be “no.” They re-label taxes as “fees” and debt as “certificates of participation,” so the Colorado Supreme Court lets them take our money without our voter consent.
In 2009, without asking, the state forced an extra tax on us when we’re sick and have to go to the hospital. In their best George Orwell, the legislature named this tax “The Hospital Provider Fee,” as if hospitals, not patients, pay it. The new “fee” generated more than $650 million in 2016, pushing Colorado’s revenue over its TABOR cap.
“We made great strides in 2017 defending TABOR and advancing policies that promote economic freedom,” Jesse Mallory, AFP’s state director and the former Colorado Senate Republicans’ chief of staff, said in a statement.
This morning the TABOR Foundation brought a lawsuit before the Colorado Supreme Court. As the Plaintiff, we have charged that both Denver’s Regional Transportation District (RTD) and its Scientific and Cultural Facilities District had violated the requirements of the Taxpayer’s Bill of Rights when they started imposing sales taxes on items that had been exempt; items that the Districts did not have voter approval to tax. The arguments were presented on appeal to the State’s highest court. Our Foundation was ably represented by attorney Steve Lechner of Mountain States Legal Foundation. He faced alone the four attorneys employed by the governments on the other side. Our side had lost at both the District (trial) level and at the Colorado Court of Appeals.
We knew going in that the Court is skewed to the Left and consistently finds reasons to subvert the clear language of TABOR. One Justice, Gabriel, asked a hypothetical about getting broad-brush voter approval that, because as the Justice admitted, it was not applicable to this case. Mr. Lechner nailed a question by Justice Marquez. She had asked him if a precedent out of Mesa County could mean that the entire argument about voting on a tax policy change was irrelevant as long as revenues did not exceed the overall District TABOR limit. Lechner cited to her chapter and verse on why the particulars of that precedent were wrong.
Steve Lechner also gave a summary that laid out the proper path for the Court to follow, showing that our lawsuit does not ask to have the statute declared unconstitutional, since it merely provides the necessary legislative permission for the newly imposed taxes. We don’t even ask that the relevant statute be overturned; only that the Districts then take the next logical step and ask the voters for permission to impose those taxes.
In my experience, we will have to wait several months for a Ruling to be issued. The TABOR Foundation thanks Mountain States Legal Foundation for its free representation and its thorough, excellent work. Both organizations has seen this through as far as we can, and the Supreme Court’s ruling will conclude the issue.
Say you had a box with a plant growing inside it. For reasons dark and twisted, the plant finds itself quite content to grow inside the black confines of the box. It gains inch after inch each week. Eventually, the plant runs out of room to grow but the box is a box. It can’t grow with the plant. The plant, doomed by its own prodigiousness, grows too big for its cramped home and crushes itself against the six walls of its cardboard prison.
So, what do plants and Colorado’s economy have in common? While I grant that it is a little melodramatic, I think it’s also an apt metaphor for the situation imposed by Colorado’s Taxpayer Bill of Rights.
In 1992, Colorado voters approved adding an amendment to Colorado’s constitution that put a cap on how much revenue the state is allowed to collect through taxes. It also requires the state to authorize any new taxes directly through voters by means of a referendum process. Any amount above the cap is refunded to taxpayers. This mechanism allows me to feed into an unhealthy obsession with Legos every year, as my tax return checks can be quite generous. However, at the same time Colorado’s constitution has a requirement in it that requires the state to increase education spending to keep pace with inflation.
One great way to think of both tax and spending mechanisms is to think of TABOR as the brake and Amendment 23 as the gas. TABOR limits government growth and spending while Amendment 23 keeps a steady drip of cash flowing into government expenditures.
Day one of the Colorado legislative special session ended with House Democrats advancing a bill to fix a mistake that could cost special districts as much as $6.9 million this year — but providing little reason to be optimistic that the measure can make it through the Republican-led Senate.
Legislators are grappling with a drafting error in the signature bill of the 2017 session that removed the ability of special districts to charge sales tax on retail marijuana, a gaffe that could leave districts a combined $6.9 million short on revenue this year if not fixed. The vast majority of that shortage — about $6 million — would be incurred by the Regional Transportation District that provides public transit in the Denver area.