Category Archives: Legal Issues

May 30

NTUF Defends Unanimous Win Protecting Taxpayers from Doubled Property Taxes

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NTUF Defends Unanimous Win Protecting Taxpayers from Doubled Property Taxes

by Tyler Martinez  May 29, 2024

Our Taxpayer Defense Center continues to fight for residents in Northern Colorado. Back in March, in a major victory for taxpayers, a unanimous panel of the Colorado Court of Appeals agreed with us that a doubling of the property taxes in a few Northern Colorado counties violated the Colorado Taxpayer Bill of Rights (TABOR).  But the case continues, because the Lower South Platte Water Conservancy District has now sought review from the Colorado Supreme Court. We recently filed our Brief In Opposition.

The case, Aranci v. Lower South Platte Water Conservancy District, involves residents challenging a tax increase by the Water District, arguing it violates Colorado’s Taxpayer’s Bill of Rights (TABOR). The controversy arose when the Water District doubled its mill levy in 2019 without seeking voter approval. The residents filed a class action lawsuit, asserting that this increase violated TABOR, which requires prior voter approval for any tax rate increases, and seeking a refund for what was illegally collected.

The District Court initially ruled in favor of the Water District, finding no violation of TABOR under a narrow exception articulated in Huber v. Colorado Mining Association, which was about a ministerial tax adjustment based on inflation. However, upon appeal, the Court of Appeals unanimously reversed, declaring the mill levy increase was not ministerial and holding for the residents on five independent grounds.  Continue reading →

May 14

Gaines: Getting back from the state what we’re owed under TABOR

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Pretend that your employer accidentally overpaid you, say $20 extra a month for a couple years.  Neither of you notice until one day you get an email telling you about the mistake.  The mistake has been fixed and your pay will be $20 less going forward.  Also, you now owe your employer $240.  Not a pleasant thing to consider.
Fresh on the heels of Governor Polis signing the state budget, we got similar bad news.  Due to an accounting error there’s a $67 million “oops” in the budget.
The mistake stretches all the way back to the hurried 2020 legislative session and a bill rushed through for Polis’ signature.  SB20-215 created the Health Insurance Affordability Enterprise, another of those government-run “businesses” which attaches a fee to many health insurance policies (any policy regulated by the state’s division of insurance).
These fees go to Governor Polis’ pet reinsurance programs as well as subsidies for low-income residents, including, incidentally, those here illegally.  Like all enterprises, this revenue was not subject to the revenue limits the Taxpayer’s Bill of Rights (TABOR) puts on the government.
So far a pretty standard example of how our legislature likes to meet its priorities, not by the consent of those that foot the bill, but by taking without asking first.  The problem came in because someone, somewhere in the state government, screwed up.  I can’t quite seem to find out the exact details, but someone goofed.  Tax revenues from the state’s general fund were going to this enterprise, as they were supposed to by an earlier law and no one kept the money separate.
They should have been separate because the general fund dollars are decidedly not exempt from TABOR limits.  The state was keeping money above TABOR limits pretty much since the start of this enterprise, shorting us on money we are owed.  As I say above, the exact details of who knew and when are not too clear to me; I have seen different versions in different news stories.  Some say that no one on the legislature’s Joint Budget Committee knew until after the budget was signed, the legislators being kept in the dark while the state controller and the attorney general were trying to see if they did indeed have to return the money.
If you have seen headlines on this problem, you may or may not have noted a discrepancy in the dollar amounts.  Some articles say $67 million, some say $34.  Both are right, but the semantics are important.  The total owed is $67 million:  $33 million for this year and $34 million for the past couple years of overpayments.  If I return to my analogy from before, you could liken the $34 million to the $240 you’d owe your employer, the $33 million to the $20 loss on your current check, and the loss of that $20 per month in the future to the problem the state has in trying to figure out how to fund the enterprise fully going forward.
Going forward is pretty simple.  Perhaps not pleasant, but simple.  A bill is already working its way through the legislature to make sure that this problem doesn’t recur.  Working in descending order, the next problem is how to pay the $34 million overcharge from this year.  That one will likely get paid, at least in part, by not sending general fund revenue to the enterprise this year.
Lastly, the thorniest problem, the one that I think seems to be causing the most heartburn is how to pay taxpayers back the $33 million they’re owed from the last two years.  I had to laugh when I read up on this issue because some Democrats, the same ones that howled about the irresponsibility of using the state’s reserves to help temporarily drop property taxes in the last special session, are now perfectly okay with dipping into said reserves to pay taxpayers back.  Funny how quickly reckless financial irresponsibility isn’t reckless anymore when the political need is big enough.  Tapping reserves carries a couple problems, however.  First, the legislature must enable this to happen because this size of a hit puts us below the statutory minimum, and somehow, at some point in the future, that loss would need to be made up.
Another route open to our legislature would be to reduce spending.  They could simply not spend as much this session and put that money into refunds.  You know, kind of like when you have to forego some spending you wanted due to unexpected bills.
I marvel at this whole story.

Continue reading →

May 09

EDITORIAL: Rein in violations of taxpayer’s rights

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EDITORIAL: Rein in violations of taxpayer’s rights

    •  Updated 

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The 2024 tax and audit season, which generally stretches from mid-January to mid- or late April, hasn’t been quite as challenging as it was in pandemic years, industry experts said.

Government is supposed to be of, by and for the people. That’s why Colorado voters passed the Taxpayer’s Bill of Rights in 1992, forcing the state government and other taxing jurisdictions to obtain voter approval before raising taxes or spending revenues that outpace inflation and population.

Moments after voters passed the law, politicians began routing around it. They began levying and/or raising car registration “fees,” energy production “fees” professional registration “fees,” doing-business “fees,” plastic bag “fees,” phone “fees,” tire “fees,” alcohol “fees” and much more.

Politicians who don’t want to ask for a tax increase — those who think they know what’s best for other peoples’ money — learned early on they could call a “tax” a “fee” and from TABOR become free. Courts, which make up a major component of state and local taxing jurisdictions, have gone along with this ruse.

Boldly flouting federal law, the Colorado Legislature recently passed Senate Bill 184 to impose a “Congestion Impact Fee” on rental vehicles. The money will go to fund passenger rail and other Democratic pet projects marketed as good for the climate.

To continue reading this story, please click (HERE) to at the Denver Gazette.

Apr 27

Martinez: Court sends a reminder; tax hikes require voter consent

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 By Tyler Martinez

In a major victory for taxpayers, a unanimous panel of the Colorado Court of Appeals agreed with the National Taxpayers Union Foundation’s Taxpayer Defense Center (NTUF) that an overnight doubling of the property taxes in a few Northern Colorado counties violated the Colorado Taxpayer’s Bill of Rights (TABOR).

We represented James Aranci and his neighbors, who were shocked to learn in 2020 that their property taxes to the Lower South Platte Water Conservancy District doubled from 2019 to 2020 (and the years thereafter). TABOR mandates a ratification vote of any proposed tax increase or new debt taken on by government entities–including water districts. But there was no vote from Aranci or anyone else. So we came to help in their challenge to this unconstitutional tax increase.

The court held in this case that the doubling of the rate increased the tax revenue to the water district, and thus there should have been a TABOR vote.  The court read the relevant case law in the same way as we did, holding that Huber v. Colorado Mining Association–which was about a ministerial tax adjustment based on inflation–did not apply here, where the water district had a lot of options for balancing its budget.

To continue reading this story, please click (HERE) to go to Complete Colorado.

Apr 15

Democrats unveil new plan to gut TABOR and direct money to anti-poverty measure

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Democrats unveil new plan to gut TABOR and direct money to anti-poverty measure

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Table showing child tax credit amounts for Coloradoans with children age 16 or younger under House Bill 1311 by adjusted gross income level, child’s age and filing status. The credit is available for single filers with an adjusted gross income up to $85,000 and joint filers with a gross income up to $95,000 and decreases as income increases.
Data: Colorado Legislative Council; Table: Axios Visuals; Colorado is forecast to refund $6 billion in surplus tax collections in the next three years.

Colorado is forecast to refund $6 billion in surplus tax collections in the next three years.

Yes, but: Democrats want to redirect one-third, or roughly $2 billion, to parents making less than $95,000 through a child tax credit under a new bill.

  • The maximum tax credit for a child under age 6 would be $3,200 and $2,400 for children 6-16.
  • The amount of the tax credit would decrease by hundreds of dollars for every $5,000 in income, a fiscal analysis shows.

Continue reading →

Mar 24

Water district subject to TABOR vote requirement

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Water district subject to TABOR vote requirement

Water districts are like all other government entities that are subject to the Taxpayer’s Bill of Rights when it comes to voters approving tax increases, the Colorado Appeals Court ruled Thursday.

In a precedent-setting case out of Logan County in the northeast corner of the state, a three-judge panel overturned a lower court’s decision that the Lower South Platte Water Conservancy District that serves four Eastern Plains counties violated TABOR by doubling its mill levy starting in 2019 because it did so without voter approval.

The lower court had ruled in favor of the district, saying its raising of the levy from 0.5 mills to 1 mill did not violate that 1992 constitutional amendment because the water district was formed before TABOR was approved, and is required under the state’s Water Conservancy Act to set a mill levy based on a mandatory and non-discretionary formula.

The water district tried to argue that the Colorado Supreme Court, in Huber v. Colorado Mining Association, allows such mill levy increases because of that formula.

But a three-judge panel said that high court ruling applies to entities that aren’t making a legislative or governmental act for a tax-rate increase, but a non-discretionary duty under pre-TABOR taxing statutes, such as the Colorado Department of Revenue making legally required adjustments to severance taxes. Continue reading →

Mar 22

A TABOR Lawsuit Victory

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Residents in the northeast corner of Colorado contacted the TABOR Committee several years ago about a tax increase imposed without voter approval by their local Water Conservancy District.  Our organization kicked off the response with an attorney’s letter warning the District to reverse course.  It did not.  After other subsequent efforts, a lawsuit was filed by those residents.  Two public interest law firms have done the legal work.

Although a lower court allowed the District to increase taxes, the very good news is that the Colorado Court of Appeals recently ruled for the taxpayers!  The case still can be appealed to the Colorado Supreme Court, and if not heard there, the trial court must still resolve several questions, so the lawsuit will continue.

The importance here is that the Colorado court system has confirmed the primacy of the Taxpayer’s Bill of Rights and protected the taxpayers in that District.

 

Penn Pfiffner
Colorado TABOR

Mar 15

Menten: Open letter to the Colorado Commission on Property Tax

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Dear members of the Commission on Property Tax:

The commission was tasked with providing property tax relief options before the temporary tax adjustments expire at the end of 2024.

The obvious  answer is to restore inflation and growth adjustable property tax revenue caps where they’ve been forfeited in prior elections. Good news – that’s already in the Taxpayer’s Bill of Rights (TABOR) but it needs to be reinforced!

If that doesn’t happen, there will be a hard property tax cap on the 2024 ballot. That’s been clearly stated by two of the proponents of property tax caps if there was insufficient actions from the commission.

Taxpayers want tax caps whether they are hard or inflation adjustable. Taxpayers like me understand that government growth should be relative to the size of the local economy. That is rightly answered in the existing property tax limit contained in TABOR, paragraph 7c, which allows for such growth.

Having sat through all the commission meetings, there’s a few moments I want to highlight.

Bring back the tax caps

In this three minute video, the county assessor from Santa Clara, California described where that state sits now under the Proposition 13 property tax caps. His points illustrate why our Colorado TABOR is ideal. The assessor points out that local California governments didn’t appropriately reduce property taxes in 1978, even referring to property taxes as “money machines.” So, California voters used their right to petition to place a hard tax cap on the ballot, which became Proposition 13. Continue reading →

Jan 12

ALEC on American Radio Journal: Colorado’s Taxpayer Bill of Rights Turns 30

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This month marks the 30th anniversary of Colorado’s Taxpayer’s Bill of Rights (TABOR), which was approved by voters in November of 1992 as a constitutional tax and expenditure limit (TEL). TABOR is considered the gold standard of state fiscal rules because it limits the growth of most of Colorado’s spending and revenue to inflation plus population. If the state government collects more tax dollars than TABOR allows, the money is returned to taxpayers as a TABOR refund. The receipt of tax rebates, totaling $8.2 billion since TABOR passed in 1992, has strengthened Colorado citizens’ confidence in the TABOR Amendment over the years. To learn more about TABOR and effective TELs, read our latest report and visit FiscalRules.org

 

Jan 12

Polis Pitches Tax Cuts, But His Democrat-Run Statehouse Isn’t On Board

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Polis Pitches Tax Cuts, But His Democrat-Run Statehouse Isn’t On Board

Patrick Gleason, Contributor
I cover the intersection of state & federal policy and politics.

Dec 15, 2023,05:40am EST

Colorado Governor Jared Polis (Photo by Michael Ciaglo/Getty Images)
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If Texas Governor Greg Abbott (R) were to coauthor a New Republic column with Paul Krugman or another famous progressive economist touting the benefits of greater government spending, that would surprise many. Yet the ideological analog to that occurred recently, with Colorado Governor Jared Polis (D) coauthoring an article with economist Arthur Laffer, in which they tout the benefits of reduced tax rates. Governor Polis and Dr. Laffer also contend that the Taxpayer’s Bill of Rights (TABOR), Colorado’s thirty one year old constitutional amendment that prevents state spending from growing faster than population growth plus inflation and requires tax hikes to receive voter approval, is flawed.

In their op-ed, published in National Review on December 7, Polis and Laffer lament that tax limitation measures “such as Colorado’s Taxpayer’s Bill of Rights, that focus on tax payments rather than tax rates totally miss the opportunity to address the damage done by high tax rates.” Polis and Laffer bemoan the fact that TABOR surpluses are not automatically refunded in the form of tax rate reductions and instead go out as rebate checks.

“If there is an excess in tax revenues above population growth and inflation, as defined by TABOR, that means tax rates should have been lower but were not,” write Polis and Laffer. “The law serves as a signal that tax rates have been too high. The proper response to this signal is not to have it keep signaling, but to get the message and cut tax rates permanently.”

What’s more, Governor Polis’s stated desire for tax rate reductions is belied by his enactment of a bill that will make it more difficult to pass income tax cuts in the future by ballot measure. That new law, which was signed by Polis in 2021, mandates that citizen-initiated income tax cuts feature poison pill ballot language claiming the measure will reduce funding for education, healthcare, and other priorities, even when that’s not true.

Colorado House Minority Leader Mike Lynch (R) and Senator Byron Pelton (R) introduced a bill during last month’s special legislative session that would have reduced Colorado’s income tax rate from 4.4% to 4.0%. Governor Polis acknowledges the economic benefits of lowering income tax rates in his recent column, yet he did not support that bill, which was killed in committee along party lines.

Click (HERE) to go to Forbes to read the rest of this article