Colorado lawmakers may have to refund money to taxpayers sooner than they initially expected.
Refunds are a sign of Colorado’s booming economy. But they also mean lawmakers will be restricted in how much money they’ll be able to keep and spend under Colorado’s Taxpayer’s Bill of Rights, also known as TABOR. It requires refunds when revenue exceeds the combined rate of inflation and population growth.
State economists giving lawmakers a quarterly revenue forecast Monday gave conflicting estimates about whether refunds are required in the 2015 tax year. Legislative economists say no but warn that the possibility exists.
Gov. John Hickenlooper’s economists predict, however, that the state needs to refund $196.8 million next year because of revenue increases in the current budget year. Lawmakers weren’t expecting refunds until the 2016 tax year, and Hickenlooper’s budget request sets aside nearly $137 million for those.
But the latest predictions by the governor’s economists have increasing revenue collections in cash funds and severance taxes, hence their predictions for sooner-than-expected refunds. Henry Sobanet, Hickenlooper’s budget director, said the state has a revenue cushion to cover most of the $196.8 million that needs to be refunded. Still, about $73 million of that was already budgeted, so the governor’s office will present lawmakers with an adjusted spending plan by Jan. 2 to account for that amount.
To prevent refunds, lawmakers have to ask voters for permission.
Overall, the forecasts showed positive trends. Both adjusted revenue projections upward, and the report from legislative economists predict the state will have about $1 billion more to spend in the next budget year than it does in the current budget year.
But Natalie Mullis, the chief economist for the Colorado legislature, was quick to warn lawmakers that the amount is not as large as it appears.
“It’s not like that’s enough money to fund everything that every interest group is going to want to bring to you this year,” she said, prompting laughter in the room.
“Does everyone behind you hear?” quipped Democratic House Speaker Mark Ferrandino, referring to the lobbyists in the room.
The governor’s economists project the state will collect about $9.7 billion in taxes through the current budget year that ends July 1 and $10.3 billion the following fiscal year. Legislative economists had similar projections.