The Economic and Revenue Forecast presented to the Joint Budget Committee in June showed that the state’s general fund is projected to close out fiscal 2018 with a $1.2 billion surplus.
Since Colorado’s Taxpayer’s Bill of Rights (TABOR) places a cap on annual state tax revenue the state can keep, spend or save, many wonder whether Coloradans will actually see tax refunds in 2020.
Downtown Pasadena with the city hall and the San Gabriel mountains in California.PHOTO: GETTY IMAGES
By The Editorial Board
July 27, 2018 6:41 p.m. ET
As a rare municipality with a AAA credit rating from S&P Global, Pasadena is an oasis of financial stability in California. Yet the city declared a fiscal emergency earlier this year, and the reason is a sign of the progressive times.
In 1978 and 1996, Californians approved two amendments to the state constitution to limit municipal authority to raise taxes. Among other restrictions, Prop. 13 requires the support of two-thirds of voters to raise taxes for a specific local program or project. Under Prop. 218, new taxes can be proposed only during general elections when the city council is also up for a vote.
But there’s a loophole. “In cases of emergency declared by a unanimous vote of the governing body,” Prop. 218 says, cities can ignore the timing restrictions. And California lets local leaders determine what constitutes a fiscal emergency. Under that flexible definition, cities can propose taxes whenever they want while still following the letter of Prop. 218. Continue reading
— Margaret Mitchell
We’ll soon see how far we’ve come as a community…whether the public safety tax and school bond and override successes last fall marked a welcome change in attitudes or were only a temporary aberration.
Two of the three, the ones soonest on our ballots, fall easily into the category of “no-brainers” while the third, the community center proposal, will likely generate heated back and forth between now and the city election in April.
It makes no sense, all three county commissioners argued in a public session last week, for Mesa County to not be able to accept state and federal grants for infrastructure and other purposes without busting the TABOR revenue cap but to instead have to turn down such things as a $5 million award for Mind Springs. Ironically, some grants not applied for come from federal severance taxes which flow back through the state and become subject to TABOR when passed on to local governments.
The state Capitol has no air conditioning, yet there was a chilly feel during a Monday morning committee hearing on the funding of state improvement projects.
The Capital Development Committee met with the Deputy Treasurer to find out why funding isn’t in place yet for projects identified as a result of a bill signed into law in 2017.
Democrats on the committee requested that treasurer Walker Stapleton show up to answer questions.
“Why is the state treasurer not here? What does he have going on that is more important than this transaction?” asked State Rep. Chris Hansen, D-Denver.
“Since I’m the one with the details and I’m the one that’s been working on this, I’m the one that volunteered to be here today,” said Deputy Treasurer Ryan Parsell.
“I, for one, am not disappointed that the treasurer is not here. I’m glad that you are here,” said State Sen. John Cooke, R-Greeley.
Stapleton is running for governor against Congressman Jared Polis.
“What I’m hoping we’re not doing here is making this a political football for no apparent reason,” said Rep. Jon Becker, R-Fort Morgan.
To understand the concern with the treasurer’s office and decisions being made, you need to understand the law that created the funding mechanism for the state improvement projects.
In 2017, lawmakers passed SB 267, which removed the Hospital Provider Fee from the state’s general fund and created its own enterprise that does not count against the state’s TABOR limit. The Taxpayer Bill of Rights, which is in the state’s constitution, limits how much government can grow each year and requires the state to refund taxpayer money if it collects too much. Taking the Hospital Provider Fee out of the equation allowed the state to keep more money before hitting the limit.
SB 267 authorized the state to issue certificates of participation (COPs) to fund about $2 billion dollars in road construction projects and pay for other state building improvement projects.
COPs essentially mean the state is selling buildings it owns to get immediate funding, and then they buy the buildings back through a lease-purchase agreement.
A lawsuit challenging the legality of the Hospital Provider Fee, thus the COPs, is going to be heard in Denver District Court in October.
The COPs need to be issued between July 1 and June 30, 2019.
During a political stop last week, Stapleton was asked about not having the COPs issued as of July 1. He was quoted in Westword as saying:
“My paramount concern as the treasurer of Colorado is to make sure we’re not issuing bonds when there is economic uncertainty. Anybody in the capital markets can tell you that from an investment standpoint, when you’re issuing bonds and those bonds are being impacted by pending litigation, which we had nothing to do with, it makes investors skittish. I’m not going to issue bonds when it could negatively impact the credit of Colorado based on hair around the deal resulting from the lawsuit. It would be fiscally irresponsible for me to do so.”
Last week, a spokeswoman for the treasurer’s office told Next with Kyle Clark that the delay was because the office received bad advice from bond counsel, and finally replaced the counsel with a firm that was willing to proceed.
“Bond counsel continued to express uneasiness and discomfort with the pending litigation but asks for more time to research the issue. After that point, discussions largely occurred directly with the Attorney General’s Office and Bond Counsel. During that time, the Attorney General’s office and Treasury began to question whether Bond Counsel’s initial response was correct,” Parsell testified on Monday morning. “It became increasingly clear that bond counsel was not approaching this case with an open mind. Bond counsel was basing their viewpoint off of a 30-year-old case at the expense of precedent that had been set in the interim years. The Attorney General’s Office asked bond counsel to review newer precedent. Bond counsel refused. The Attorney General’s Office also offered Bond Counsel the opportunity to review the state’s defense of the lawsuit. Bond Counsel refused. The Attorney General’s office offered to discuss alternative legal tactics that may give bond counsel comfort. Bond counsel refused.”
List of projects to be funded with 2018-19 COPs:
The treasurer’s office plans to start issuing the COPs on Sept. 26.
‘The legislation gives the treasurer’s office the authority to issue the COPs between July 1 of 2018 and June 30 of 2019. We will meet that deadline with ample time to spare,” said Parsell.
Hansen responded that no one was suggesting the treasurer’s office was breaking the law, just that it was delaying projects 90 days that could cost the state more money.
One of the projects also expecting funding from the issuance of COPs is the widening of Interstate 25 from Castle Rock to Monument.
“Based on the communication that we’ve received from CDOT, the timeline that we have will not interrupt any construction project timing,” said Parsell.
CDOT plans to start the project in November.
What was not answered at the committee hearing was if any of the projects will start later than expected because of the funding delay, or if any of the projects will cost more because of the funding delay.
“It is difficult to ascertain whether any projects were delayed from starting since every funding recipient is aware that funding is contingent on the timing of the COP issuance. The advice I offered was to expect funding in August,” said Kori Donaldson, Legislative Council staffer for the Capital Development Committee. “We don’t have any data about costs associated with the projects starting in October rather than August.”
July 24, 2018 By Sherrie Peif
LAKEWOOD — Republican Senate District 22 candidate Tony Sanchez says there is no doubt a vote for him is a vote for the Taxpayer’s Bill of Rights (TABOR).
Sanchez hopes to replace Andy Kerr, who is term limited, representing Ken Caryl, Lakewood and Edgewater. He firmly believes TABOR is the main reason Colorado weathered the recession the way it did.
“I was on the board of the Colorado Union of Taxpayers, so I am somebody who unequivocally supports TABOR,” said Sanchez, whose challenger Democrat Brittany Pettersen while she was representing House District 28 voted to raise taxes and increase dept under Senate Bill 17-267, which some labeled as the biggest betrayal of TABOR since the Constitutional Amendment was passed in 1992. “Some say it’s an impediment, but it’s the only thing that kept the prosperity of Colorado in place.”
Sanchez said the real problem with the state budget is accountability and the confidence voters have in their legislators.
“What kind of confidence do voters have to raise any taxes if they don’t know where their money is going?” he said. “We have to defend TABOR. It’s a good thing for our citizens to have that voice, to be the final judgment when it comes to that as opposed to their legislator.” Continue reading
Bed tax law suit gets new life
DENVER — Ongoing litigation against the Colorado Department of Health Care Policy & Financing, among others, over a 2009 program that raised taxes via a “hospital provider fee,” has new energy after Cause of Action Institute announced earlier this month it would take on the representation of the plaintiffs in the case.
Cause of Action is a Washington D.C.-based 501(c)(3) organization that according to its website advocates for “economic freedom and individual opportunity advanced by honest, accountable, and limited government.”
Plaintiffs, who were originally represented by Mountain States Legal Foundation, had 60 days to find new counsel after Mountain States withdrew for reasons not related to the case or the plaintiffs.
Lee Steven and James Valvo are the lead attorneys. The Colorado-licensed attorney is Michael Francisco, who while working in the Colorado Attorney General’s office helped to write the defense of Colorado’s Taxpayer’s Bill of Rights (TABOR) in Kerr vs. Hickenlooper, which claimed TABOR was a violation of the U.S. Constitution’s guarantee of a republican form of government. That argument lost.
This case was initially filed in 2015. It asserts the state’s Hospital Provider Fee is actually a tax enacted in violation of the TABOR. Continue reading
CARTOON WORKINGMAN RELUCTANTLY PAYING TAXES. (PHOTO: ADOBESTOCK/PPD/ADIANO)
The best budget rule in the United States is Colorado’s Taxpayer Bill of Rights. Known as TABOR, this provision in the state’s constitution says revenues can’t grow faster than population plus inflation. Any revenue greater than that amount must be returned to taxpayers.
Combined with the state’s requirement for a balanced budget, this means Colorado has a de facto spending cap 
(similar to what exists in Switzerland and Hong Kong).
The second-best budget rule is probably a requirement that tax increases can’t be imposed without a supermajority vote by the legislature.
The underlying theory is very simple. It won’t be easy for politicians to increase the burden of government spending if they can’t also raise taxes. Particularly since states generally have some form of rule requiring a balanced budget.
Basically a version of “Starve the Beast.”
Anyhow, according to the National Council of State Legislatures, 14 states have some type of supermajority requirements.
And more states are considering this reform.
High Court decision could send internet sales taxes to Durango
The city of Durango could see some additional tax revenue thanks to a recent U.S. Supreme Court decision on internet sales, but not enough to solve a projected municipal budget shortfall.
The Supreme Court recently ruled in South Dakota v. Wayfair that states and local governments can require remote retailers with no physical presence in a state to pay sales taxes.
“The Supreme Court has recognized that our tax system has changed, our economy has changed and we need to modernize,” said Ali Mickelson, director of legislative and tax policy with the Colorado Fiscal Institute, a nonpartisan organization.
The new sales tax revenues could bring in an additional $168 million to $262 million to the state of Colorado and local governments, according to a U.S. Government Accountability Office report.
But there are unanswered questions associated with the decision, including when new revenue will start to flow and how much local governments might receive.
“I don’t know that any experts are certain about what’s gong to happen,” Mickelson said.
Residents are invited to learn more about the Mesa County Commission’s proposed ballot question to exempt state grants from the revenue and spending limitations of the Taxpayer’s Bill of Rights, or TABOR, at a town hall meeting on Tuesday, from 5:30 p.m. to 6:30 p.m. at the Old County Courthouse, 544 Rood Ave., in the public hearing room on the second floor.
The commissioners are considering a ballot question to exempt state grants from the county’s TABOR cap, without increasing any taxes. Most of the state grants the county receives are for infrastructure projects, “so this actually grows the private sector, not county government, which should be limited,” Mesa County Commissioner Rose Pugliese said.
Pugliese also said, “This would include pass-through grants for our nonprofits like Mind Springs. If we continue to turn away grants, our taxpayer money will continue to go to the state and be used in other communities for their projects.”
Ongoing litigation against the Colorado Department of Health Care Policy & Financing, among others, over a 2009 program that raised taxes via a “hospital provider fee,” has new energy after Cause of Action Institute announced earlier this month it would take on the representation of the plaintiffs in the case.
Cause of Action is a Washington D.C.-based 501(c)(3) organization that according to its website advocates for “economic freedom and individual opportunity advanced by honest, accountable, and limited government.”
Plaintiffs, who were originally represented by Mountain States Legal Foundation, had 60 days to find new counsel after Mountain States withdrew for reasons not related to the case or the plaintiffs. Continue reading
