Measure tackles TABOR-rebate plan

State Senate President Bill Cadman, R-Colorado Springs, filed a bill that would mend some of the tax-refunding mechanisms outlined in the Taxpayer’s Bill of Rights by shifting more monies in excess of state revenues to the middle class.It’s an important piece of legislation but warrants further explanation, as adjustments to TABOR can often be perplexing.

The Colorado Fiscal Institute, which provides analysis on fiscal and economic issues, assisted Colorado Community Media in breaking down the basics of Cadman’s bill, SB1.

According to the institute, the bill would repeal the current six-tier sales tax refund and implement a three-tier state sales tax refund system in which greater percentages in rebates would be given to individuals with an adjusted gross income between $ 36,000 and $ 117,000.

The bill would annually calculate the adjusted gross income amounts based on the consumer price index.

Under the three tiers, the new mechanism imposed by SB1 would look like this:Tier 1- An AGI of $ 36,000 or less, the rebate will equal to $ 36,000 times the single percentage.Tier 2- An AGI between $ 36,000 to $ 117,000 means the rebate amount would be the AGI times the singles percentage.Tier 3 – AGI in excess of $ 117,000, the rebate amount would be $ 117,000 times the single percentage.

Under SB1, the earned income tax credit or EITC refund mechanism, which is far more complicated than the proposed change to the six-tier sales tax refund, would remain unchanged.

“CFI still believes the best investment in the middle class is to restore funding for schools and colleges and to fix our crumbling roads,” said Carol Hedges, executive director of the Colorado Fiscal Institute. “But if voters said they wanted to keep the revenue above the cap, the new structure under Senate Bill 1 actually makes the rebate mechanism better.”

State Sen. Andy Kerr, D-Lakewood, sits on both the Senate education and finance committees.

He said he remains “vehemently neutral” on SB1 but warned of “politically expedient” legislation that only fixes current issues instead of looking ahead to more pressing funding gaps where K-12 and higher education are starved of financial assistance due to state underfunding.

“Colorado is just in such a bad spot with our education funding, we have this negative factor in place that’s preventing three quarters of a million in funding,” Kerr said.

Last week, Republicans on the Senate Education Committee, voted against a bill sponsored by Kerr that would cap tuition increases at 6 percent for in-state undergraduates. Reasons for the party’s rejection stemmed from a concern in limiting funding options for colleges.

“I appreciate the direction of SB1,” Kerr said, but added that funding education also helps to sustain the middle class.

“How are we going to keep the doors of our schools open?” he said. “We have to look long term.”

Cadman did not respond by press time for this report.

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