PAID FAMILY LEAVE

Did TABOR violations occur? Court to hear claim

By Shelly Bradbury

The Denver Post

The Colorado Supreme Court next week will consider whether the state’s fledgling family and medical leave program violates the Taxpayer’s Bill of Rights amendment to the Colorado Constitution.

The legal challenge, to be argued on Tuesday, focuses on funding for the newly voter-approved program, which will, beginning in 2024, offer up to 12 weeks of paid time off to most Colorado workers who are either sick or caring for their newborns or seriously ill family members.

Also known as Proposition 118, the $1.2 billion program was approved in 2020 by voters in a 57% to 43% vote.

The state will begin funding the program in January 2023 by collecting between 0.45% and 0.9% of employees’ annual pay from employees and their employers, with some exceptions.

That premium could be increased to as much as 1.2% of wages after 2025.

Those premiums are at the center of the legal challenge by Chronos Builders, a Grand Junction homebuilding company, which argues the fees are surcharges on income that violate TABOR, which requires that all income “be taxed at one rate … with no added tax or surcharge.”

Attorneys for Chronos argue that the fee is a surcharge on income and isn’t applied evenly — some people and companies pay a higher percentage of wages than others — and therefore the program’s funding scheme violates TABOR and is unconstitutional.

“Proposition 118’s premium … is an attempt to do with a fee what would be illegal with a tax,” attorney Daniel Burrows wrote for Chronos.

Attorneys for the state argue the premium is not governed by TABOR, in part because the family and medical leave program will be administered through the newly-created Division of Family and Medical Leave Insurance, an enterprise the state says is exempt from TABOR.

The state argues that TABOR is meant to “to prohibit a graduated income tax, not to prohibit income-related fees.”

A Denver District Court judge agreed with the state in December and dismissed Chronos’ lawsuit, leading them to appeal; both sides jointly requested the review by the state Supreme Court.

“Chronos’ reading of (TABOR) should be rejected not only because it contradicts the plain constitutional language, but also because that reading could invalidate important, longstanding programs that calculate fees based on income, like the (unemployment insurance) program,” the government’s attorneys wrote.

“Such a result would cripple basic government functions — both for existing programs and any future programs that require a fee based on income.”

David Kopel, research director at the Independence Institute, a Denver think tank that has defended TABOR, said he does not expect Chronos to succeed in its challenge.

“The Colorado Supreme Court hates the Taxpayers Bill of Rights and has interpreted it with extreme hostility,” Kopel said, giving the challenge a “0%” chance of succeeding.

The Colorado Supreme Court ruled against opponents to the family and medical leave act who before the 2020 election sought to classify the fee as a payroll tax increase during the process of drafting the ballot language.

Penn Pfiffner, chairman of the TABOR Committee, a group that advocates for TABOR, said he found the state’s argument “strained.”

“The constitution is very clear,” he said. “It’s not the role of the courts to bend over backwards and try to redefine a common-sense reading, it is the role of the courts to support the constitution.

“And I think clearly the case shines a bright spotlight on the fact that this initiative was written such as to get around the constitution.”

Shelly Bradbury: 303-9541785, sbradbury@denverpost.com or @shellybradbury

TABOR from page A1 to A5