Dec
25
Dec
25
EDITORIAL: Colorado tax ‘refunds’ will cost taxpayers dearly
The insult to injury of the TABOR Amendment is back: Colorado must refund hundreds of millions of dollars in taxes to state residents, despite the widespread public needs
As hopeless as it might seem, Colorado must revisit the argument over its ludicrous state tax “refunds” that hurt the state and all of us much more than any individual actually benefits.
If you’re new to these parts, Colorado suffers under a unwieldy and complicated set of restrictive budget laws dubbed the Taxpayer’s Bill of Rights, or TABOR.
The measure was a product of Colorado’s notorious anti-tax crusader Douglas Bruce and misguided state voters who approved the state constitutional amendment in 1992. As it was sold to voters, the measure capped state taxes by requiring that tax increases be approved by voters. But the convoluted and labyrinthine measure does so much more. It not only caps taxes, but it caps spending. Part of the amendment sets government services at a baseline, so that when budgets decrease in lean tax years, a new, lower baseline is set, creating the so-called, dreaded ratchet-down effect.
Dec
25
TABOR rears its ugly head
City Sage
Maybe not, because it’s TABOR time. When Colorado tax revenues increase too rapidly, the Taxpayer’s Bill of Rights and its arcane provisions authored by Douglas Bruce kick in, forcing the state to refund “surplus” tax revenues or ask voters for permission to retain them.
The state constitutional amendment may have seemed simple, transparent and commonsensical to the voters who approved it in 1992, but it isn’t. Sold as a measure that took away the power to raise taxes from spendthrift elected officials, the measure was far more complex.
Bruce wrote every word of the lengthy amendment, explicitly designed to shrink, hobble and defund Colorado governments at every level.
TABOR limits government revenue increases to an annual figure determined by population growth plus inflation. That may sound reasonable, but Bruce’s simplistic formula doesn’t work. It has forced the state to make continual service cuts and defer infrastructure maintenance and construction, because the world Bruce envisioned bears little resemblance to the world we live in.
In the real world, tax revenues may vary sharply during any multi-year period. If revenues are flat for years before rebounding sharply, too bad! The revenue cap starts from zero every fiscal year. The 2005 passage of Referendum C mitigated TABOR’s effects for a few years, and the recession made it irrelevant for a few more. But now it’s back with a vengeance.
Dec
24
Economists: Colorado tax refunds could come year early
Colorado Capitol Dome (Denver Post file photo)
Colorado lawmakers may have to refund money to taxpayers sooner than they initially expected.
Refunds are a sign of Colorado’s booming economy. But they also mean lawmakers will be restricted in how much money they’ll be able to keep and spend under Colorado’s Taxpayer’s Bill of Rights, also known as TABOR. It requires refunds when revenue exceeds the combined rate of inflation and population growth.
State economists giving lawmakers a quarterly revenue forecast Monday gave conflicting estimates about whether refunds are required in the 2015 tax year. Legislative economists say no but warn that the possibility exists.
Gov. John Hickenlooper’s economists predict, however, that the state needs to refund $196.8 million next year because of revenue increases in the current budget year. Lawmakers weren’t expecting refunds until the 2016 tax year, and Hickenlooper’s budget request sets aside nearly $137 million for those.
But the latest predictions by the governor’s economists have increasing revenue collections in cash funds and severance taxes, hence their predictions for sooner-than-expected refunds. Henry Sobanet, Hickenlooper’s budget director, said the state has a revenue cushion to cover most of the $196.8 million that needs to be refunded. Still, about $73 million of that was already budgeted, so the governor’s office will present lawmakers with an adjusted spending plan by Jan. 2 to account for that amount. Continue reading
Dec
22
Colorado budget forecast shows continued growth but TABOR worries ahead
Colorado’s economy keeps getting better, and it continues to be reflected in the amount of money the state takes in from taxes.
That’s the conclusion from the latest estimates from state officials that show overall tax collections continue to improve in the state, coinciding with the continuing improvement in the state’s economy.
Revenue forecasts released Monday from the Office of State Planning and Budgeting (OSPB) and the nonpartisan Legislative Council both showed increases in forecasted revenues. The forecasts are used to set budget priorities for the state government for the remainder of the current fiscal year, which ends on July 1.
The more conservative forecast, from OSPB, suggests that general-fund revenues in the 2015-2016 fiscal year will be $53.6 million more than previously forecast just three months ago, when forecasters agreed that about $1 billion more in revenue would be available to lawmakers for spending on state programs in the coming fiscal year.
Forecasters continue to predict, however, that lawmakers will have to set aside as much as $120 million of the increased revenue to pay refunds to taxpayers mandated by the Taxpayer’s Bill of Rights, which limits the amount of increased revenues the state can take in and how much lawmakers can spend each year. Continue reading
Dec
19
Hickenlooper warns of budget perils to come, thanks to TABOR
Governor John Hickenlooper addresses his supporters at Union Station in Denver, Tuesday, November 4, 2014. (AAron Ontiveroz, The Denver Post)
The month before his second term starts, Gov. John Hickenlooper is painting a bleak picture of Colorado’s future budget situation, even as the state’s economic fortunes improve.
“Some of the things we’ve taken for granted and counted on in terms of our quality of life, we probably won’t be able to continue to afford,” he told the Denver Forum at a luncheon Tuesday.
The reason for the strife, the Democrat made clear, is the state’s constitutional spending limit known as the Taxpayer’s Bill of Rights.
It’s politically volatile to point the finger at TABOR, and Hickenlooper sought to walk a fine line as he raised questions about its impact.
In fiscal year 2016, Colorado is forecasting taxpayer refunds because the state’s revenues are exceeding the inflation-plus-population-growth-cap for the first time in 15 years.
Unless lawmakers seek to keep the money, the refunds will go out the door even as the state struggles to meet its constitutional requirement to fund education under what is known as Amendment 23. The state is short $900 million on education funding, according to analysts. Continue reading
Dec
19
Estimated $15 TABOR refund in 2017 could keep CDOT from getting $271 million for I-70 viaduct plan
A Colorado taxpayer refund of around $15 could keep the Colorado Department of Transportation from getting $271 million for its Interstate 70 viaduct project.
CDOT has been working on a plan to lower the I-70 viaduct, put a cap over some of the road and add two toll lanes in each direction from Interstate 25 to Interstate 225. That project is estimated at $1.2 billion.
CDOT was anticipated $271 million from the state, as a result of a funding mechanism from a Senate bill (SB 228) passed in 2009. However, if Colorado taxpayers are due a Taxpayer Bill of Rights (TABOR) refund, then CDOT’s share of state money would be reduced or eliminated altogether. Continue reading
Dec
18
Coloradans face choice: tax refund or pay for services, governor says
Audio: Gov. John Hickenlooper speaks with Ryan Warner
Newly re-elected Colorado Democratic Gov. John Hickenlooper smiles to applauding supporters as he arrives to deliver his victory speech, at the Capitol, in Denver, Wednesday, Nov. 5, 2014. Hickenlooper won a second term in office, narrowly defeating Republican challenger Bob Beauprez.
(AP Photo/Brennan Linsley)
Democratic Gov. John Hickenlooper says that voters will soon face difficult decisions regarding the state’s finances.Economists predict the state will be forced to refund excess tax money to citizens under to Colorado’s Taxpayer’s Bill of Rights in coming years.
Hickenlooper says that will mean the state may have to cut some essential services. As an example, he says the state won’t be able to provide oversight of nursing homes to the extent it currently does — and at a time when the nursing home population is growing.
Dec
18
DOOM AND GLOOM: Hickenlooper Promises Sky Will Fall If State Gives Tax Refunds
In an interview with Colorado Public Radio, Democratic Governor John Hickenlooper bemoaned the idea that the State of Colorado would have to refund tax dollars to taxpayers as part of the Colorado constitution. From the article:
“Hickenlooper says [giving funds back to taxpayers] will mean the state may have to cut some essential services. As an example, he says the state won’t be able to provide oversight of nursing homes to the extent it currently does — and at a time when the nursing home population is growing.”
Given this dire proclamation that nursing homes will lack oversight – Grandma is in danger! – we assume that the state budget contains absolutely no fat that it could trim from superfluous or wasteful programs. Wait. What’s that? There are areas of massive waste. But, what about Grandma? Here are some suggested areas from which to cut the fat:
- Rein in Connect for Health Colorado’s spending as a recent audit showed that the exchange was blowing through tax dollars, some of which enriched Democratic political operatives, like Hick’s campaign team. While much of the exchange was federally-funded, the state spent at least $20 million in 2013 to support the out-of-control organization. The worst offense? Nearly $40,000 for promotional lip balm. Grandma could have some silky soft lips with $40,ooo in chapstick. Then, there was the firm given $129,000 to engage voters in healthcare – a contract that the audit found to be so incomplete that it was unclear whether campaign finance laws were broken. (We’re guessing yes.)
- Leave the Morrison bridge alone. U.S. Sen. Tom Coburn listed this bridge as one of the worst wastes in the country in his 2014 annual “Wastebook”. Apparently, there was talk about whether the bridge would have to be torn down for not using enough steel manufactured in the United States. We can appreciate the sentiment, but wasting more tax dollars isn’t the answer. This would cost at least $20,000 to fix, according to the report.
Dec
18
You’re a Mean One, Mr. Grinch: TABOR May Take Money from Colorado Schools
PHOTO: Colorado may have to return the $30 million collected so far from the tax on recreational marijuana because of the state’s Taxpayer Bill of Rights, or TABOR law. Photo credit: Meghan Barkley/Flickr.
December 16, 2014
DENVER – At least $30 million has been generated so far by Colorado’s special tax on the sale of marijuana, but some “fine print” in the Taxpayer Bill of Rights (TABOR) law may force the state to refund the money marijuana sales have generated, instead of it going to schools.
According to Proposition AA, passed in 2013, the first $40 million generated by taxes on recreational marijuana would be allocated to build and fix rural schools.
Economist Chris Stiffler with the Colorado Fiscal Institute says the story reads much like a popular holiday cartoon.
“Twice now, voters have said they want to tax marijuana and give it to schools,” says Stiffler. “Now, because of this weird quirk in TABOR, we’re going to have to actually return all the money generated from the marijuana taxes. This is like the Grinch sneaking into town on Christmas Eve and instead of stealing your presents, stealing the roof off the schools.”
The refunds will be issued because the state’s estimate of the total tax revenue it would have at this point was off by less than one percent. That includes all tax revenue, not just the tax on marijuana. Under TABOR, that discrepancy triggers tax refunds. As for how the refund will be handled – one proposal would temporarily lower taxes on recreational marijuana.
Stiffler says the current issue with TABOR is an example of why the amendment creates impractical situations for the state as it enacts policies.
“On paper, TABOR looks really good when you talk about voters’ ability to vote on their own taxes,” says Stiffler. “But when you really think about TABOR, you run into a lot of these unintended consequences. This marijuana rebate, the fact that we have to maybe vote three times to tax marijuana and give it to schools, is one of those consequences.”
Stiffler says it’s likely Colorado voters will have to approve the tax on recreational marijuana an additional time. Last year, 65 percent of voters approved Proposition AA.