Proposition CC would eliminate TABOR refunds, dedicate revenue to education, transportation
What would Proposition CC do, if passed?
Under Colorado’s Taxpayer’s Bill of Rights, when the state collects revenue over the constitutional revenue limit set by TABOR, local governments and residents receive a refund of that revenue. The first $150 million of revenue above the limit is refunded in the form of reimbursements to local governments equal to revenues lost due to seniors and disabled veterans being excluded from property tax. Money beyond that first $150 million is refunded via a temporary reduction in the income tax rate or sales tax refunds.
Proposition CC would allow the state to keep the revenue it collects over the limit and require it is spent on public schools, higher education and transportation projects.
Proposition CC does not impact federal tax refunds.
Proposition CC is similar to Referendum C, though unlike the older ballot measure, Proposition CC does not have a sunset. Passed in 2005, Revenue C suspended TABOR refunds for five years and directed that money to education, healthcare, transportation and public safety employees pensions.
How much are your TABOR refunds?
The Colorado Legislative Council estimates that during tax year 2020, which would be the first year Proposition CC would take effect if it passes, taxpayers would receive the following TABOR refunds:
- Single filer earning up to $41,000: $26
- Single filer earning $136,000 to $185,000: $56
- Single filer earning $232,100 or more: $79
- Joint filers earning up to $41,000: $52
- Joint filers earning $136,000 to $185,000: $92
- Joint filers earning $232,100 or more: $158.
Because they only occur when the state collects revenue over the cap, refunds aren’t distributed every year. Since TABOR was passed in 1992, the state has issued TABOR refunds nine times, though Referendum C resulted in a raise to the revenue cap, which in turn led to fewer TABOR refunds since 2011.
However, Colorado is forecast to take in enough revenue to grant TABOR refunds over the next three years.
Where would this revenue go?
The ballot language designates the revenue would be divided into thirds, and one-third of the revenue will go to public schools, one-third to higher education and one-third to transportation.
Money allocated to public schools would be disturbed on a per-pupil basis and could only be used for nonrecurring expenses “for the purpose of improving classrooms.”
The transportation money would be allocated with 60% going to the highway users tax fund, 22% to counties and 18% to municipalities.
“I’m still not convinced that this money’s going to be on top of the money that is already being spent on transportation and education,” said Michael Fields, executive director of Colorado Rising Action, a conservative nonprofit opposed to the measure. “You look at what happened with (Referendum) C. The areas that they said would go up didn’t because they moved money out of the budget, so I think there’s a lot of uncertainty. Our argument is that it’s largely a blank check, and that there’s just no guarantee where this money will go.”
House District 26 Rep. Dylan Roberts refuted this, stating that, in addition to the bill that referred Proposition CC to the ballot, the legislature passed House Bill 1258, which sets in statute how the money shall be spent if Prop. CC passes.
“That bill, signed into law by the governor and now in state statute, says that the money can only be spent on those three categories: K through 12, higher education and transportation and requires that an independent audit be performed each year and given to the public that details exactly how the money was spent,” Roberts wrote in an email to Steamboat Pilot & Today.
Is this a tax increase?
Proposition CC does not change the tax rate, but it allows the state government to keep tax revenue that would sometimes be returned to local governments and individual taxpayers. Some people consider that a tax increase.
“When the government keeps and spends more of your money, it’s a tax increase to the average person,” said Fields. “It’s not a tax rate increase, but the language doesn’t say that. I think the ballot language is misleading by starting out by saying ‘without raising taxes.’ The money’s not coming from nowhere. It’s our tax money that would otherwise be going back to us.”
“It’s not a tax increase because it’s not an increase in any tax rate, and it’s not the creation of a new tax,” Roberts said. “This is money that has already been sent to the state through your normal tax filing, and based off of an arbitrary formula that was put in place almost 30 years ago, there’s a cap on the revenues the state collects. Colorado is the only state out of 50 states that has this arbitrary cap. It’s money that you’ve already paid, and it is not an increase in any tax rate. It’s not a new tax.”
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