Mar 31

District’s reasonable request (to avoid TABOR)

Chieftain editorial

Published: March 30, 2015;

THE FOUNTAIN Creek Watershed Flood Control and Greenway District has a request.

The district last week asked Pueblo County commissioners and Colorado Springs Utilities to amend the 1041 permit that both entities signed giving the utilities permission to build the Southern Delivery System. The district wants the commissioners and utilities to change the wording of the permit so that some $50 million in funds would be paid into an enterprise fund rather than directly to the Fountain Creek district.

When Colorado Springs Utilities and Pueblo County reached the terms of the permit for SDS, they agreed that Colorado Springs Utilities and its El Paso County-based partners would spend $50 million for flood mitigation work on Fountain Creek. The permit also requires the money to be used to significantly benefit Pueblo County, which to us means protecting it from raging floodwaters and damage from upstream.

The funds will be paid to the Fountain Creek district, but the district was at risk of losing some dollars if they were to be paid into the general fund. That is because it would have run awry of the Taxpayer’s Bill of Rights, or TABOR.

TABOR is the voter-approved constitutional amendment that sets caps on how much a government’s spending may grow, year over year. And Larry Small, the executive director of the Fountain Creek district, projected that the $50 million would exceed the limit.

So the district is sagely endeavoring to circumnavigate the caps by setting up an enterprise fund. This is a common and thoughtful solution to the district’s financial dilemma, and it is into this fund that the district is asking Pueblo County and the utilities to agree to direct the $50 million in funding. Continue reading

Mar 28

TABOR refund likely to go to voters

By Marianne Goodland

The Colorado Statesman

Budget writers this week finished their work on the annual state budget and turned their attention to what to do about a $58 million projected TABOR refund.

Sen. Pat Steadman, D-Denver, took the lead on coming up with a proposal for the Joint Budget Committee on Wednesday.

The $58 million refund was triggered by tax revenue received by the state through excise and sales taxes on marijuana, and which pushed the state over its allowable TABOR revenue cap.

The $58 million is made up of two different funds: $27.7 million from marijuana taxes, and $30.3 million the JBC had to take from general funds to cover expenditures already made on certain marijuana programs like prevention and education. Steadman explained Wednesday that the $30.3 million was spent before the state (and JBC) knew they would have a TABOR refund situation. So they had to replace that money with general fund dollars.

Steadman’s proposal won’t go into final drafts until after the General Assembly finishes work on the Long Appropriations Bill.

The major part of the proposal is a referred measure to the voters for this November, asking if the state can keep the money. Steadman proposed that $40 million of the total go to BEST, the school construction fund that was to be covered with marijuana revenues.

Steadman explained that to date, only about $25 million has gone to that fund, although in both Amendment 64 and Proposition AA (passed by voters in 2013) the state pledged at least $40 million to public school capital construction. Tax revenues from marijuana haven’t lived up to what was billed; Prop AA asked voters to allow up to a cap of $70 million per year. However, the most recent revenue forecast from Legislative Council economists explained that the amount of the refund would be capped at the total amount of taxes collected.

Continue reading

Mar 27

Could Colorado’s hospital provider fee be the key to increased road funding?

Reporter-Denver Business Journal

Some Denver business leaders are pushing a state budget fix that would ensure a boost in transportation funding and could help to increase education spending simply by moving the six-year-old hospital provider fee out of the general fund into what is know as “enterprise fund” status.

However, with the Colorado Legislature’s Joint Budget Committee set to introduce its proposed budget for the 2015-16 fiscal year on Friday, the idea has not gained enough traction yet even to be discussed formally by the committee.

And Democratic and Republican legislative leaders disagree on whether it should be considered, especially since that solution likely would eliminate any Taxpayer’s Bill of Rights (TABOR) refunds to residents statewide in the near future.

However, the same bill says the transfer can be cut in half if TABOR refunds — which are required when state-government revenue grows above a certain cap — are between 1 and 3 percent of the general-fund budget. And they can go away altogether if TABOR refunds exceed 3 percent.

Right now, the TABOR refund is projected to be a little more than 1 percent, which means the $204 million that had been planned for transportation funding would sink to $102 million. Continue reading

Mar 27

Tax and Expenditure Limitation Act

As an interesting side note, while TABOR is well-known in Colorado, relatively few states have a similar government spending limit mechanism in their constitutions.  The American Legislative Exchange Council (ALEC) actually has a model bill that is based on Colorado’s TABOR amendment that lawmakers in other states can pick up, make minor changes to, and introduce in their own jurisdictions.  We would bet there are constituents in many states who would appreciate a cap on their legislature’s wanton spending.

http://www.alec.org/model-legislation/tax-and-expenditure-limitation-act/

Tax and Expenditure Limitation Act

Summary

The Tax and Expenditure Limitation Act recognizes the important tradeoff between constraints on the growth of state and local government, and the provision of adequate reserves to meet emergencies and to stabilize budgets over the business cycle. The Act is a constitutional provision designed to accomplish these objectives. The Act links a tax and spending limit to an emergency reserve fund and a budget stabilization fund. The Act also provides for temporary reductions in tax rates and/or tax rebates when surplus revenue accumulates above the tax and spending limit, and the cap on the emergency reserve fund and the budget stabilization reserve fund.

Model Policy

{Title, enacting clause, etc.}

Section 1. {Election Provisions} For any fiscal year that commences on or after____ state and local government districts must have voter approval in advance for any new tax rate increase, mill levy above that for the prior year, valuation for assessment ratio increase for a property class, or extension of an expiring tax, any markup on products sold through state-controlled enterprises, or a tax policy change directly causing a net tax revenue gain to any district. Voter approval is also required for creation of any multi-fiscal year direct or indirect district debt or other financial obligation without adequate present cash reserves pledged irrevocably and held for payments in all future years, except for refinancing district bonded debt at a lower interest rate or adding new employees to existing district pension plans. Voter approval is also required for suspension of the spending limits imposed by this Act. Continue reading

Mar 26

RETURN TO OWNER: Tabor Tax Rebates May Be Coming to a Mailbox Near You

Money IIIt has been almost 15 years, but hard-working Colorado taxpayers may be in for a TABOR refund in the near future.  The combination of an improving economy and tax receipts from the state’s nascent marijuana industry have created a surplus that must be refunded to Colorodans under the state constitution, unless a ballot measure calling for the funds to be retained and spent by the government is passed in a statewide vote.

Of course, there will be fierce resistance from Democratic lawmakers to refund a penny of the excess tax payments that was dropped into the states’ coffers.  It was not too long ago that the Speaker of the Colorado House of Representatives, Dickey Lee Hullinghorst,staked out her position on the issue, saying that “the people would be far better off if we invested that…” and went on to marginalize the refund by comparing it to “50 bucks to spend on a tank of gas or something.”

In case Speaker Hullinghorst has not been part of the middle class for a while, $50 is a lot of money to someone not making six figures.

Hullinghorst’s wild guesstimate of the figure is most likely wrong.  According to current estimates, the surplus tax collections will amount to somewhere between $70 million and $220 million during the 2015 fiscal year.  This would result in refunds between $15 – $89 per taxpayer, with lower-income people getting more.  There is also a possibility that some low earners will get an additional $230, according to a Denver Post story.

We have to ask – are Democrats really representing the middle and lower earners as they claim?  If they were, would TABOR refunds even be a question?

As an interesting side note, while TABOR is well-known in Colorado, relatively few states have a similar government spending limit mechanism in their constitutions.  The American Legislative Exchange Council (ALEC) actually has a model bill that is based on Colorado’s TABOR amendment that lawmakers in other states can pick up, make minor changes to, and introduce in their own jurisdictions.  We would bet there are constituents in many states who would appreciate a cap on their legislature’s wanton spending.

http://coloradopeakpolitics.com/2015/03/26/return-to-owner-tabor-tax-rebates-may-be-coming-to-a-mailbox-near-you/

Mar 26

Colorado roads could get more funding

Personal income rose enough in Colorado last year to trigger provisions that could redirect $1.25 billion in extra funds to repair the state’s roads and buildings over the next five years.

But those transfers may end not long after they start because of caps linked to refunds made under the state’s Taxpayer’s Bill of Rights, or TABOR.

Personal income in Colorado last year rose 5.6 percent, the third-biggest increase, after Alaska and Oregon at 5.7 percent each, according to a report Wednesday from the U.S. Bureau of Economic Analysis.

Under a law passed in 2009, the state must redirect 2 percent of general fund revenues into the Highway Users Tax Fund and the Capital Construction Fund once personal income growth in the state exceeds 5 percent.

The Colorado Department of Transportation would receive about $200 million a year, with an additional $50 million a year targeted for the Capital Construction Fund, said Gregory Sobetski, an economist with the Colorado Legislative Council.

But there is a big “if” attached. Any year in which the surplus under TABOR is between 1 percent and 3 percent of general fund revenues, transfers to the highway fund are cut in half. If refunds are greater than 3 percent, no transfers can be made that year.

Continue reading

Mar 24

Rep. Jim Wilson: War breaks out at the Golden Dome

(Jim Wilson)

The March Revenue Forecast is in and the “Battle Over Bucks” is gearing up under the Golden Dome. Throughout this session, I have been alerting you to the fact that a battle was brewing over the upcoming budget and TABOR – the Taxpayer’s Bill of Rights. Well, the war broke out this week!

Here is the scoop: The March Revenue Forecast unveiled the amount of new money available for the next budget cycle and all the bills that have been in a holding pattern are lining up for funding. In the MRF for the 2015-16 budget year, Legislative Council projects that the General Assembly will have an increase in General Fund dollars to allocate in the budget. The increase amounts to approximately $831.4 million or 8.7 percent. There is an additional $49.1 million surplus left over from fiscal year 2014-15. These amounts reflect the dollars available to spend even after TABOR refunds and SB 09-228 transfers are accounted for. (There was, however, a decrease of $218.6 million in projected revenues compared to the September Revenue Forecast.)

What does all this mean? I am glad you asked! Overall, the MRF is lower than the September projection, but there will still be an estimated $831.4 million in new dollars to spend. It is anticipated that TABOR refunds will kick in, but the amount refunded will be rather small in the first year. The “dollar debate” is a passionately partisan issue. Democrats continue to seize every opportunity to demonize TABOR as the reason there is no revenue available to fund state programs. Republicans are quick to counter with the fact that the General Fund has increased its expenditures $2.9 billion (with a B!) since 2009, with approximately $831.4 million available for additional growth in the 2015-16 budget. Continue reading

Mar 22

With taxpayers due refunds for the first time in a decade, lawmakers mull workarounds

DENVER — The Colorado Legislature has entered Bizarro World.

The revenue forecast it received last week confirmed that while the state’s economy is booming overall, and its coffers are overflowing with money, it can’t fund everything lawmakers on both sides of the political aisle want because it must return some of the extra money to taxpayers.

That has led many under the golden dome to believe they’ve entered an old Superman comic book that featured a backward Earth.

And it’s all because of the Taxpayer’s Bill of Rights.

That 1992 constitutional amendment put a permanent cap on how much government can grow each year, and requires that any long-term debt and tax increases be approved by voters.

While some lawmakers credit TABOR for preventing the state from going even deeper into the hole during the recent recession, others are blaming provisions in it for hindering the state’s ability to keep pace with funding such big-ticket items as roads and schools.

And now that forecasts are calling for anywhere from $70 million to $220 million in excess TABOR revenues, lawmakers are debating whether to try to work around TABOR limits and fill funding gaps.

Lawmakers on both sides of the aisle already have killed measures their constituents want because they would have an impact on those TABOR refunds, even if they bring in new revenue, such as a measure to allow off-highway vehicles to be licensed to drive on state roads because it would bring in cash, and a felony DUI bill because of its $17 million price tag.

For the first time ever, fiscal impact notes that legislative staffers attach to every bill introduced into a session include what they would do to the TABOR refunds, and if they cut into general fund money that goes to those big-ticket items.

TABOR ISSUES

Under TABOR’s strict provisions, government budgets can only grow by inflation and population growth. But some lawmakers are questioning both as not accurately reflecting how governments operate.

At the same time, other TABOR provisions lump all state revenue into one big pile when it comes to calculating when a refund is required. That formula, however, doesn’t take into account that much of the revenue already is dedicated to specific uses.

The inflation rate under ?TABOR is based on the consumer price index of the Denver-Boulder area, which makes no sense to Sen. Pat Steadman, D-Denver.

Steadman, the longest-serving member of the Legislature’s Joint Budget Committee, says the price of milk that consumers pay has nothing to do with the cost of building a new school or prison.

“The inflation rate, that’s based upon a market basket of goods that consumers buy, but the goods and services government buys are very different from what the average household consumer buys,” Steadman said. “We’re buying prisons. We’re buying roads. We’re buying a lot of things that most people don’t have to pay for, and that has nothing to do with the consumer price index.”

When it comes to population growth, TABOR impacts could spell danger to areas of the state that see their populations decrease, such as in rural Colorado. Continue reading

Mar 21

Aurora leaders are lobbying against an anti-Gaylord bill that doesn’t exist yet

It’s not uncommon for interest groups or local governments to go into defense-lobbying mode once they see a bill put forward that they don’t like or even once they hear the details of a bill before its introduction.

But Aurora officials on Thursday launched a pre-emptive strike against a bill to hurt the proposed Gaylord Rockies project that they feel is coming — even though they don’t know what its details might be or who might be sponsoring it.

Members of Aurora’s legislative delegation are writing a letter to colleagues in the Colorado House and Senate letting them know their concerns and pleading for a fair and open process.

“We are concerned that anything that would shut down this project or anything that would affect the decision-making process of the Economic Development Commission would just close business in Colorado,” Hogan said. “If the rules are changed after they’ve been made, it is going to make it difficult for any business sector to come to Colorado with any confidence.” Continue reading

Mar 19

Rebounding economy, boosts tax revenues, triggers TABOR refunds

Colorado is preparing to issue rebates to taxpayers for the first time in nearly 15 years.

The latest economic forecasts released Wednesday indicate the state will exceed its constitutional limit on tax collections by between $70 million and $220 million this fiscal year, triggering refunds under the Taxpayer’s Bill of Rights.

How much taxpayers will see when they file their 2015 taxes in April 2016 remains unclear, but the amount is expected to be modest.

The refunds will range from $15 to $89 per taxpayer based on income level, with the lowest-income earners possibly receiving an additional $230 break.

Thanks to the state’s continued economic resurgence, the early projections show refunds should continue for the next three years, unless lawmakers request voter approval to spend the money or approve other tax breaks to offset the extra revenue.

For months, economic forecasts suggested the prospect of refunds, but the March report serves as the definitive voice. The latest forecasts will determine the amount lawmakers can spend in the state budget and for other major legislation.

Continue reading