Sep 23

Tax Refunds Imminent As Colorado Economy Improves

(Photo Credit: Thinkstock)

(Photo Credit: Thinkstock)

DENVER (AP) – Colorado’s growing economy means tax refunds are on the horizon for residents.

State economists told lawmakers Monday that projections for tax collections continue increasing and they need to budget for refunds mandated by Colorado’s Taxpayer’s Bill of Rights, also known as TABOR. It calls for refunds when revenue exceeds the combined rate of inflation and population growth.

The first refunds are expected to happen in 2016, and economists told lawmakers they need to budget about $130 million for that in next year’s budget. The following year, lawmakers have to budget anywhere from $239 million to $393 million for refunds.

While that’s an indicator of better economic times, the growing revenue pie can also highlight the ideological divide over TABOR, which Republicans favor and Democrats often criticize.

Supporters of the 1992 voter-approved constitutional amendment see it as forcing state government to be prudent with spending even during economic expansions, while opponents see it as restricting investments in schools, transportation, and other services when more money is available.

The last refunds happened about a decade ago.

“I think for a few years I’ve been telling you all that there would come a point and time when the economy is trucking – at least in Colorado it feels like it’s trucking – but the budget is going to hit the TABOR limit and that means that there will still be tough budget decisions to be made. And we’re there,” said Natalie Mullis, chief economist for the Colorado Legislature.

Mullis’ quarterly revenue forecast was one of two presented to lawmakers Monday. The other was from the governor’s economists. Both had similar projections, saying Colorado revenue continues to exceed expectations because of strong sales and income tax growth.

Recreational marijuana taxes may also trigger refunds, barring legislative action, even though pot revenue is nowhere near the estimate voters received when they approved the taxes in 2013. Instead, the refunds would occur because of the overall rise in state revenue and because of a TABOR provision regarding new taxes.

Voters approved the pot taxes for school construction and enforcement and prevention programs. So far, the taxes are estimated to generate about half the $70 million predicted.

“People voted for this, people wanted it, and TABOR’s going to give them their money back and not let it do any of the things they wanted it to do,” said Sen. Pat Steadman, a Denver Democrat who is one of the state’s budget writers.

Steadman said if lawmakers refund the marijuana tax money, they’ll have to cancel spending they approved with the new revenue or dip into the state’s general fund to make up for it.

With refunds looming, lawmakers returning to the state Capitol in January can expect pressure from interest groups to try to keep the additional revenue by putting the question to voters, as TABOR requires.

– By Ivan Moreno, AP Writer

http://denver.cbslocal.com/2014/09/22/tax-refunds-imminent-as-colorado-economy-improves/

Sep 23

Tax refunds imminent as Colorado’s economy improves; first refunds expected in 2016

 

Colorado’s growing economy means tax refunds are on the horizon for residents.

State economists told lawmakers Monday that projections for tax collections continue increasing and they need to start budgeting for refunds mandated by Colorado’s Taxpayer’s Bill of Rights. It calls for refunds when revenue exceeds the combined rate of inflation and population growth.

The first refunds are expected to happen in 2016, and economists told lawmakers they need to budget about $130 million for that in next year’s budget.

Recreational marijuana taxes may also trigger refunds, barring legislative action, because of the overall rise in revenue and because of a TABOR provision regarding new taxes.

Voters approved the pot taxes for school construction, and enforcement and prevention programs. So far, the taxes are estimated to generate about half the $70 million expected.

Sep 23

Revenue forecasts bring good news – and a big complication

StockCapitolFull22214

Revenue forecasts bring good news – and a big complication

Colorado tax revenues keep rising faster than state economists can predict them, a trend that might seem to be good news for education but which actually could make it harder to trim the $900 million shortfall in K-12 funding.

That’s because projected revenues are rising fast enough that they likely soon will hit a constitutional trigger that requires refunds of surplus revenues to taxpayers. If the trends continue, the 2015 legislature may have to set aside money in the 2015-16 budget to cover refunds in 2016.

The likelihood of reaching what’s called the “TABOR limit” was a key element in quarterly state revenue forecasts presented to the legislative Joint Budget Committee Monday morning by economists from the Legislative Council staff and the executive branch’s Office of State Planning and Budgeting.

“I’ve been thinking this has been coming for years,” said Lisa Weil, policy director for Great Education Colorado, a group that advocates for increased K-12 funding. “It certainly complicates” school finance discussions, she added.

Weil isn’t the only person who’s seen this coming. State economists have referenced the TABOR limit in the last several forecasts. But hitting the trigger always has been far enough in the future that policymakers didn’t think too much about it. Now, it seems, the future is just about here.

The TABOR limit is part of the 1992 Taxpayer’s Bill of Rights, which required that state revenue growth beyond inflation and population increase in a given year be refunded to taxpayers. That limit was modified by Referendum C, a 2005 voted-approved measure that shelved the limit for five years and eased its restrictions after that.

Legislative economists estimate that Ref C, as it’s called around the Capitol, has enabled the state to retain and spend $9.8 billion that otherwise would have been refunded.

The last TABOR refunds were paid in 2005, triggered by a $41 million surplus in the 2004-05 budget year. The refunds averaged $15 per taxpayer.

Do your homework
Legislative Council forecast (TABOR section starts page 13)
OSPB forecast (TABOR starts on page 48)

Refunds receded into the realm of the theoretical after that as the recession pushed growth in state revenues well below annual TABOR limits. The March 2011 forecasts marked the turnaround for revenues, which have been on the upswing ever since.

Legislative economists estimated Monday that $125.1 million will have to be earmarked in the 2015-16 budget to cover 2016 refunds, and $392.6 million will have to be set aside in 2016-17 to pay for 2017 refunds.

Executive branch forecasters estimate the amounts to be refunded in those two years at $133.1 million and $239.4 million. (The two sets of forecasts offer differ in amounts.)

The legislative staff forecast estimated 2016 refunds at $11 per taxpayer, provided through the earned income tax credit and sales tax refunds. The larger 2017 refund would be provided by a temporary lowering of the income tax rate from 4.63 percent to 4.5 percent, plus more sales tax refunds.

TABOR refunds matter to education spending because they require lawmakers to consider yet another demand as they attempt to juggle competing state spending needs.

The state’s school districts took a $1 billion hit in expected funding after the 2008 recession, a impact known as the “negative factor” after the formula used to reduce K-12 spending in order the balance the overall state budget.

District leaders and lobbyists fought hard during the 2014 session to trim the negative factor, and lawmakers did make a $110 million cut. (Get background in this story.) Education interests have signaled their intent to push for trimming the negative factor further during the 2015 session, an effort likely to be complicated by the need to address the TABOR limit.

“It’s going to take a lot of conversation,” said Jane Urschel, deputy executive director of the Colorado Association of School Boards and the group’s Capitol lobbyist.

The negative factor also is being challenged by a pending lawsuit (see story).

The amount of funding available for education also is a key concern for the state’s colleges and universities. Their state support has recovered modestly in the last two years. But the higher education system also is in the middle of fleshing out a performance funding system mandated by the 2014 legislature. Many in higher ed are worried there isn’t enough funding to allow that new system to operate properly. (Get background here.)

Lawmakers have an alternative to paying refunds – asking voters to let the state keep the money, as Ref C allowed nearly a decade ago.

“It’s time to talk about TABOR’s binding requirements,” Urschel said, adding that it’s “maybe” time to consider a new version of Ref C.

The politics of that are tricky, especially if Republicans take control of the Senate, the House, the governorship or any combination of the three in the Nov. 4 election.

“This is going to a fun session,” Weil said of 2015, with a hint of irony in her voice.

Forecast notes

The forecasts released Monday touched on three other topics of interest for education funding watchers.

State Education Fund: This dedicated account, used to supplement K-12 spending, is projected to have between $561 million and $672 million in it for spending by the 2015 legislature. The fund contained more than $1 billion last spring, prompting a tug of war between lawmakers who wanted to spend more on schools and others who wanted to save for future rainy days. The rainy day crowd mostly prevailed.

Marijuana revenues: Up to $40 million a year in excise (wholesale) taxes on recreational marijuana is earmarked for the Building Excellent Schools Today construction program. Prior marijuana revenue forecasts proved way too optimistic, partly because many users so far have chosen to stick with low-tax medical marijuana. The latest legislative forecast puts excise revenues at under $12 million in each of the next two years and at only $12.3 million in 2016-17. (See this story for more background.)

College construction: The higher education lobby’s big spring 2014 gamble paid off. Scrambling to find campus construction money, higher ed helped push through a bill that earmarked some surplus 2013-14 revenues for buildings – if that surplus materialized. It did, and nine of the 10 projects on the priority list got their money on Sept. 15. The 10th is expected to get its cash near the end of the year after the state’s 2013-14 books are finally closed. The list of 10 includes a few non-campus projects. The higher ed projects are at the Auraria Higher Education Center, CSU-Fort Collins, CU-Boulder, Fort Lewis College and Adams, Colorado Mesa and Western Colorado state universities.

http://co.chalkbeat.org/2014/09/22/revenue-forecasts-bring-good-news-and-a-big-complication/#.VCJDnfJ0xes

Sep 22

School Finance Legislation and Consequences, with TABOR

TABOR-required refunds would be $125M in ’16-17 and $392M in ’17-18, Colorado legislative economists project. Need for refunds would require legislature to set aside $$ in prior years, likely affecting such things as cuts in K12…
http://www.coloradofiscal.org/info-graphic-a-history-of-school-finance-in-colorado/

shrinking funding for Colorado Schools

Sep 09

CITY OF OURAY: Voters will decide on de-Brucing property tax

CITY OF OURAY: Voters will decide on de-Brucing property tax | Ouray County Plaindealer

Along with the series of retail marijuana questions on the ballot this November, Ouray voters will be asked to approve a “de-Brucing” of city property tax.

During its meeting on Tuesday, city council approved Resolution No. 8, which details ballot language that would allow the city to collect and retain property tax revenues that are limited by the Taxpayer Bill of Rights.
The question will read: “Provided that no mill levy shall be increased, above the preserved mill levy of 13.585 for general operating expenses, without further voter approval, shall the City of Ouray be authorized to collect, retain and spend all excess revenues from property taxes received in 2015 and each subsequent year, without regard to any revenue or expenditure limitations including those contained in Article X, Section 20 of the Colorado Constitution (TABOR)?”
With a tight grip on the General Fund, the city is desperately looking at revenue options to build reserves and continue to maintain basic core services the city provides. Under TABOR laws, however, local governments cannot raise tax rates without voter approval and cannot spend revenues collected under existing tax rates without approval if revenues grow faster than the rate of inflation and population growth.
TABOR, passed in the state by voters in 1992, is a constitutional amendment that limits government spending at all levels. However, many local governments thought that the amendment was written in a way that does not have a straightforward application or clear interpretation, and throughout the 1990s, a number of municipalities opted to ask voters to “de-Bruce” various aspects of the law in order to escape the broad restriction.
De-Brucing, named after the amendment’s author, Douglas Bruce, is the term used to lift one or more of TABOR’s spending limitations. By de-Brucing the city’s property tax, the city would not have to refund any of the excess revenues received from assessed values.

http://www.ouraynews.com/articles/2014/09/08/city-ouray-voters-will-decide-de-brucing-property-tax

Aug 27

Aurora asks district judge to dismiss TABOR lawsuit

Aurora, taxpayers face off in district court over taxing district for hotel project

BRIGHTON – The city of Aurora asked an Adams County District Court judge on Monday to dismiss a lawsuit that claims the city violated TABOR with parts of a multimillion-dollar incentive package for a hotel developer.

“The project has been held up pending the litigation and we are seeking the dismissal of those claims,” said attorney Daniel Lynch with the Denver law firm Kutak Rock.

Lynch said there are no factual allegations in the complaint that was filed against the city and the Aurora Urban Renewal Authority in March. He said the court should be able to make a ruling on the legal interpretation of the Taxpayer’s Bill of Rights and dismiss the case.

Attorney Mark Grueskin, who is representing two taxpayers who filed the lawsuit, said several facts are in dispute and asked that the remaining claims move forward.

At issue is whether the city of Aurora violated TABOR when it allowed a single voter representing a corporate landowner to vote to raise taxes in a special election.

Under a June 2011 incentive agreement approved by the Aurora City Council, the increased tax revenue would go to the developer to pay for construction of a conference center and other infrastructure surrounding the Gaylord Rockies Hotel development in northern Aurora by Denver International Airport.

The city in a single meeting in June 2011 established an ordinance allowing 30 percent of the voters in any geographic area to petition the city for creation of an “enhanced taxing area.”

If the city approved the petition, the new taxing area also could petition for a tax increase.

In the case of the Gaylord Rockies development, the owner of land proposed for the project appointed a representative to vote on a 2 percent increase in lodging tax in the new enhanced taxing area and a 6.25 percent increase in the admissions tax (a tax paid on tickets to events).

Both taxes were approved by a single voter and the revenue from those taxes was guaranteed to the developer in an incentive agreement.

Grueskin said TABOR – a voter-approved constitutional amendment – requires a vote of the entire electorate in Aurora and does not allow for the creation of a special voting district to the exclusion of every other Aurora voter.

“Why is it that this one landowner had some sort of claim to vote?” Grueskin asked. “The point of TABOR is not to protect the middleman, it’s to protect the person paying the tax.”

Lynch said the city complied with TABOR by having an election that included all of the voters in the enhanced taxing area.

Adams County District Court Judge Ted Tow said he might issue a ruling by Friday on the motion to dismiss the remaining claims in the lawsuit.

By Megan Schrader Published: August 26, 2014
Contact Megan Schrader: 286-0644

Twitter @CapitolSchrader

Read more at http://gazette.com/aurora-taxpayers-face-off-in-district-court-over-taxing-district-for-hotel-project/article/1536251#X1b9bVd7kC9hSkj4.99

 

http://gazette.com/aurora-taxpayers-face-off-in-district-court-over-taxing-district-for-hotel-project/article/1536251

Aug 14

CORPORATE WELFARE: Gaylord Hotel Project Benefits from Fishy Tax Scheme

Aurora politics have been thrust into the spotlight based on reports that a new hotel tax scheme is fostering corporate welfare on a massive scale.

The controversial Gaylord Hotel project in Aurora is benefiting from a special tax district created by the Aurora City Council.  The catch is that only a single voter has approved the tax increases in this special district, and all the future revenue has been awarded to the Gaylord project’s developer.  The whole thing sounds fishy by any measure.

The Colorado Springs Gazette explains further: 

The city of Aurora invented an incentive tool called an enhanced taxing area to levy higher admissions and lodging taxes, imposed a general improvement district with a 40-mill property tax levy, and declared agricultural land blighted to use urban renewal tax incentives.

Critics say the Aurora deal is an unprecedented giveaway of taxpayer money to a private developer over a 30-year period. [Peak emphasis]

Continue reading

Jul 24

Penn’s take on Kerr order denying rehearing en banc

TABOR Directors and friends,

We will not see a review by (appeal to) the entire US 10th Circuit Court of Appeals (en banc) in the federal case to overturn the Taxpayer’s Bill of Rights.

The next logical step is for the Defendant to ask the US Supreme Court to hear an appeal that the case should not proceed to the trial phase because the substance of the case does not fall within the judicial branch to decide.  The Solicitor General’s office this morning confirmed in a telephone call with me that such a filing is contemplated.

Luke Wake and his team at NFIB are ready to help out once again.  See his message below.

The dissents from the 10th Circuit Court are telling and a very important development in proceeding to the next step.  They follow the very brief ruling in the attachment.

Our TABOR Foundation is committed to seeing this through as far as we need to, and Board approval is already in place.  I’ll keep you informed as I learn more.

Penn Pfiffner

I’ve been in communication with each of you about the Kerr v. Hickenlooper case, wherein a handful of ideologically motivated litigants are challenging the constitutionality of the Colorado Taxpayer Bill of Rights (TABOR). TABOR was an initiative approved by Colorado voters in the early 1990s, which gives the citizens a right to vote on new taxes. NFIB was very supportive of the reform then and the NFIB Legal Center is now leading its defense (along with TABOR Foundation).
>
> As you recall, I previously explained that the Tenth Circuit federal court of appeal recently decided to allow a “Guarantee Clause” challenge to proceed against TABOR. And I’ve said before, this would open Pandora’s box for challenges to any constitutional amendment restraining the legislature’s tax and spend powers, or potentially any amendment limiting the state’s police powers.  We were hopeful that the Tenth Circuit would review the decision because it is binding on all Tenth Circuit states, and because it provides persuasive authority that could be invoked by litigants challenging taxpayer protections in other states as well. Unfortunately the Tenth Circuit denied Governor Hickenlooper’s petition for en banc review; however, there were three very strong dissenting opinions (see attached). These dissents largely echoed the concerns we raised in our original amicus brief.
>
> Given the force of these three dissents, I should think the State is in as good a position as possible in pursuing a petition for certiorari in the U.S. Supreme Court. When considering whether to take a case the Supreme Court asks two questions: (1) Does this decision create a conflict between federal circuits, or does it expressly conflict with a previous Supreme Court decision? (2) Does the case raise an issue of national concern? Both can be answered in the affirmative.
>
> Early in the 20th Century, the Supreme Court decided that a Guarantee Clause challenge to Oregon’s initiative process was precluded by the political questions doctrine. The Court has since repeatedly affirmed that Guarantee Clause cases are non-justiciable. In a 1992 opinion Justice Ginsberg held out the possibility that there may be some conceivable Guarantee Clause case that might be justiciable [we don’t necessarily disagree that there might be some case in the future], but no Court of Appeal has found one to date–except the Tenth Circuit in this case.
>
> The Tenth Circuit held that a Guarantee Clause challenge should be allowed to move forward despite the fact that the judges were not presently aware of any standard or principled rule for how the case might possibly be decided. This is highly problematic because it encourages litigation without principled rules.  And the case certainly raises an issue of national concern because–as discussed above–it invites challenges to potentially any state constitutional amendment, especially voter initiatives–and most especially taxpayer protections.
>
> We are now planning to file an amicus brief encouraging the Supreme Court to take the case. Each of you has indicated that your organization has tentatively agreed to join with us in this filing. Please let me know if you have any questions. My understanding is that the State will be filing its petition for certiorari sooner than later. So we may be filing as early as September. I will keep you all in the loop.
>
> Very best,
>
> -Luke