The TABOR refund limits, set by the Referendum C cap, are about to be reached this year for the first time in a decade. Depending on how this plays out, $30-$100 will be refunded to each taxpayer in our state.
Public services that rely on state funding, such as schools, are concerned about a possible refund. Advocates for these services believe that our state has weathered the recession and as the economy recovers, funding for these services should recover, too.
TABOR, the Taxpayers Bill of Rights, was passed by the Colorado voters in 1992 to limit revenue growth for state and local governments and require any tax increase to be approved by voters. It is a revenue limit based on the previous year’s expenditures and reserve increases with a percentage adjustment based on growth in population plus inflation. Excess revenue raised beyond this limit must be refunded to the voters.
Voters may choose to allow the state to keep the excess money, but TABOR limits the times when such votes may occur. Voters may also exempt their government from TABOR revenue limits for a set number of years. For example, in 2005, Referendum C was passed, allowing the state to keep excess revenue from 2005-2010. Starting in 2010, revenue limit was based on the prior year’s “Referendum C cap” adjusted for inflation and population growth, rather than the prior year’s spending. The Referendum C cap increases each year.
Both types of votes have passed in special districts, school districts and some small cities and in the city and county of Denver.
Amendment 23, which passed in 2000, is a TABOR related vote that directly impacted state education funding. It allows the state government to retain as much of a TABOR surplus as necessary to fund the K-12 provisions the amendment included. No other such statewide vote has passed.
Starting in 2009, revenue shortfalls, due to the recession, negatively impacted the state budget. In order to balance the state budget, the legislature reinterpreted the meaning of Amendment 23 in 2009. This reinterpretation results in nearly $1 billion in cuts to education funding each year. You may hear these cuts referred to as the “negative factor.” This reinterpretation is now being challenged in the Colorado Supreme Court by several school districts and families. (Link to A23 article)
Many questions remain, to include: What do Colorado residents need to do to ensure all services, including public schools, are adequately funded? Are Coloradans willing to forgo a small refund from TABOR and rather, invest in services to replenish funding that was lost during the recession?
We are the only state in the country that makes these important decisions at the ballot box.