TABOR & Proposition CC: Providing Context to Colorado's Tax Problem

Blog Post 3: Proposition CC, TABOR, and Future Funding in the Colorado Budget

By Rudolph Zombek

            On November 5, 2019, Colorado Proposition CC was put on the ballot and voted down 53.65% Against to 46.35% For. The full title of the ballot proposal was Proposition CC, Retain Revenue for Transportation and Education TABOR Measure (2019) was designed to keep “state to retain revenue it is required to refund under the Taxpayer Bill of Rights TABOR” (Ballotpedia, 2019).  The Colorado Taxpayer Bill of Rights Amendment which passed in 1992 by the same process that Proposition CC did, in which it was put on the general election ballot for the voters to decide. In 1992 it passed by 53.68% of the vote compared to 46.32% against, a similar ratio but in reverse to Proposition CC’s failure which shows a consistency to keep growth of state government limited (Ballotpedia, 2019). The State Legislature, particularly Democratic representatives have been in a battle to increase government services and size of government since 1992 but they have been limited by the TABOR amendment.

            Colorado differs from Eastern states in that there is more direct democracy built with in the state’s constitution in that the “state legislature can refer amendments and statutes to the ballot, citizens can initiate amendments and statutes through the petition process, and veto referendums and recalls are available as well for the ballot” (Hitt, 2019). Proposition CC was referred by the state legislature and Tabor was initiated by citizens showing a dynamic of government elites vs. the citizens (Ballotpedia, 2019). The legislature wants to expand the size and role of government while TABOR, which started as a citizen initiative was designed to curtail rapid and massive growth of the state government. Though Colorado is trending “Bluer” as of recent elections, the people still want government growth to be curtailed like in 1992 when TABOR was passed (Figure 1). The 54% pro-TABOR and 46% pro-expansion mirrors the general elections of 1992 and 2018 indicating a persistent desire for “fiscal responsibility” from the general citizenry in its elected officials.

Figure 1. Colorado Party Control 1992-2019. Matthew Hitt, Colorado State University November 18, 2019

If the proposition passed it would have allowed “the state would have retained $310 million above the TABOR limit in 2019-2020 and $342 million above the limit in 2020-2021” (Legislative Council of the Colorado General Assembly, 2019). According to the TABOR amendment, “If revenue from sources not excluded from the fiscal year spending exceeds these limits in dollars for the fiscal year, the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset” (Department of Treasury, 2019). Proposition CC was written in respect to constitutional TABOR restrictions, but the voters turned it down. This leaves Colorado Democrats in the legislature with a pickle of how to fund their desired changes to government.

Brian Eason of The Colorado Sun has proposed that Democrats can take 4 options, “raise new fees, exempt existing revenue from the cap, raise the cap by $200 million, and go back to voters” (Eason, 2019). The first option of raising new fees sets a new criterion for fees before TABOR regulates it in the future, so the legislature can set a fresh tax rate. This is the most direct way of raising new revenues and can be done within the Capitol, but this may result in a “backlash by voters” as it “hits their wallets directly (Eason, 2019). The second option is to exempt existing revenues such as “gas taxes or the state hospital fee” which would get it out of the TABOR revenue cap and be able to fund purpose base projects (Eason, 2019). This too may prove unsavory to taxpayers.

The third option is to raise the TABOR cap by $200 million so the state would not be obligated to refund excess revenues but this “never got off the ground when first proposed in 2017” (Eason 2019). The last option is to go back to the voters and ask permission to keep the excess revenues generated in order to fund future projects. This would essentially be a re-balloting of Proposition CC in 2020 “when higher turnouts may pass the proposition” (Eason, 2019). However, the 2019 election made it clear that the taxpayers wanted to keep their refunds. So, how else can the legislature try to keep existing revenues and raise more?

The most direct way is that the Colorado TABOR Repeal initiative (2020) make its path through the initiative process and make its way onto the ballot. The text of the proposal is quite simple, “SECTION 1. In the constitution of the state of Colorado, repeal section 20 of article X” (Ballotpedia, 2019). According to Ballotpedia and Dr. Matthew Hitt of Colorado State University, this initiative would require the “valid” signatures of 124,632 Colorado voters, must be completed in 6 months, and be submitted no later than August 3, 2020 for approval (Hitt, 2019). As this initiative is brand new after the defeat of Proposition CC, time will tell if the parties interested in repealing TABOR can garner the signatures of 124,632 voters in the time allotted.

Figure 2: Colorado Ballot Initiative Signature Requirements. Matthew Hitt, Colorado State University November 18, 2019

            So, in the meantime, the legislature will have to continue to figure out new ways and means of raising and retaining revenues while TABOR is still a valid amendment. However, as observed by the failure of CC the voters of Colorado may turn on Democrats as they want their refunds still and for government to grow within the guidelines of TABOR. The easiest path to raising revenue for the legislature would to vote in new taxes and fees that tie into existing programs. However, if they want to ever be free to legislate taxing and spending, they will need to ramp up a campaign to real TABOR.

References

Ballotpedia. “Colorado Proposition CC, Retain Revenue for Transportation and Education TABOR Measure (2019)” Ballotpedia. 2019. Middleton, WI. Accessed on December 1 , 2019 https://ballotpedia.org/Colorado_Proposition_CC,_Retain_Revenue_for_Transportation_and_Education_TABOR_Measure_(2019)

Ballotpedia. “Colorado TABOR Repeal Initiative”. Ballotpedia. 2019. Middleton, WI. Accessed on December 3 , 2019 https://ballotpedia.org/Colorado_TABOR_Repeal_Initiative_(2020)

Ballotpedia. “Colorado Taxpayer Bill of Rights TABOR, Initiative 1 (1992)” Ballotpedia. 2019. Middleton, WI. Accessed on December 1 , 2019 https://ballotpedia.org/Colorado_Taxpayer_Bill_of_Rights,_Initiative_1_(1992)

Department of the Treasury. “TABOR”. State of Colorado. Denver, CO. February 27, 2019. Accessed on December 1, 2019. https://www.colorado.gov/pacific/treasury/constitutional-provisions-0

Eason, Brian. “With Proposition CC’s failure, Colorado Democrats face a budget crunch in 2020. Here are their 4 options to address it”. The Colorado Sun. Denver, CO. November 27, 2019.Accessed December 3, 2019 https://coloradosun.com/2019/11/27/colorado-taxpayer-refunds-2020-legislature/

Hitt, Matthew. “Legislative Politics Colorado Background”. Colorado State University. Fort Collins, CO> November 18, 2019.

Legislative Council of the Colorado General Assembly. “2019 State Ballot Information Booklet”. State of Colorado. Denver, CO 2019. Accessed December 1, 2019 https://leg.colorado.gov/sites/default/files/images/lcs/2019_blue_book_english_for_web.pdf