Colorado votes on tax regime embraced by conservatives

Democrats who control Colorado’s Statehouse are asking voters in November to dismantle part of a state tax regime that for decades has served as a model for fiscal conservatives nationwide. Coloradans will decide if the state can permanently keep tax revenue that otherwise would be refunded under limits set by a 1992 constitutional amendment called the Taxpayer’s Bill of Rights, or TABOR.

Democratic lawmakers who won a substantial legislative majority in 2018 elections that pushed this onetime swing state to the left placed Proposition CC on the ballot. They say it’s time to chip away at a formula that has led to multibillion-dollar underinvestment in fast-growing Colorado’s schools and roads. TABOR requires that proponents go to the ballot to let voters decide.

Opponents say it’s just a first step to weaken or eliminate a safeguard that’s allowed the private sector to fuel Colorado’s robust economy and has kept state government growth in check. They’re hoping that voters’ insistent refusal to raise most taxes at the polls since 1992 will hold true Nov. 5.

“This is a rehearsal for future efforts to repeal TABOR,” said Michael Fields, the face of the “No on CC” campaign as executive director of the conservative nonprofit Colorado Rising Action.

“The one thing standing in the way of those who want to grow government is the taxpayers. Most Coloradans don’t like having their power over taxes curbed.”

Carol Hedges, executive director of the liberal Colorado Fiscal Institute, says a tax code unique among the states in that it’s written into the state constitution, rather than in statute, cannot adapt to rapid economic changes or meet the needs of a growing and aging population.

“We tend to put principles and values in state constitutions that don’t change over time,” said Hedges, whose institute estimates that Colorado’s state taxes per $1,000 of income rank a lowly 45th among U.S. states. “Is tax policymaking at the ballot a viable tool for addressing the challenges of a growing state?”

Proposition CC asks voters if the state can keep revenue in those years when it has a surplus and is required to return that money to taxpayers. Any excess revenue would be allocated to transportation and transit, K-12 schools and higher education. Supporters say an annual audit would ensure the funds are spent properly.

Coloradans voted in 2005 to let the state avoid tax refunds for five years. The new ballot question would make that change in tax law permanent. TABOR requires that the government at all levels get voter approval for tax hikes, bonding or revenue retention. Many local municipalities have done so to fund school districts and public safety.

TABOR also sets an annual state income limit that can trigger tax refunds based on a formula that involves population and inflation. Many Democrats say that prevents Colorado from taking advantage of good economic times to fund schools — hundreds of which are on four-day weeks — and aging, and increasingly congested, road network.

Legislative economists estimate the state stands to refund $264 million in the fiscal year 2019-2020 and $143 million in 2020-2021. Anticipated individual refunds next year could range from $20 to $62.

“This is not an assault on TABOR,” House Speaker KC Becker argued during a recent debate, insisting Proposition CC doesn’t raise taxes. “If we want a top-notch state, we need to make the investments in our infrastructure.”

Voters approved TABOR in 1992, an idiosyncratic election year in which Colorado also chose a Democratic presidential candidate — Bill Clinton — for the first time since 1964. Colorado’s population was 3.5 million then. It’s approaching 6 million today.

Fiscal conservatives nationwide celebrated TABOR as another landmark in a tax revolt dating to California’s property tax-slashing Proposition 13 in 1978.

Efforts to duplicate TABOR failed elsewhere, however, though several states adopted limits on spending or revenue collection in their constitutions.

More than $3 million has poured into the campaigns for and against Proposition CC, including monetary and in-kind contributions from the Koch brothers-founded Americans for Prosperity on the “no” side and Colorado billionaire Pat Stryker, a liberal political donor, on the “yes” side.

With TABOR itself potentially on the table — the Colorado Fiscal Institute and others have proposed a 2020 ballot measure to repeal it — Proposition CC will gauge how far Colorado has turned to the left, said Dick Wadhams, former state Republican Party chair. He noted that Democrats’ 2018 triumphs were tempered by voters’ rejection of new taxes for transportation.

“It’s a tough sell,” he said. “I think Colorado voters are comfortable with the idea that the power to raise taxes should reside with voters and not with the Legislature or the governor.”