Face The State Staff Report
Taxpayers who pay someone to take care of their children or businesses that use alternative fuel are at risk of losing the tax credit they benefit from under current Colorado law.
John Ziegler, staff director of the Joint Budget Committee, circulated a list of nearly $1.9 billion of tax credits (PDF) the General Assembly could potentially repeal without a vote of the people. The tax credits have long been considered sacred under the state's Taxpayers Bill of Rights, which requires voter approval of any change in tax policy that results in a net increase of government revenue. But a recent state Supreme Court case has legislators now believing they can cut such credits without running afoul of the state constitution.
Sharon Eubanks, an attorney for the state's Legislative Legal Services, explained to members of the JBC Wednesday the new interpretation in the context of the court's March 16 mill levy decision. The court ruled a tax policy change directly causing a net revenue gain only requires voter approval if the new money exceeds the limit dictated by the Taxpayers Bill of Rights. However, due to the passage of Referendum C, a 2005 ballot measure, TABOR’s revenue limit has been suspended until 2011. As a result, Eubanks concluded that the legislature is free to eliminate Colorado’s tax credits without voter approval.
House Minority Leader Mike May, R-Parker, disagreed with the interpretation and said it completely disregards the intent of TABOR. If the court's ruling gives the legislature this power, he said, “Then the Supreme Court has overstepped their authority."
The 2007 School Finance Act contained a provision that froze the state's mill levy rates, the mechanism used to calculate property taxes. Before the legislation, the rates were rolled back as property values increased to ensure that property taxes remained flat. By freezing the mill levy rates, however, the legislation ensured that property tax revenue went up as property values increased. The Colorado Supreme Court upheld the controversial tax increase, which raised $118 million in its first year.
In a harshly worded statement, May said: "The constitution is not a book of suggestions, it is the law. I'm astounded at the arrogant presumption of authority over an area of the budget long thought to be clearly marked off limits by the constitution. Particularly at a time when Colorado taxpayers are tightening their belts, we should be doing the same before we take more of their money. I believe that much more thought should have been given to this opinion before we embark on going into such uncharted territory.