One of Governor Polis’ key requests to balance the state budget using Taxpayer’s Bill of Rights (TABOR) refunds passed out of the legislature and now awaits his signature.
House Bill 26-1419 will recoup almost $300 million in overcollected revenue that would otherwise be returned to Colorado taxpayers, if the measure can withstand legal challenges.
TABOR Roulette
As previously explained, from the first discussions of the governor’s TABOR refund recoupment proposal, legislative staff voiced their concerns to the Joint Budget Committee (JBC) about the measure’s legality.
While bill proponents remain adamant that the retroactive changes to tax collections caused by the passage of the federal One Big Beautiful Bill Act entitle the state to recoup the overcollected TABOR dollars, many remain less confident.
Republican Senator Barbara Kirkmeyer claimed that there is no precedent for recouping TABOR refunds after federal tax changes, especially because the tax collections were certified as accurate.
Additionally, if the legislature gets it wrong, the state could owe taxpayers the money back, with interest, as required by TABOR.
In the final debate before the bill’s passage, even some Democrats voiced their concerns.
“JBC staff, after consulting with OLLS (Office of Legislative Legal Studies), LCS (Legislative Council Staff), and the state auditor, concluded that the refund does not qualify as an over-refund under current statute,” noted Senator Janice Marchman.
Marchman also mentioned that conservative group Advance Colorado had already promised to sue the state over HB-1419 before the bill even passed, a risk she was not eager to pursue.
Regardless, HB-1419 passed mostly along party lines in the Senate, 20-15, with three nays from majority Democrats.
Avoiding Accountability
As previously explained, when the bill was still making its way through the House, an amendment was offered to place the question before voters in the upcoming election.
Given that the bill presents no small tax policy change, and that there would likely be less legal uncertainty with direct voter approval, one might have expected proponents to at least consider the motion.
Instead, hubris and short-term thinking won the day, and the amendment was shot down.
Many supporters of HB-1419 (like Governor Polis) will be gone from under the gold dome without ever needing to confront the potential budget fallout should HB-1419 be found to be illegal.
Meanwhile, it is Coloradans who bear the brunt, as that money not in their hands is money lost to inflation, even if taxpayers do ultimately prevail in court.
