TABOR rule requires state to refund all of 2014-15 pot money
In November 2012, 55 percent of Colorado voters said they wanted to legalize and tax recreational marijuana when they approved Amendment 64. One year later, 65 percent of Colorado voters approved Proposition AA, a tax plan for recreational marijuana that set up a 15 percent excise tax and a 10 percent sales tax on the newly legal product and directed where those funds would go.
This November, Colorado voters will again be asked about taxing recreational marijuana.
“May the state retain and spend state revenues that otherwise would be refunded for exceeding an estimate included in the ballot information booklet for Proposition AA and use these revenues to provide forty million dollars for public school building construction and for other needs, such as law enforcement, youth programs, and marijuana education and prevention programs, instead of refunding these revenues to retail marijuana cultivation facilities, retail marijuana purchasers, and other taxpayers?”
Under Colorado’s Taxpayers Bill of Rights (TABOR), the state must refund new tax revenues if they exceed revenue estimates published at the time of the vote on the new tax, in this case Proposition AA in 2013.
At the time, state economists published an estimate that the new marijuana taxes would generate $67 million in revenue. For the first fiscal year of the new tax, from July 1, 2014 to June 30, 2015, the taxes generated approximately $66.1 million, below the original estimate and in compliance with TABOR.
The problem stems from the other estimate published at the time: that of the overall non-exempted state tax revenue generated during fiscal year 2014-2015. State economists estimated Colorado would bring in $12.08 billion in non-exempted tax revenue during the last fiscal year, but the state brought in $12.35 billion — $270 million more than the 2013 estimate.
Because the overall revenue was greater than the estimate, a TABOR requirement that has never been triggered since the amendment was approved in 1992 goes into effect. The state must refund the revenue from the new tax, up to the total overage. The revenue from the new pot taxes, $66.1 million, is less than the total overage, $270 million, so the state must refund all $66.1 million, all of the marijuana tax generated during the last fiscal year, to state taxpayers.
That is, unless voters approve Proposition BB this November.
State Senator Pat Steadman, D-Denver, says the state should keep the money in order to fund the types of programs that voters envisioned when they originally approved taxes on recreational marijuana. Steadman was the lead author of Proposition BB, and is now its leading cheerleader. The refund, which is separate from the main TABOR refund that all state taxpayers will receive, is so minor (the average Colorado taxpayer will get $8 back), Steadman says, that the money could be put to better use by the state.
“I don’t think anyone wants these monies refunded. Voters just told us loud and clear a couple of years ago: we want it taxed,” Steadman said on a recent visit to Telluride. “The question on the ballot is actually pretty simple: should we keep all the money from the taxes and spend it on what you said you wanted it spent on, or should we refund it back to marijuana industry, marijuana purchasers and other taxpayers?”
Registered voters should be receiving a Blue Book in the mail shortly detailing how the money would be spent should voters allow the state to keep it. In the meantime, the final draft of the Blue Book and further information about Proposition BB can be found on the state legislature’s website at bit.ly/1FKSRvr.