Legislators find way to restore pot-tax funding to RTD, museums
A RTD train sits at the corporate office, located between the Evans and Broadway stations.
By Ed Sealover – Reporter, Denver Business Journal
Jan 30, 2018
Regional Transportation District trains, Scientific and Cultural Facilities District museums and other beneficiaries of special-district funding soon will be on a path to again receive the revenues from retail marijuana sales that they’d been losing since July.
Colorado senators on Tuesday approved a “fix” for the language that has left those districts unable to collect sales taxes for cannabis sales within their district since shortly after an omnibus funding bill from the 2017 session was signed into law. Affected organizations have warned that while the problem has not led to program cuts yet, it could do so in the future if it’s not remedied.
The fix to the error made in Senate Bill 267 is not one with unanimous support, having passed to the House Tuesday on a final vote of 24-10. Republican leaders warned not only that they feel the bill is unconstitutional, but that districts that re-start the collection of marijuana taxes without a vote of the people may be challenged in court.
Still, the organizations likely to begin receiving more money in the near future cheered Thursday’s vote to pass Senate Bill 88 out of the Republican-majority Senate and onto the Democrat-led House, where leaders have expressed support for the fix.
“Right now we’ve been able to absorb that loss of revenue. But long-term it’s definitely going to affect what we’re able to do,” said Scott Reed, assistant general manager for communications at RTD, which has lost about $500,000 a month. “This is a step in the right direction to correct the inadvertent mistake from Senate Bill 267.”
SB 267 was the signature bill of the 2017 session — a measure that put $1.9 billion toward transportation, removed the hospital provider fee from under the Taxpayer’s Bill of Rights revenue cap and lowered business personal property tax bills for companies. One of the ways that it created funding for its array of initiatives was to raise the state’s marijuana sales tax from 10 percent to 15 percent, offsetting that slightly by exempting retail marijuana sales from Colorado’s 2.9 percent general sales tax.
One clause in SB 267 had the result of disallowing special districts from collecting sales taxes approved by their voters on retail marijuana sales. Because these districts already do not get funding from the statewide special tax on marijuana, that left them unable to collect any taxes from sales of the drug, despite such revenues having been planned for in their budgets.
For RTD, that’s meant a loss of about $3.5 million since July; for SCFD, which helps to fund several hundred arts and culture organizations in the Denver metro area, that’s meant a loss of about $360,000.
Gov. John Hickenlooper called a special legislative session in October to try to fix this problem. However, Republicans and Democrats could not agree on a solution that they both found to be constitutional, and the session ended without any bills passing.
SB 88, sponsored by Sen. Bob Gardner, R-Colorado Springs, simply clarifies that retail marijuana sales remain subject to sales taxes levied by the affected special districts. And it permits these districts to begin collecting those taxes again if the bill is signed into law — or to put the question about re-starting the tax to the voters if district officials would prefer.
The 10 senators who voted against SB 88 all were Republicans, many of whom said that it goes against TABOR to authorize the collection of a tax without a vote of the people.
Sen. Tim Neville, R-Littleton, said issues like the one from SB 267 could have been avoided had bill sponsors not tried to shove a 72-page rewrite of their bill through the Legislature in the closing days of the session when few people could read it. And Sen. Kevin Lundberg, R-Berthoud, said that no matter whether the mistake in the hastily written bill was intentional or accidental, it can be corrected only by a vote of the people.
“Senate Bill 88 is just legal manipulation … which the people of my district sent me down here to get rid of, not to put more in place,” Lundberg said. “If that isn’t passing the buck and failing to take on our legislative responsibilities, I don’t know what is.”
Senate Majority Leader Chris Holbert, R-Parker, went so far as to warn districts that reinstate the tax without a vote of the people that there are residents within their boundaries that likely will sue over the actions as a constitutional violation.
But Gardner, who got just a minority of Republicans to join him and all Democrats in backing the bill, said courts have affirmed that the Legislature can reinstate a tax that had been on the books, much like it can pause and then restart a tax credit.
“This is a bill that is not without its controversy,” he said. “I carry it because it is my fundamental belief that when this institution, the General Assembly, makes what everybody calls an error in the drafting of legislation, it is incumbent on us to correct that error.”
Reed said that RTD officials have not decided yet whether they will just begin collecting tax revenues after the likely signing of the bill into law or whether they will seek a vote of the people.