Governor Hickenlooper unveils next year’s Colorado budget & taxpayer refunds
by Lisa Cyriacks
For the first time in many years, Colorado government finds itself in a position of having to refund tax revenue to voters. The refunds are required when state revenue exceeds the combined rate of inflation and population growth.
Taxpayer rebates totaling $167.2 million are mandated by Colorado Taxpayer’s Bill of Rights (TABOR), assuming current law and the accuracy of the September forecast by the Office of State Planning and Budget.
A $30.5 million rebate for new marijuana taxes is coming. Total state marijuana revenue was different than what was projected in the election blue book. (In November 2013, Colorado voters approved Proposition AA, which allowed a 10% retail sales tax and a 15% excise tax.) Because the estimated revenue subject to TABOR was underestimated, under TABOR the state must refund the money being collected or ask voters again to keep it for additional state spending.
According to Governor Hickenlooper, it will be important to engage the legislature when the session begins on the issue of marijuana sales tax revenue rebates. At the time he presented the proposed budget he advised that it would be unwise for the state to plan to spend any of those funds in advance of that discussion.
Current revenue projections indicate a $136.6 million refund for revenue above the Referendum C cap in Fiscal Year 2015-16. If they materialize, the rebates would go out under existing formulas via tax credits or sales tax refunds when people file their 2016 taxes. The cost for refunding TABOR is typically negligible because it done through tax filings.
In a recent interview, incoming House Speaker Dickey Lee Hullinghorst made the suggestion that Democrats may support a ballot measure in 2015 to ask voters to keep the money for state spending instead of issuing refunds.
State Senator Kent Lambert (R) is the chairman of the bi-partisan budget committee comprised of three Republicans and three Democrats. Lambert supports asking voters to keep the marijuana revenues exceeding TABOR, but he is noncommittal on the larger refund.
Governor John Hickenlooper presented a proposed budget setting aside nearly $137 million to be returned to taxpayers in 2016. His proposal could still be amended. A final decision won’t be made for months, but Governor Hickenlooper made it clear to lawmakers that he does not think voters are willing to let government keep money above the limit set by TABOR.
“Colorado’s economic activity continues to outperform the national expansion,” Hickenlooper stated. “Total employment and personal income have steadily increased for several years running. The state’s unemployment rate stands at 4.7%, the lowest since 2008. Looking ahead, the most likely scenario is for the momentum to continue at a steady pace.”
The full Colorado legislature will make adjustments to the budget and vote on it in the spring.
The entire letter from the governor to the Joint Budget Committee about the FY 2015-2016 proposed budget can be found online at the Office of State Planning and Budgeting, www.colorado.gov/ospb.