Increased revenue means refunds on way

The debate over voters’ wisdom in backing the 1992 Taxpayer Bill of Rights resumed last week after it was made apparent that Coloradans can soon expect their first state revenue-related tax refunds in 10 years.

State economists told members of the Legislature’s Joint Budget Committee on Sept. 22 that TABOR-mandated refunds are expected to occur in 2016.

That’s because increased revenues are expected to exceed TABOR limits. TABOR requires the state to refund money to taxpayers when revenues exceed the combined rate of inflation and population growth.

Supporters of TABOR see the constitutional amendment as a way to reign in overzealous spending by lawmakers during rosy economic times. However, opponents believe the measure has crippled the state and local governments from putting the money to good use.

Lawmakers will have to set aside about $ 130 million in refunds in next year’s budget, followed by even larger refunds the following year, which could reach nearly $ 400 million.

That’s not being taken as good news by Sen. Pat Steadman, D-Denver, the vice chairman of the Joint Budget Committee. Steadman estimates that the refunds would equate to about $ 11 per taxpayer the first year – money that he believes could be better spent elsewhere.

“Frankly I’d rather get our schools to where they ought to be before we start sending refunds to taxpayers,” Steadman said. “And I think a lot of taxpayers would agree.”

Steadman is also frustrated by the possibility of the state having to issue taxpayer refunds on revenue that has been collected through recreational marijuana sales.

Unless lawmakers take action, a TABOR technicality would require the state to refund pot dollars that were meant to provide money for school construction.

This means that lawmakers will either have to get creative with legislation to prevent that from happening or they will have to ask voters for permission to keep the money – the same voters who supported the notion of retail pot sales tax money funding school construction in the first place.

“We’re in a position where we may have to refund the total amount of pot tax we collected in the first year and that’s not what voters had in mind,” Steadman said. “And it’s not my fault, it’s not their fault, it’s TABOR’s fault.”

But TABOR-backers believe that budget concerns over tax refunds are being blown out of proportion.

Penn Pfiffner, a former state lawmaker and a longtime TABOR proponent, said the state is expected to see about a 10 percent, or $ 1 billion general fund increase in next year’s budget. So the state isn’t going to miss the relatively small refund that soon will be owed to taxpayers.

“If the government is getting almost 10 percent more, why would it complain about having to return $ 11 per family?” Pfiffner said.

“Government should be on a budget just like a family and new revenues shouldn’t automatically increase government.”​

 

 
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