Colorado expected to see $1 billion in new revenue in 2019; will taxpayers get a rebate?

FILE - Colorado State Capitol
The Colorado State Capitol in Denver, Colorado.

The Economic and Revenue Forecast presented to the Joint Budget Committee in June showed that the state’s general fund is projected to close out fiscal 2018 with a $1.2 billion surplus.

Since Colorado’s Taxpayer’s Bill of Rights (TABOR) places a cap on annual state tax revenue the state can keep, spend or save, many wonder whether Coloradans will actually see tax refunds in 2020.

 

Jon Caldara, president of the Independence Institute, said that although TABOR has a revenue cap and taxpayers can get back money when the cap is surpassed, there is no guarantee that money actually will be refunded.

“The problem is that the legislature keeps us from ever reaching that amount because every time it looks like we’re going to get close, they just call another part of the budget ‘a fee,’ and take it outside of the budget,” Caldara told Watchdog.org.

A perfect example of this, Caldara said, was the faster fee, which is a registration tax on a person’s vehicle, and most recently, the hospital provider fee, which is a bed tax.

“Every time they do that, it gives the state budget more room to grow before it hits that tax limit,” Caldara said. “And so we never reach that top.”

State revenue is expected to surpass the cap by $126.2 million, which should result in a TABOR refund for tax year 2019, according to the legislative forecast. An additional $21.3 million brought forward from fiscal 2015 will bring the total amount to $147.5 million.

“In tax years when the state refunds a TABOR surplus, taxpayers may claim an amount up to $50,000, less their income tax liability, as a refundable credit,” the forecast states. “This forecast expects a TABOR surplus in FY 2018-19 and FY 2019-20. If a surplus occurs in these fiscal years, partial refundablility of the credit will be available in tax years 2019 and 2020.”

TABOR, which took effect in 1992, mandates that refunds should be distributed through local government reimbursements for seniors and disabled veterans with property tax exemptions. If there are any remaining refunds, they will be distributed via the six-tier sales tax refund system.

“There is an open question about how much that surplus is going to be,” Pfiffner told Watchdog.org. “If the system collects more taxes than allowed under the formula, then it is mandated that that amount gets given back.”

Pfiffner added that refunds have been distributed to taxpayers in Colorado in the past. Between 1997 and 2000, TABOR’s spending limit was exceeded and the state had to turn around and give the money back. An average of $3,200 per family was returned over three years, he said.

“The Taxpayer Bill of Rights allows an automatic increase to the budget every year. And all this does is put a speed regulator, if you will, on how fast government grows,” Pfiffner said. “And I think that has been one of the reasons why in Colorado we’ve had a very successful economy compared with other states.”

Although TABOR has been proposed in at least 30 states since 2004, Colorado remains the only state with TABOR.

The law has come under scrutiny over the years, and opponents have claimed the law is responsible for the state’s economic troubles in the past that resulted in a credit downgrade in 2002.

As a result, Colorado suspended the law for five years in 2005 following a decrease in public services.

“We have had a way of controlling government growth so that the state, although it’s not a low-state tax, is one in which people have had good control over the state government. We’re still fighting that battle everyday,” Pfiffner said.

The forecast predicts strong growth in the near future that is expected to taper off through 2020.

https://www.watchdog.org/colorado/colorado-expected-to-see-billion-in-new-revenue-in-will/article_ee62a9de-9407-11e8-848a-7765b28f8a98.html

Leave a Reply

Your email address will not be published. Required fields are marked *

*