Mar 14

The Tenth Circuit’s Punt in Kerr v. Hickenlooper Opens the Door for a Torrent of Litigation

In 1992 the people of Colorado voted to amend their Constitution with adoption of a Taxpayer Bill of Rights (TABOR). This was a historic initiative that put the power in the hands of the people to decide for themselves whether to approve new taxes or tax-hikes. While many states have constitutional protections to prevent new or increased taxes—such as California’s requirement of a supermajority vote in the legislature—Colorado’s TABOR was unique in that it made the citizens of the state the final word on new taxes or increased taxes. TABOR therein served as a model that has been implemented through constitutional amendments in other states, and which NFIB has supported as a means of protecting small business owners from new and ingenious taxing schemes. But TABOR is under attack—and this may have profound implications, not only in Colorado but throughout the country.

TABOR’s Legal Challenges

TABOR was upheld as constitutional in the Colorado Supreme Court last year in the face of a lawsuit advanced by educators and the parents of school-aged children who complained that TABOR makes it harder for schools to get necessary funding. NFIB Small Business Legal Center filed in that case to defend the law, and we were pleased to see the Court ultimately affirm the constitutionality of TABOR. But TABOR faces yet another challenge—this time in federal court. Continue reading

Mar 13

Colorado legislators grapple with pot-tax refund issue

Colorado lawmakers on the Joint Budget Committee expressed frustration Wednesday that even though the state’s voters approved taxes on retail marijuana sales as required under the Taxpayer’s Bill of rights, some of that revenue might have to be refunded under TABOR if more taxes are collected than officials estimated.

JBC staff delivered a 100-page report to legislators outlining most of the scenarios that could occur of if the state collects more than the official $67 million estimate for the first full fiscal year of recreational pot sales, from July 1, 2014, through June 30, 2015.

That estimate was given to voters in the official voters pamphlet — known as the Blue Book — last fall, which explained Proposition AA, the new taxes established for retail marijuana sales. That booklet estimated likely revenue from new pot taxes at $67 million in the first full year. (The ballot language itself pegged predicted tax revenue at $70 million.)

Most current estimates, however, show the state will likely collect far more than $67 million.

The report outlines three courses of action:

– Wait to see how much tax is collected, then ask voters to let the state keep any excesses;

– Send a refund of any taxes collected above the estimate; or,

– Attempt to reduce the 15 percent excise tax on wholesale sales and 10 percent special sales tax in order to keep the amounts collected under $67 million.

“This is a bizarre result that we’d have to refund all that tax money just because what we asked for [was an estimate] in a year when this is going to be a growing industry,” said JBC Vice Chairman Sen. Pat Steadman, D-Denver, at a meeting of the budget panel Wednesday.

“It’s been the will of the people who passed TABOR,” said JBC Chairwoman Rep. Crisanta Duran, D-Denver. Continue reading

Mar 13

House Minority Leader Statement on TABOR Ruling

FOR IMMEDIATE RELEASE Contact: Joel Malecka

March 11, 2014 (o) 303-866-5679 (c) 970-581-3302

House Minority Leader Statement on TABOR Ruling

Denver –Today, following the 10th Circuit Court of Appeals’ ruling on a lawsuit challenging the constitutionality of the Colorado Taxpayer Bill of Rights (TABOR), House Minority Leader Brian DelGrosso (R-Loveland) issued the following statement:

“The Taxpayer Bill of Rights, particularly the requirement that voters’ approve all tax increases, provides vital protection to Coloradans from the tax-and-spend Democrats’ dream of unlimited
spending,” said DelGrosso. “It’s unfortunate that the lawsuit will continue, but I am not surprised these Democrats, which include House Democrat leadership, want to overturn TABOR. They believe they know what’s better for you than you do and without TABOR’s protection will be able to raise your taxes without your consent.”

House Republicans statement on TABOR ruling

Mar 13

Can the U.S. Government Declare a State Constitution ‘Un-Republican’?

A lawsuit challenging Colorado’s Taxpayer Bill of Rights raises uncomfortable questions about federalism and the Constitution’s Guaranty Clause.

The Colorado Capitol in Denver (Wikimedia Commons)

The Constitution is full of inconvenient provisions. Gun-control advocates struggle to explain the Second Amendment; those favoring federal power must wrestle with the Tenth: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”

Here’s a puzzle for the “states’ rights” and “state sovereignty” crowd: the “Guaranty Clause,” Article 4 § 4, which binds the federal government to “guarantee to every state … a republican form of government.”

That clause, like a dormant volcano, rumbled last week in a courtroom in Denver. The sound should worry those who think state prerogatives trump those of the nation.

Since the earliest days of the republic, this clause has been interpreted to mean that when Congress recognizes a state government and admits its members to Congress, it is implicitly finding the state’s government properly “republican.” In fact, when admitting new states to the union, Congress has for more than a century placed in the statute wording finding that the people have adopted a “republican form of government.” Continue reading

TABOR may force Colorado to refund excess marijuana money to taxpayers

Status

DENVER — Tax revenues from Colorado’s new recreational marijuana industry are pouring into state coffers — and that’s actually a bit of a problem for lawmakers.

Taxpayers, however, may stand to benefit if lawmakers decide to refund the tax revenue that comes in above last year’s $67 million first-year estimate.

According to a legal analysis conducted by the state and obtained by FOX31 Denver, the marijuana revenues are subject to the state’s Taxpayer Bill of Rights (TABOR), which will require lawmakers to take action if tax revenues from the new legal marijuana industry exceed the estimated $67 million in annual revenue that was anticipated in the 2013 Blue Book analysis of Proposition AA, the new sales and excise tax rates voters approved in November.

The legal memorandum from the Office of Legislative Legal Services was sent to members of the Joint Budget Committee Monday night.

The report, obtained by FOX31 Denver, is the result of more than a week of legal analysis aimed at providing some certainty to the unanswered question of what happens if revenues come in above that $67 million estimate.

The most current Dept. of Revenue estimate forecasts that the state will take in $107 million, exceeding the Blue Book estimate by some $40 million.

The conclusion: the state must lower the tax rate and either refund the excess amount of revenues above the $67 million estimate or refer a measure to the November 2014 or 2015 ballot seeking permission from voters to let the state keep and spend all of the tax revenue from recreational marijuana.

“It’s very difficult to figure out what the actual amount of marijuana tax revenue is going to be,” said JBC Chairwoman Crisanta Duran, D-Denver, who notes that the state will update its revenue forecast,including marijuana tax revenue projections, on March 18.

“Ultimately, one way or another, the people of this state are going to have a great say about how this extra money is spent. We have to follow TABOR and either take the decision back to the people of Colorado and ask them to keep these dollars or we have to make a refund.”

Rep. Cheri Gerou, R-Evergreen, also sits on the JBC but, unlike Duran, doesn’t see a referred measure to the November ballot as a real option.

“I think probably what’s going to happen is that, internally, the state will try and take care of it,” Gerou said. “I think it’s going to be a bit of a black eye if we have to go back to the voters with another amendment. Continue reading

Mar 12

High court may review TABOR law

Justice Kennedy would be seen as swing vote in case

Gov. John Hickenlooper has to decide whether to go to the Supreme Court to defend the Taxpayer’s Bill of Rights, a law that many of his fellow Democrats would like to overturn.

Hickenlooper

Hickenlooper

The Denver-based 10th Circuit Court of Appeals ruled Friday that a lawsuit against TABOR can proceed. Attorney General John Suthers had argued that the lawsuit is a political question that the courts have no business deciding.

The state has the option to appeal to the U.S. Supreme Court or to the full 10th Circuit Court of Appeals. A three-judge appeals court panel handed down Friday’s ruling.

“We are currently reviewing the ruling and will then discuss the matter with our client before taking any next steps,” said Suthers’ spokeswoman, Carolyn Tyler.

Colorado voters adopted TABOR in 1992, stripping the power to raise taxes away from the Legislature. The lawsuit claims that TABOR violates the U.S. Constitution’s guarantee to every state of a “republican form of government,” where an elected body of representatives makes the laws.

Legal arguments in the case harkened back to the earliest days of the United States government, with arguments about what the framers of the Constitution would make of Colorado’s law.

No other state has an anti-tax law as strong as Colorado, and the case has attracted national attention. TABOR has been on the ballot in five other states, and 20 state legislatures have considered it, but it has always been rejected, said Nicholas Johnson, vice president of tax policy for the Center on Budget and Policy Priorities in Washington, D.C. The group was happy with Friday’s ruling.

“It’s important because legislatures need this authority. TABOR seeks to emasculate the Legislature,” Johnson said.

Richard Westfall, a leading Republican lawyer in Denver, filed a brief in defense of TABOR and argued that overturning it would open a “Pandora’s box” that could lead to similar challenges around the country.

But Mike Feeley, who argued the case for the plaintiffs, thinks Westfall is overstating the case. Continue reading

Mar 11

House Minority Leader DelGrosso’s Statement on TABOR Ruling

Denver –Today, following the 10th Circuit Court of Appeals’ ruling on a lawsuit challenging the constitutionality of the Colorado Taxpayer Bill of Rights(TABOR), House Minority Leader Brian DelGrosso (R-Loveland) issued the following statement:

“The Taxpayer Bill of Rights, particularly the requirement that voters’ approve all tax increases, provides vital protection to Coloradans from the tax-and-spend Democrats’ dream of unlimited spending,” said DelGrosso. “It’s unfortunate that the lawsuit will continue, but I am not surprised these Democrats, which include House Democrat leadership, want to overturn TABOR. They believe they know what’s better for you than you do and without TABOR’s protection will be able to raise your taxes without your consent.”

http://coloradohousegop.com/2014/03/house-minority-leader-statement-on-tabor-ruling/

Mar 10

Federal Appeals Court rules Colorado Anti-TABOR lawsuit can proceed

Published March 7, 2014 | By CTBC Director

A three-judge panel on the Federal 10th Circuit Court of Appeals ruled Friday that a lawsuit challenging the Taxpayer’s Bill of Rights (TABOR) amendment to the Colorado Constitution may proceed, and remanded the case to federal district court to proceed to trial on the merits.

Byron White Courthouse 10th Circuit Denver

The appeals court ruling addressed only the issue of whether the plaintiffs (33 “educators” and legislators who are “mostly Democrats” with a few token “Republicans”) have legal standing to sue, and whether the lawsuit is barred by the “political question” doctrine, and explicitly did not address the merits (or lack thereof; the case has been widely derided as frivolous and groundless) of the lawsuit:

The merits of the case are not before us. We express no view on the substantive issues and intend none. We consider solely standing and the political question doctrine.  (Ruling at 6)

Establishing standing to sue requires, first and foremost, that the plaintiff “has suffered a concrete and particular injury in fact that is either actual or imminent” – which the court affirmed for the plaintiffs who are current or former legislators, since

Legislator-plaintiffs contend they have been injured because they are denied the authority to legislate with respect to tax and spending increases. (Ruling at 21)

The more significant element of the appeals court ruling addresses the “political question” doctrine – the issue of whether the claims brought by the lawsuit may properly be addressed by the courts at all.

 As a threshold matter, we must decide if the political question doctrine categorically precludesGuarantee Clause challenges against state constitutional amendments adopted by popular vote. (Ruling at 29)

The appeals court concluded that guiding U.S. Supreme Court precedent Continue reading