What it means to give back your TABOR tax refund
Colorado voters have consistently said no to statewide ballot questions asking for more money to fund local schools and pave roads, but a group of lawmakers hopes voters will say yes to a different question.
The question is Proposition CC, and it asks Coloradans this November whether they want to permanently give up part of their tax refunds guaranteed by the Taxpayer’s Bill of Rights and divide those dollars evenly among transportation, K-12 education and higher education.
The Yes on CC campaign calls the ballot measure a good first step toward investing more in education and transportation — two chronically underfunded parts of the state budget. Opponents say CC is a sneakily worded tax increase that actually gives lawmakers a “blank check” on how the money is spent.
What most people know about the 1992 constitutional amendment called TABOR is that it requires voter approval for any tax increase or bond measure put forth by schools and governments across Colorado. TABOR also created a formula that limited how much those local entities could keep using population numbers and the rate of inflation.
Any tax dollars collected above that
TABOR cap must be returned to taxpayers.
TABOR refunds are sporadic, though. Coloradans will get one for 2019, but the last time a statewide refund occurred was 2015.
How much voters would be giving up if they vote yes on Proposition CC is also a bit of guessing game.
The governor’s office is projecting refunds totaling $1.7 billion over the next three fiscal years.
Legislative economists, however, predict the total will be closer to $542 million. Individual Colorado taxpayers could get as little as $20 total in TABOR returns for 2020, 2021 and 2022, or they could receive as much $248, based on current projections.
How would the money be spent?
The state highway fund would get the transportation dollars, with 60% directed to state projects, 22% for counties and 18% for cities.
Within that spending, at least 15% must be earmarked for transit projects.
Lawmakers would get to decide how to allocate the higher education dollars, andthek-12fundswouldbe doled out to districts on a per-pupil basis.
Critics say that’s not fair because some schools have higher costs. The caveat for all the education dollars is they can’t be used on recurring expenses like raising teacher salaries or reducing class sizes.
Because TABOR refunds aren’t a consistent source of funding, schools will have to use them for one-time spending such as bonuses, new textbooks and air conditioning.
“Because of an outdated formula in our constitution we are preparing our students to compete in tomorrow’s job market with yesterday tools,” Great Education Colorado director Lisa Weil said during the pro-cc campaign launch.
The No on CC campaign says there’s no guarantee the money would get spent on the target areas because future lawmakers could pass a new law — not subject to voter approval — to change where it goes or could lower the general fund dollars given to these three areas.
Former Republican Gov. Bill Owens, who fought hard for a temporary TABOR refund timeout back in 2005, opposes Proposition CC for these very reasons.
“I understand the difference between short-term adjustments during funding crises and permanent blank checks that the state government too often wishes it could write itself,” Owens said in a June statement. “Proposition CC is the latter, and for the sake of future generations of Colorado taxpayers, I urge voters to reject it in November.”
What protects these refund dollars from being mismanaged?
A companion bill to the ballot measure that was passed by lawmakers in 2019 requires an annual audit and report detailing how the TABOR refund tax dollars were spent.
Gov. Jared Polis said during the launch of the Yes on CC campaign that this would “ensure accountability to the voters of our state,” but opponents are quick to point out that the previous TABOR timeout, Referendum C, had an annual report too.
“With Ref C, the promise was that a third of the money or more would go to higher education, and that never happened. The legislature simply didn’t do it,” former U.S. Sen. Hank Brown said. “I’d say we’ve heard it before, and it didn’t work out that way.”
Brown was the University of Colorado president back in 2005 and a supporter of the temporary timeout. What soured him on the idea was something Republican lawmakers called the “Ref C shuffle.”
Higher education got $253 million from the measure in fiscal year 2006-07, but it also took a $271 million general fund cut.
Have other Colorado governments done this?
All but four of Colorado’s 178 school districts have already “de-bruced,” the nickname for permanently lifting the limit on the number of tax dollars a government can keep.
Eighty-five percent of Colorado’s municipalities and 51 of its 64 counties have also convinced their voters to let them opt out.
“Again, in the most conservative areas of the state, they have said, ‘Look, rather than trying to raise taxes, why don’t you let us not raise taxes and spend what you already collect?’ ” Polis said. “It just makes common sense.”