Category Archives: Legal Issues

May 03

Objectors unsuccessful at blocking property tax cuts at Title Board

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The Title Board reconsidered its ballot titles for three property tax reduction proposals at its April 30, 2021 meeting.

Opponents were unsuccessful at derailing three ballot initiatives that would cost local governments more than $1 billion in property tax revenue as the Title Board on Friday stuck by its original decision to award a ballot title to the measures.

On April 21, the three-member board concluded Initiatives #26-28 contained a single subject, as the state constitution requires, and consequently set a title that would appear before voters. But objectors Carol Hedges and Scott Wasserman challenged the board’s finding, trigging a rehearing at the Title Board’s final meeting to screen proposals for the 2021 statewide ballot.

As introduced, the initiatives would all reduce the residential property tax assessment rate from 7.15% to 6.5% and cut the assessment rate for all other property from 29% to 26.4%. Nonpartisan fiscal analysts estimated the tax cut would constitute a $1.03 billion hit to local governments, affecting services such as K-12 education and police. Because Colorado’s school financing scheme requires the state to backfill funding for local districts, there would be an extra $258 million in additional state spending each year.

Partially offsetting the sizeable loss in local government revenue would be $25 million that the state could temporarily direct toward localities — if excess income exists that normally would be refunded under the Taxpayer Bill of Rights. The three proposed initiatives would funnel the money toward fire protection, toward reimbursements for the senior homestead tax exemption, toward general relief.

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Apr 23

COLORADO SUPREME COURT School finance tax change arguments heard

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By Erica Meltzer

Chalkbeat Colorado

The plain language of Colorado’s Taxpayer’s Bill of Rights says that to raise taxes from one year to the next requires a vote of the people.

But what if voters agreed to keep school property taxes steady more than 20 years ago and state officials lowered them instead? Does it take another vote of the people to return tax rates to the previous level? Or does increasing them simply correct an error?

That’s the question the state Supreme Court took up Tuesday as lawmakers seek a solution to a vexing problem in school funding.

Colorado lawmakers sent the court a formal question — known as an interrogatory — last month seeking a constitutional ruling before they give final approval to a bill that gradually would increase local property taxes over 19 years.

If approved, the change would generate more than $90 million in new revenue for schools next year and more than $288 million a year when fully implemented. That would take a big bite out of the funding gap that Colorado schools experience when lawmakers hold back education dollars to pay for other priorities — but the money would come from local taxpayers, not state coffers.

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Apr 06

State-Based Policy Groups Launch New Coalition to Oppose Gas Tax Proposal

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State-Based Policy Groups Launch New Coalition to Oppose Gas Tax Proposal

APR 6, 2021 BY AFP

Battle Intensifies After Introduction of Framework, Initial Coalition Expands

 DENVER – Americans for Prosperity-Colorado (AFP-CO) and partners formally launch the Colorado Taxpayers Coalition, a group of local advocacy partners set out to protect Colorado taxpayers by defeating the legislature’s current gas tax proposal and protecting the Taxpayer’s Bill of Rights (TABOR).

AFP-CO is also running a statewide campaign that urges Coloradans to contact their elected official to advise against the bill. These efforts included a poll that revealed constituents in several state senate districts strongly oppose the proposal.

 AFP-CO State Director Jesse Mallory issued the following statement: Continue reading →

Mar 26

Millions more for Colorado K-12 schools? Lawmakers seek court opinion first.

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Current Colorado lawmakers want to slowly increase local school district property taxes without a vote. They say it doesn’t violate the Taxpayer’s Bill of Rights because a generation ago voters agreed to higher rates and state officials improperly lowered them.

Erica Meltzer, Chalkbeat
5:54 AM MDT on Mar 24, 2021

Kellee Nolke talks to her kindergarten class at University Elementary School, 6525 W 18th St, in Greeley in 2019. (Joshua Polson, Special to The Colorado Sun)

This story was originally published by Chalkbeat Colorado. More at chalkbeat.org.

Democratic lawmakers are asking the Colorado Supreme Court to decide whether a proposed tax change that could generate millions for K-12 education is constitutional.

Colorado’s Taxpayer’s Bill of Rights typically requires voter approval for tax increases. This proposal would gradually increase local school district property taxes without a vote under the premise that voters a generation ago agreed to higher rates and that state officials improperly lowered them.

On Friday, after giving initial approval to a bill to phase in higher local tax rates over 19 years, senators took the unusual step of sending what’s called an interrogatory seeking the opinion of the state’s highest court. Republicans Sen. Kevin Priola of Brighton and Bob Rankin of Carbondale joined Democrats in what was otherwise a party-line vote on the resolution.

Supporters hope to get a clear answer before the end of the legislative session and include the prospect of additional revenue in the 2021-22 budget. New local taxes would generate more than $90 million next year and could bring in the equivalent of around $288 million a year when they’re fully implemented.

Supporters believe previous case law indicates the court would agree with their interpretation. Legal experts have said the decision could go either way.

To continue reading this story, please click (HERE):

Mar 18

Here are the new gas and road-usage fees behind Colorado Democrats’ $4 billion transportation plan

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The new fees would start in July 2022 to pay for infrastructure projects, efforts to improve air quality and public transportation initiatives

Jesse Paul
2:00 PM MDT on Mar 18, 2021

With Pikes Peak looming in the distance, traffic flows along Federal Boulevard in Westminster on May 13, 2020. (Andy Colwell, Special to The Colorado Sun)

Colorado drivers would begin paying a new fee of 2 cents on every gallon of gas they purchase starting in July 2022 under legislation Democratic state lawmakers are expected to introduce in the coming weeks.

That fee, which would not require voter approval, would increase to 8 cents per gallon starting in July 2028 under the proposal, which is part of a $4 billion, 11-year effort to raise and spend money for badly needed transportation projects across the state.

Lawmakers, political groups and business interests have been trying for years, without much luck, to find a transportation funding solution. The proposal, which includes a number of other new road-usage fees, is backed by Gov. Jared Polis and also aims to reduce traffic congestion on Colorado’s roads, expand public transportation and improve air quality by making it easier for people to own electric vehicles and spending millions on environmental initiatives.

“We think this is the time that we absolutely have to get something done and something meaningful,” said Senate Majority Leader Steve Fenberg, a Boulder Democrat. “Not a baby step, but a real meaningful step toward solving the transportation problems that we have in our state.”

To continue reading this story, please click (HERE):

Mar 18

New Real Estate Transfer Taxes Are Not Allowed

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New Real Estate Transfer Taxes Are Not Allowed

The Taxpayer’s Bill of Rights includes provisions beyond the required citizen vote on new or higher taxes.

Real estate purchases have much higher values than purchases of consumables.  Purchasers of consumables such as household goods and of durable goods such as appliances and cars must pay a sales tax.  Governments have looked hungrily at real estate purchases as possible sources of taxation, salivating over taking a portion of the value each time there is a sale.

That’s a bad idea.

Our Colorado Taxpayer’s Bill of Rights is comprehensive enough to prevent any government (“district”) from even proposing to add this type of tax.  Because TABOR is written into the state constitution, any government would first have to initiate a statewide vote to overturn this provision before a new tax scheme could even be considered.

There are just a few existing real estate transfer taxes, which were “grandfathered in” upon the 1992 passage of TABOR.  There is a trivially small (.0001) statewide tax, mislabeled a “document fee,” for each sale.  It was initially imposed just to provide an indication of sale price.  There are 12 municipalities that have long-standing transfer taxes, all in the mountains and on the Western Slope.  In addition to a prohibition of new transfer taxes, no rate increase is allowed for any existing transfer tax.  For more detailed information, follow this link: http://thetaborfoundation.org/colorado-real-estate-transfer-taxes/

Colorado constitution (Article X, Section 20), paragraph 8(a) states:  “New or increased transfer tax rates on real property are prohibited.”

The provision was included within the Taxpayer’s Bill of Rights as an additional protection for citizens.  A specific real estate sale might go forward in Colorado, when it otherwise might not quite reach the buyer’s threshold with the additional burden of an onerous transfer tax.

New Real Estate Transfer Taxes Are Not Allowed

Mar 18

Colorado Real Estate Transfer Taxes

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Colorado real estate transfer taxes

  1. State Documentary “Fee” (real estate transfer tax)

Upon the transfer (conveyance) of real property, a state statute gives all Colorado counties the power to collect a real estate transfer tax.  The authorization is found in Colorado Revised Statute 39-13-101 et seq.

Each county assessor is responsible for determining the actual value of any property.  The purpose of this real estate transfer tax is stated in the controlling statute’s legislative declaration as helping to establish what that market value is.  To do so, the assessor’s office needs to maintain a continuing record of the total price paid by purchasers.

The tax is calculated at one penny for every $100 of the purchase price (.01 percent[1]).  As an example, a house selling for $450,000 would see imposed a transfer tax of $45.  Values of real estate under $500 are excluded.

(An additional charge to cover the cost of processing the recorded document may be added to the tax so that the total “doc fee” shown on a closing form is likely higher than the tax.)

The tax is imposed upon transfer of all residential, commercial or other real property.  There are a few exceptions, the primary one being that no government (federal, state or local) must pay the tax, although it must show the purchase price on the recoded document.  Another important exception is the transfer of inherited property.

The law directs the tax be collected when the real estate transfer is to be recorded at the county’s clerk & recorder’s office.  The tax is accepted by the clerk’s office and deposited by the county treasurer to be used as general fund revenue for the county.

The law creating this tax was passed in 1963.  It has not been modified since.

 

  1. Local transfer taxes

There are 12 different towns in the mountains / Western Slope that impose real estate transfer taxes.  These were extant at the passage of the Taxpayer’s Bill of Rights in 1992 and so were “grandfathered in.”  The towns with the tax are shown in the accompanying table.

The constitutional provision created a statewide prohibition on the creation of new transfer taxes or the increase of existing transfer taxes

Towns with authority to impose a real estate transfer tax

 

Town Percentage of purchase price
Aspen 1.5  **
Avon 2.0
Breckenridge 1.0
Crested Butte 3.0
Frisco 1.0
Gypsum 1.0
Minturn 1.0
Ophir 4.0
Snowmass Village 1.0
Telluride 3.0
Vail 1.0
Winter Park 1.0

 

There was no state law governing the adoption of local transfer taxes.  All towns and cities on the list are home rule municipalities and they adopted their real estate transfer taxes pursuant to their constitutional authority under Article XX to do so as a matter of local concern.  This explains why only municipalities, not counties, have legacy transfer taxes that predate the prohibition created in the Taxpayer’s Bill of Rights.

** Actually, two separate taxes totaling 1.5%: Wheeler Opera House RETT 0.5%; Housing RETT 1.0%, and the first $100K is deducted prior to applying the HRETT

This synopsis was written by Penn R. Pfiffner in February 2021.  The author wishes to recognize the assistance of the Colorado Municipal League, which supplied the rates in the table and added language about home rule.

[1] See 39-13-102 paragraph 2(b)

Mar 16

Denver, Colorado Sales Taxes Increased Without Voter Consent

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Denver’s 2021 budget reveals that the city expects to collect $14 million in new sales tax revenues this year by taking advantage of a 2018 United States Supreme Court ruling for the first time. The State of Colorado began collecting new sales tax revenues under the same scheme in 2019.

These tax increases have come without voter consent, raising the question of whether sales tax rates should be lowered to offset the increases.

Key Takeaways

  • A 2018 U.S. Supreme Court ruling allows states and local governments to mandate that out-of-state retailers collect sales taxes from residents when selling online.
  • Denver and the State of Colorado have both created a substantial tax windfalls for themselves after promulgating new tax rules to take advantage of the ruling.
  • The state brought in $80 million in new sales tax revenue in FY 2019-20 as a result of the new rules. Denver projects a $14 million increase in sales tax revenue this year as a result of its changes.
  • Both Denver and the state skirted TABOR. The burden of the new taxes falls on residents, but the changes did not appear on the ballot for voter approval.
  • The new rules effected a tax revenue increase by expanding the sales tax base. Denver should consider offsetting this base increase by decreasing its sales tax rate.

To continue reading this story, please click (HERE):

Feb 12

Petition For Writ Of Certiorari To The Colorado Supreme Court

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In regards to the lawsuit we filed to overturn the Hospital Provider tax and the subsequent abomination of SB267, we are in the phase of appealing to the Colorado Supreme Court.

The motions the Court is considering from the Court of Appeals ruling is that none of us has standing to bring these matters before legal review. That means that discussion of the facts of the dispute are not being addressed. Unlike the appellate level, the Supreme Court does not have to accept the case for review.

Our attorneys at Cause of Action filed the petition on time, as we are the petitioners.
The Respondents (The State of Colorado, Colorado Department of Health Care Financing, Colorado Healthcare Affordability and Sustainability Enterprise, Kim Bimestefer, Colorado Department of the Treasury, and Dave Young) filed a Reply brief on January 28th arguing that since none of us pay the bed tax (not true) that the Supreme Court should not take up the case (or any of the substantive issues including $400 million of new taxing authority).

The last action was Lee Steven writing a reply with his reasoned, thorough, and direct arguments, that we certainly have standing for all the other issues which Defendants ignored, and also that we have standing on the tax vs. fee question that started it all.

I believe that we are indeed fortunate to have such an excellent, skilled professional working on our behalf.

All three written arguments referenced in the preceding paragraph are attached for your perusal, as well as posted on the TABOR website (http://thetaborfoundation.org/lega…/hospital-provider-tax/).

Finally, here’s a response from our local legal counsel, William Banta:
“There should be no more replies, responses, or rebuttals.
The next step should be the Supreme Court’s decision, either granting or denying our request for certiorari (reconsideration of the Court of Appeals decision).”

Penn Pfiffner,
Chairman of the Board of Directors, TABOR Foundation