Governor Hickenlooper’s proposed 2016-2017 state budget, released in November 2015, includes $289 million in rebates to taxpayers required by the Taxpayer Bill of Rights (TABOR) while at the same time showing a $373 million general fund budget shortfall.
GSV leaders met with Natalie Mullis, Chief Economist for the State of Colorado, in December to try to understand this quandary. While Colorado is one of the fastest recovering states in the nation following the recession, we operate under unique laws enacted under TABOR in 1992. As such, our state government is restricted on how much revenue the state can keep during the recovery. When certain limits are reached, tax money must be returned to the taxpayers. We are on target to hit those limits this year. Therefore, in coming years, at the same time you are seeing money rebated to taxpayers, you may see funding cut to services that we enjoy in the state, including public education.
So what can be done?
Building a Better Colorado, a bipartisan coalition of Coloradans facilitating conversations across the state about what kind of Government we want in Colorado, hosted a community summit in Longmont in January. GSV leaders participated in this summit. You can find the Issue Overview Brief on their website, with the state financial brief starting on page 18.
One of the Building a Better Colorado conversations centers around how to address the situation of returning money to taxpayers while at the same time cutting budgets for state services. You may hear a lot about two proposals in the coming months.
- Moving the “Hospital Provider Fee” outside TABOR revenue limits: In 2009, the State Legislature created the Hospital Provider Fee to help pay for the state’s portion of Medicaid. These fees fall under the state revenue limits and will trigger the TABOR rebates this year. The legislature will consider a bill this session that would move funds from this fee out from under the TABOR umbrella, delaying for a few years hitting the limit and triggering tax refunds. The legislature could pass this bill without a statewide vote. Denver Post Article
- Placing a statewide “debrucing” initiative on the 2016 ballot: There may be a citizen’s initiative on the November 2016 ballot that would propose removing the TABOR requirement to rebate money back to the taxpayers (also known as debrucing). This would require sufficient signatures be gathered on citizen’s petitions by early August and a favorable vote of the people in November. Many municipalities in the state have passed local debrucing measures, and the state actually had a temporary debrucing from 2006-2011 know as Referendum C, but under current law, when the TABOR limits are reached, rebates must happen. Denver Post Article
Both of these scenarios would allow the legislature to use what the state collects under our current tax rates, in order to provide public services we value.
Grassroots St. Vrain will continue to follow the state finance developments so stay tuned for more information.