Category Archives: Legal Issues

Jul 17

Bed tax law suit gets new life

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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 →

Jul 16

Protecting Taxpayers with Supermajority Requirements

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Protecting Taxpayers with Supermajority Requirements

Cartoon workingman reluctantly paying taxes. (Photo: AdobeStock/PPD/Adiano)

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.

Continue reading →

Jul 16

High Court decision could send internet sales taxes to Durango

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High Court decision could send internet sales taxes to Durango

New revenue would help, but not solve, city’s long-term budget deficit
By Mary Shinn City & health reporter

Sunday, July 15, 2018 7:30 PM
A U.S. Supreme Court decision on internet sales could bring the city of Durango additional sales tax revenue. But unanswered questions surround the new revenue.

JERRY McBRIDE/Durango Herald file

Continue reading →

Jul 16

Bed tax law suit gets new life

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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 →

Jun 14

Colorado’s Taxpayer Bill of Rights (TABOR) Should Be a Role Model for the Nation

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Colorado’s Taxpayer Bill of Rights (TABOR) Should Be a Role Model for the Nation

June 12, 2018 by Dan Mitchell

A balanced budget requirement is neither necessary nor sufficient for good fiscal policy.

If you want proof for that assertion, check out states such as Illinois, California, and New Jersey. They all have provisions to limit red ink, yet there is more spending (and more debt) every year. There are also anti-deficit rules in nations such as Greece, France, and Italy, and those countries are not exactly paragons of fiscal discipline.

The real gold standard for good fiscal policy is my Golden Rule. And the best way to make sure government doesn’t grow faster than the private sector is to have a constitutional rule limiting the growth of government.

That’s why I’m a big fan of the “debt brake” in Switzerland’s constitution and Article 107 in Hong Kong’s constitution.

And it’s also why the 49 other states, assuming they want an effective fiscal rule, should look at Colorado’s Taxpayer Bill of Rights (TABOR) as a role model.

Colorado’s Independence Institute has a very informative study on how TABOR works and the degree to which it has been effective. Here’s a good description of the system.

Colorado voters adopted The Taxpayer’s Bill of Rights in 1992. TABOR allows government spending to grow each year at the rate of inflation-plus-population. Government can increase faster whenever voters consent. Likewise, tax rates can be increased whenever voters consent. …The Taxpayer’s Bill of Rights requires that excess government revenues be refunded to taxpayers, unless taxpayers vote to let the government keep the revenue.

And here are the headline results.

Cumulatively, TABOR refunds have been over $800 per Coloradan, or $3,200 for a family of four. …If Colorado government had continued growing at the same high rate (8.56% compound annual rate) as in 1983-92, the average Coloradan would have paid an additional $442 taxes in 2012. The cumulative two-decade savings per Coloradan are $6,173—or more than $24,000 for a family of four.

Continue reading →

Jun 13

The Grand Junction Area Chamber of Commerce hailed a court ruling a stormwater drainage fee is actually an unconstitutional tax.

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Chamber hails drainage fee court ruling
Article date: Jun 12 2018

The Grand Junction Area Chamber of Commerce hailed a court ruling a stormwater drainage fee is actually an unconstitutional tax.
Drainage remains a problem, however, that will require a collaborative effort to solve, the chamber stated in a news release.
District Court Judge Lance Timbreza ruled a fee assessed by the Grand Valley Drainage District on property owners constitutes a tax imposed without a vote as required under state constitutional provisions. The chamber and Mesa County sued the district in 2016 to halt the fee following eight months of failed negotiations.

“This is a victory for every property owner within the Grand Valley Drainage District boundaries, including many of our business members,” said Diane Schwenke, president and chief executive officer of the chamber. “It upholds the principles of the Taxpayer Bill of Rights and requires the district to convince voters that additional funding is needed, as TABOR clearly intended.”

The district assessed homeowners $3 a month — or $36 a year. Businesses, churches and government entities were charged $3 a month for every 2,500 square feet of roofs and parking lots from which stormwater drains.

Many businesses were assessed annual fees of up to $10,000, Schwenke said.
The chamber remains willing to a play a role in addressing drainage problems, Schwenke said. Collaborative efforts will be required that involve not only the district, but other government entities in the Grand Valley, she said.

The chamber supports a process involving all entities responsible for drainage as well as an exploration of all funding models, she said.
Moreover, more accountability and transparency will be needed regarding how priorities are set for drainage projects, how funds are spent and how funds are leveraged with money from such other sources as grants.

The chamber remains opposed to an impact fee for business expansions, Schwenke said. Business growth improves the economy, creates jobs and adds to the tax base, she said.

http://thebusinesstimes.com/chamber-hails-drainage-fee-court-ruling/

Jun 12

Your TABOR Foundation is suing the State of Colorado

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The TABOR Foundation is suing the State of Colorado over the bed tax termed a “Hospital Provider” charge, which was imposed without voter approval in strict violation of the Taxpayer’s Bill of Rights.  Our lawsuit had to be substantially amended when Senate Bill 17- 267 further flaunted the constitution by increasing the tax limit by $400+ million, defining the hospital welfare program as an off-the-books government business, issuing $2 billion in debt and much else – all without any regard to the requirements in TABOR.

In late March, we learned that our attorneys at Mountain States Legal Foundation had to withdraw.  From our outside observation point, some internal reorganization appears to have been the reason.  From everything that I have seen and heard, neither the TABOR Foundation nor the other three Plaintiffs contributed to the difficult situation.

In early April, Judge Buchanan gave us 60 days to find replacement counsel.

This email is a happy announcement that the TABOR Foundation met that deadline to recruit new attorneys and the hand-off is just about complete.  Yesterday, the TABOR Foundation appeared at a new Hearing as ordered by Judge Buchanan.  With us were the outgoing attorneys and participating by telephone were our new attorneys.  One of the other Plaintiffs, Scott Rankin, also attended.  The Court approved the substitution.  We have pulled together another very strong team so the outlook is positive.  Our new legal representation is by Cause of Action Institute, with Lee Steven and James Valvo stepping into the lead roles.  Our Colorado-licensed attorney is Michael Francisco, who while working in the Colorado Attorney General’s office helped to write the defense of TABOR in Kerr vs. Hickenlooper.

Now that the legal activity may move forward, look for more communications about developments no later than the fall…..

Penn R. Pfiffner
Chairman

Jun 12

Potential TABOR Violation by the City of Lakewood

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A TABOR fan emailed us:
“Lakewood city council wants to keep the $12 million due back to the taxpayers. Stealing is still illegal right?,”

Our President responded, “What was the source of the $12 million?
If collected by the City, what circumstances would it be due back to the taxpayers? Over-collection (that is above the TABOR limit) or something else?”

The response was, “It was on the channel 8 Lakewood City Council meeting last night. Over collection.”

Our response is as follows,
“You asked about a week ago if the TABOR Committee would look into the potential diversion of funds by the City of Lakewood. Continue reading →

Jun 07

Extras on Excise: California’s Take on ‘Tax v. Fee’

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Jun 6, 2018 / by Laura Lieberman

Extras on Excise: California’s Take on ‘Tax v. Fee’

 Due to states’ various ways of classifying and labeling charges, there is often confusion over the difference between taxes and fees. In many instances, there are constitutional restrictions on how states may impose or increase “taxes,” such as voter approval requirements, whereas fee impositions and increases have fewer hurdles. A recent California Supreme Court opinion illustrates how California determines whether a payment to a governmental entity is considered a tax or a fee.

In Calif. Bldg. Indus. Ass’n v. State Water Resources Control Bd., No. S226753 (Cal. May 7, 2018), the Court noted that determining whether a charge is a tax or fee has been a “‘recurring chore’ for California courts” for the past several decades. The courts are tasked with this responsibility because 1978’s Proposition 13, which incorporated Article XIII A into the state constitution (requiring tax increases to be approved by a supermajority in both the Senate and the Assembly), did not originally define “tax” (later amendments defined the term).

For this particular case, the court determined that the charge in question, the water waste discharge fee, was a fee and not an unconstitutional tax. They reached this conclusion by applying the test for identifying regulatory fees from Sinclair Paint Co. v. State Bd. of Equalization, 937 P.2d 1350 (Cal. June 26, 1997), which states that a levy is a regulatory fee if the following apply:

  • The amount of the fee does not exceed reasonable costs of providing the service that it is imposed for;
  • the fee is not imposed for unrelated revenue purposes; and
  • the fee amount has a reasonable relationship to the burdens that the feepayers’ activities or operations create.

Here, the court found that these three requirements were met. The water fee amounts did not exceed the costs for providing the services, the fee structure “explicitly limited fees to the amount necessary to recover the administrative costs of the permit program,” and the state records proved that the water resources control board had used a reasonable allocation methodology. The water waste discharge fee was thus a fee, not a tax, and the board’s decision to increase the fee did not require having the Legislature pass a bill.

Continue reading →

Jun 07

Opinion: Newcomers need to know benefits of Colorado’s Taxpayer’s Bill of Rights

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Opinion: Newcomers need to know benefits of Colorado’s Taxpayer’s Bill of Rights

Jennifer Schubert-Akin and Amy Oliver Cooke
For Steamboat Pilot & Today

The latest Census Bureau data released earlier this year shows that Colorado’s population has grown by nearly two-thirds since 1992, one of the fastest increases in the country. 

If you are part of the more than two million new residents who have arrived over this time, there are a few things you should know: Avoid I-70 on Sundays. We are Coloradans, not Coloradoans. And the Taxpayer’s Bill of Rights is responsible for much of the state’s economic success, which likely drew you here in the first place.

Between 1992 and 2016, median household income in Colorado grew by 30 percent, adjusted for inflation. This growth was more than double the national rate over the same period. Only Minnesota and North Dakota grew by more than 30 percent over this timeframe. Colorado gained $20 billion in adjusted gross income over these years — again, one of the biggest increases in the nation. 

While many other states have struggled with stagnant incomes over this period, what’s set Colorado apart? Its Taxpayer’s Bill of Rights, or TABOR, passed in 1992, which requires state and local governments to ask voters for permission before raising taxes or debt. 

TABOR helped end years of economic stagnation and laid the groundwork for the state’s future success by keeping resources in the hands of Colorado residents who could put them to their highest valued use and checking overzealous government spending. 

TABOR has protected pocketbooks and state solvency from legislators who believe they know how to spend your money better than you. Its requirement that excess revenues must be refunded to taxpayers has also resulted in more than $2 billion being returned to the private economy to be spent at local businesses or saved for retirement.  

 

Continue reading →