Rifts develop quickly during Colorado legislative special session

 –  Reporter, Denver Business Journal

Day one of the Colorado legislative special session ended with House Democrats advancing a bill to fix a mistake that could cost special districts as much as $6.9 million this year — but providing little reason to be optimistic that the measure can make it through the Republican-led Senate.

Legislators are grappling with a drafting error in the signature bill of the 2017 session that removed the ability of special districts to charge sales tax on retail marijuana, a gaffe that could leave districts a combined $6.9 million short on revenue this year if not fixed. The vast majority of that shortage — about $6 million — would be incurred by the Regional Transportation District that provides public transit in the Denver area.

Gov. John Hickenlooper called a special session to deal with the issue, and Democratic leaders in the House and the Senate introduced largely similar bills Monday that would clarify that special districts have authority to charge sales tax on marijuana, not withstanding the wording of SB 267. A fiscal analysis argued that move could salvage about $3.8 million of the $6.9 million that otherwise would be lost if the tax were reinstated as of Nov. 1.

“TABOR may not have anything in there that adds an ‘oops’ clause,” said Rep. Polly Lawrence, R-Roxborough Park. “But looking at the fiscal note, this does have an increase in revenue because we changed tax policy.”

However, House Majority Leader K.C. Becker, the Boulder Democrat who is sponsoring the bill to fix the problem in the House, said that the Colorado Supreme Court has ruled in a previous case that tax credits or exemptions like the one SB 267 inadvertently gave to marijuana sellers can be removed without a vote of the people — as long exemption doesn’t boost revenues beyond a government’s TABOR-imposed revenue cap. Also, Becker argued, only tax-policy changes require such ballot votes, and a mistakenly added clause can’t be considered tax policy.

“You are taking back a tax exemption. You are not talking about a new tax,” Becker said just before the start of Monday’s session. “I don’t think TABOR intended to say ‘Unintended mistakes can’t be fixed.’”

But Republicans on the Senate Transportation Committee immediately killed that chamber’s version of the bill along party lines. Officials such as Senate Majority Leader Chris Holbert, R-Parker, disagreed with interpretations that the issue over SB 267 was the same issue on which the court has weighed in before.

“I did not swear an oath to uphold the opinion of a court. I swore an oath to uphold the Constitution,” Holbert said. “And if there’s a difference of opinion, we have to ask the boss — the voters.”

Business groups such as the Denver Metro Chamber of Commerce, Colorado Competitive Council and South Metro Denver Chamber supported legislation to fix the problem, arguing that services provided by the special districts are important to residents’ quality of life.

Mizraim Cordero, director of government affairs at the Denver chamber, also said the special session offered legislators a way to solve this issue in a pragmatic, rather than divisive, way.

“It’s disappointing that a drafting error that causes a problem could so easily be swept into a political fight,” Cordero said.

Still, Democrats seemed to push the affected organizations to say there would be more serious repercussions. Rep. Leslie Herod, D-Denver, asked if RTD would consider increasing fares or cutting back on service that is specific to elderly riders. And Rep. Dan Pabon, D-Denver, asked if RTD would explain any cuts to angry constituents by blaming the Legislature for its failure to act on the bill.

Rep. Susan Beckman, R-Littleton, suggested an alternative idea might be to take the money raised by the boost in special retail marijuana sales taxes and use it to cover the money lost by the special districts. Hickenlooper said later that he hadn’t heard the idea and that he thought that education and transportation leaders would say they need the new money more. But he said Beckman’s idea was “worth considering.”

“I’m not resigned. There’s a bill working its way through the House. I am still young enough to believe that people, once they begin talking to each other, can work their way through things,” Hickenlooper said at the end of the day. “There were real conversations. We’ll see how they translate up on the second floor (where the legislative chambers are located). But I’m not giving up.”


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