Category Archives: TABOR Blog

Feb 15

TABOR And Taxes Have A Big Impact On Seniors In Colorado.

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TABOR is a friend to Colorado seniors

TABOR and taxes have a big impact on seniors in Colorado. TABOR is one of the best friends to seniors in Colorado because it limits the growth of government spending (unless approved by Colorado voters) which, in turn, reduces the need for more taxation. In addition, there are other laws that benefit Colorado taxpayers 55 and older who get a $20,000 retirement income exclusion from state taxes, and the exclusion reaches $24,000 when they reach 65. Seniors may qualify for this exemption of up to 50% of the first $200,000 of property value if they’ve lived in the same house for 10 years. In the November 2000 election, Colorado voters passed a Property Tax Exemption for seniors, known as Referendum A.  It is called the Homestead Exemption Act.

Conversely, a big downside for retirees is that Colorado’s sales taxes (which have a local component) are on the high side and can exceed 11% in some parts of the state. Seniors need to be vigilant about local sales tax increase proposals and local property tax increase proposals that are relentless in requesting more money. Local governments and special districts frequently attempt to elude TABOR restrictions by de-Brucing. As a result, local government tax growth often exceeds the state tax growth rate. Colorado taxpayers have rejected over 20 statewide tax increases since the TABOR amendment to the Colorado Constitution was approved by the voters in 1992. Seniors should oppose de-Brucing efforts at the local level to preserve the TABOR provisions.

Income Tax Range

Excepting the plains, the only thing that is flat in Colorado is the income tax rate. Colorado became a flat tax state in 1987 and has a flat income tax rate of 4.55% (the approval of Proposition 116, which appeared on the November 2020 ballot, reduced the rate from 4.63% to 4.55%). TABOR limits how much its revenue can grow from year-to-year by lowering the tax rate if revenue growth is too high. For example, in 2019, this resulted in a rate reduction to 4.5%. Colorado is only one of nine states in the US with a flat income tax. The others are Illinois, Indiana, Kentucky, Massachusetts, Michigan, North Carolina, Pennsylvania, and Utah. Only Indiana, Michigan, and Pennsylvania have a lower flat tax than Colorado. However, none of these states have a taxpayer’s bill of rights (TABOR) like Colorado does.

Denver and a few other cities in Colorado also impose a monthly payroll tax.

Taxation of Social Security Benefits
Up to $24,000 of Social Security benefits taxed by the federal government, along with other retirement income, can be excluded for Colorado income tax purposes ($20,000 for taxpayers 55 to 64 years old). The exclusion is capped at $20,000 or $24,000 (dependent upon age) regardless of what retirement income is applied. In other words, if a taxpayer has Social Security income, IRA income, and pension income, the cap limits restrict the total exclusion to $20,000/$24,000.

Continue reading →

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

Feb 04

Colorado taxpayers will be asked for more…

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Colorado taxpayers will be asked for more…

As tax season is upon us, there are several considerations worth examining about how Colorado is doing. Colorado, like most states, faces fiscal challenges arising from COVID and the lockdowns. Colorado has one of the most expensive states for real estate and the recent Gallagher vote could result in higher residential property tax burdens for Coloradans in the years to come. The Colorado state pension system (PERA) has one of the worst funding ratios in the nation, suggesting PERA funding shortfalls will present problems for Colorado taxpayers and PERA beneficiaries in the years to come. Further, a low funding ratio could result in credit rating downgrades leading to higher borrowing costs for the state. Colorado has about 25% of the population on Medicaid. This could present significant challenges for the Colorado taxpayers in years to come. There will be calls for more taxes and fees to meet the desires of the Colorado legislature.

Here are several sites for referencing how Colorado fiscally compares to the nation.

 

 

 

 

 

 

Dec 07

Can voters ignore the state constitution when passing an initiative?

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The Other Arizona Election Challenge

Can voters ignore the state constitution when passing an initiative?

By  The Editorial Board

Dec. 6, 2020 5:43 pm ET

Voters wait in line at the Surprise Court House polling location in Surprise, Arizona, Nov. 3.

PHOTO: CHRISTIAN PETERSEN/GETTY IMAGES

 

The outcome of the presidential race isn’t the only election result being contested in Arizona, and the other has even greater consequences for the law. Last week two lawsuits were filed against Proposition 208, the ballot initiative that imposes a new 3.5% tax surcharge to raise an estimated $827 million for education. It passed with 51.7% of the vote.

The suits are challenging whether Prop 208, which passed as a statute, must conform to the state constitution. One suit was filed by businesswoman Ann Siner and retired judge John Buttrick, the other by the Goldwater Institute, the influential Arizona think tank.

The suits claim that Prop 208 contradicts a constitutional amendment that limits the amount of revenue provided to school districts each year. It also overrides another constitutional provision requiring a two-thirds majority of the Legislature to approve a tax increase.

The Legislative Council, a nonpartisan legislative office that reviews bills and ballot measures for form and constitutionality, held that Prop 208’s language exempting the money it raises from an existing cap on education spending “is likely invalid” because it violates express constitutional limits. Supporters went ahead anyway. The state Supreme Court declined to rule on claims that Prop 208 unconstitutionally curtails the Legislature’s authority but said it couldn’t consider the issue until it passed.

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

Jul 22

Voting at a time when voting makes sense!

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Voting at a time when voting makes sense!

July 2020

The Taxpayer’s Bill of Rights (TABOR) includes good government provisions that improve election procedures.

We know that voter turnout is highest for those people who will benefit most directly by the ballot measure.  One way to suppress voter participation is to hold an election at an unusual time or at an unexpected, inconvenient, or difficult time.

Before the Taxpayer‘s Bill of Rights, Colorado elected officials could schedule a special election for a new tax or for a debt measure.  Held in, say, February, the government could hope weather to be really foul, so that even the average taxpayer who thought to vote on the measure might think twice, while those proponents who would benefit from the new tax would be in the majority for whom it was worth the effort to slog to the polls.

The Taxpayer’s Bill of Rights ended that incivility to the citizen.  With TABOR, a vote must happen on the November general election ballot, or if there is a standard election in the spring, (common for many town and city elections) the measure can appear on that municipal ballot.  The only other time a TABOR measure may go before the voters is in odd-numbered years at about the time in November that a general election would take place.

Colorado constitution (Article X, Section 20) paragraph 3(a) states:  “Ballot issues shall be decided in a state general election, biennial local district election, or on the first Tuesday in November of odd-numbered years.”

The Taxpayer’s Bill of Rights greatly improved government operations beyond providing the taxpayer the power to vote on tax increases.

#TABOR
#ItsYourMoneyNotTheirs
#ThankGodForTABOR
#VoteOnTaxesAndFees
#WhyTABORMatters

 

 

 

May 28

TABOR Emergency Taxes at the State level

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TABOR Emergency Taxes at the State level

Emergency taxes are a contingency written into the Taxpayer’s Bill of Rights.  In response to the decline in revenues due to the pandemic economic shutdown, activists on the Left are urging new and higher taxes using the emergency taxes clause.  Unfortunately, the General Assembly has put itself into an impossible situation that will prevent the imposition of any State emergency taxes.  Legislators’ dishonest dealings in good times removes this option today. Continue reading →

May 28

From An Editorial On May 5, 2019: State Could Go Off A Fiscal Cliff

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State could go off a fiscal cliff

By: Barry W Poulson
May 5, 2019

Colorado has created a fiscal cliff; the state is woefully unprepared for the revenue shortfall that will accompany the next recession. Citizens might be surprised to learn that the state has been pursuing imprudent policies that will result in a fiscal crisis when the next recession hits. It is important to understand how the fiscal cliff was created and what we can do about it.

Over the past two decades, Colorado has weakened the fiscal constraints imposed by the Colorado Taxpayer Bill of Rights. TABOR limits the rate of growth in state spending to the sum of inflation plus population growth, regardless of the amount of revenue the state takes in.

But most state revenue is exempt from the TABOR limit. The exempt funds include the revenue from enterprises and the fees collected by government agencies, which have grown rapidly over this period. As a result, over the past decade TABOR has not constrained the growth in spending, and this year the state will spend virtually every dollar of revenue it takes in.

The fiscal cliff is also linked to a rapid growth in debt and unfunded liabilities. While limits are imposed on general obligation debt, there are no limits on the issuance of revenue bonds. These are bonds with a dedicated stream of revenue used to pay off the bonds over time. As state enterprises have grown they have saddled the state with greater debt burdens.

Increasing debt is also incurred in the form of unfunded liabilities. Despite the recent reforms enacted in the Public Employees Retirement Association, unfunded liabilities continue to increase. The official estimate of these unfunded liabilities is $32 billion; but with realistic assumptions regarding rates returns on assets, the actual unfunded liabilities are estimated to be in excess of $100 billion. Continue reading →

May 26

TABOR and COVID 19: We’re All Gonna Pay

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TABOR and COVID 19: We’re all gonna pay

Blog post by Christine Burtt
5/26/2020 – 4 minute read

Let’s face it.  You can’t shut down the economy, borrow trillions of dollars to subsidize households and businesses, and cause massive unemployment in the private sector without getting seriously upside down in tax revenues.

The Colorado state budget will be about $3.3B in the hole for FY2021, and that doesn’t include deficits in county and special district budgets.

If Legislatures over the years had honored the requirement of the Taxpayer’s Bill of Rights to stash away an emergency fund, we’d have roughly $1B in cash right now.  Instead of a lockbox of cash, illiquid government buildings were determined to be assets counted toward the emergency fund. Anybody have cash to buy a government building?  But I digress….

In the Democrat-controlled Colorado Legislature, raising taxes is the easy answer to a budget shortfall. The short-term exercise is to reconcile what is “essential” vs “nice to have.”

In reality, government mandated services like administering food stamps, running elections, law enforcement, infrastructure, and paying public employee retirement benefits will be protected. But other programs funded for ideological wish-lists may be delayed – until they can raise taxes.

The most likely ways to raise taxes include: Continue reading →

May 19

Worst Public Pension Quarterly Results Reported-Reality Is Far Worse

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Public pensions, including PERA, had their worst investment return quarter ever in 1Q20. State pensions, on average, lost 13.2% in the quarter. However, the losses are worse than reported due to secrecy agreements in place regarding their alternative investments position. These highly speculative investments in the PERA portfolio do not have to be reported now. This reality will exacerbate the financial condition of PERA, and other state pensions, and will motivate states, like Colorado, to scream for taxpayer relief. PERA’s funding ratio declined in the very good times (and stock market boom from 2009 to 2019.) The funding ratio will decline even ffurther in the current economic. The coronavirus economy will show that their financial health is now even more problematic. Colorado taxpayers will be the target to bail these pensions out yet again. Taxpayers already contribute more than 2X to PERA than private sector employers contribute to Social Security. For more, see this Forbes analysis:

 

Worst Public Pension Quarterly Results Reported-Reality Is Far Worse

Edward Siedle Contributor


Public pensions just reported their worst quarterly investment performance in over a decade. Thanks to secrecy agreements, reporting delays and valuation wiggle-room granted to hedge funds, private equity, real estate, infrastructure, venture capital and other private asset managers, the full extent of public pension losses has not been disclosed to pension stakeholders.

Getty

Public pensions just reported their worst quarterly investment performance in over a decade. But results related to 25%-50% of their riskiest investments aren’t included. Thanks to secrecy agreements, reporting delays and valuation wiggle-room granted to hedge, private equity, real estate, infrastructure, venture capital and other private asset managers, the full extent of the losses has not been disclosed to pension stakeholders. Complicity with Wall Street allows public pensions to avoid accountability and push bad performance results off until the next quarter, year or even decade.

To continue reading this Forbes article, please click (here): 

Apr 07

“Truth and reason in ballot language!”

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“Truth and reason in ballot language!”
April, 2020

The Taxpayer’s Bill of Rights includes good government provisions that improve election procedures.

There was a time when Colorado elected officials could push for passage of a bond, or for new taxes, but bury the cost very deep into the explanation on the ballot, in hopes that many voters might not notice the magnitude of the tax.

The ballot language would promise all kinds of wonderful outcomes.  Not only would the new revenues for the government solve the problem in perpetuity, but it would bring world peace and even make the voter more handsome!  Then, near the end in the midst of a lot of other promises, would come the information that the cost to the taxpayer would be very, very high.

The Taxpayer’s Bill of Rights stopped that sort of game playing.  Now, the government must put the cost right up front.  It has no option but to state how much the new tax will weigh annually on the taxpayer.  For a new bond, the ballot measure must state at the very beginning how much the total new debt will be and what that means for the total repayment cost.  Only then may the government (“district”) present its reasons for the new taxes.

Another game that the Taxpayer’s Bill of Rights anticipated and which it explicitly prohibits is a government underestimating a revenue number.  If the new taxes exceed the estimate, the entirety of the overage must be refunded the next year and the rate adjusted downward.

Colorado constitution (Article X, Section 20), paragraph 3(c) states:  “Ballot titles shall begin, ‘SHALL (DISTRICT) TAXES BE INCREASED ____ ANNUALLY?’  (or)  ‘SHALL (DISTRICT) DEBT BE INCREASED (principal amount) WITH A REPAYMENT COST OF (maximum..)’.”  Earlier in the same paragraph is the requirement that “if a tax increase exceeds any estimate… for the same fiscal year, the tax increase is thereafter reduced up to 100% in proportion to the …excess, and the combined excess revenue refunded….”

The paragraph was carefully crafted as a good government improvement, with TABOR protecting the taxpayer in ways beyond just voting on tax rates.