Two women walk up the steps on the 10th Circuit Court of Appeals in Denver, on Oct. 16, 2018. (John Ingold, The Colorado Sun)

A federal court has revived a lawsuit challenging Colorado’s limits on taxes and spending.

The 10th U.S. Circuit Court of Appeals on Monday said a lower court erred when it ruled that 10 local governments had no legal standing to file a lawsuit seeking to overturn a Colorado constitutional amendment known as the Taxpayer’s Bill of Rights, or TABOR.

In a 2-1 decision, the appeals court said the local governments do have a right to sue, overturning a lower court’s decision. The appellate court didn’t rule on the merits of the lawsuit.

“This case has a long history,” the ruling said. “… This case is rife with difficult issues, and we applaud the district court for its attempts to ‘don waders’ and generate some cognizable structure out of the sludge. Nevertheless, we conclude that it could not properly reach its conclusions at this stage of litigation. Because we hold that the political subdivision plaintiffs are not barred by standing requirements, we reverse.”

TABOR, approved by voters in 1992, requires voter approval for tax increases, and the lawsuit claims that violates the federal law that admitted Colorado as a state.

The lawsuit, filed in 2011, says that putting taxing authority in the hands of voters violates the federal law that admitted Colorado as a state. They say that law requires Colorado to have a republican form of government, and that elected officials should have the power of taxation.

Colorado Attorney General Phil Weiser vowed to defend TABOR against any legal challenges as he campaigned for his job in 2018, despite the fact that the Democrat dislikes the policy.

On Monday, TABOR proponents said they believe the tax policy — a third rail in Colorado politics — isn’t going away.

“We are confident that TABOR will ultimately be upheld,” the conservative group Colorado Rising Action said in a written statement. “People give government its authority, and Coloradans again and again choose having a say on tax increases and the size of government. Not only has this law benefited our state, but it is enormously popular.”

The Democratic-controlled Legislature will ask voters in November’s election to allow the state to retain excess tax revenue. House Speaker KC Becker argued the state should do all it can to address underfunded priorities, especially at a time of sustained economic growth.

TABOR opponents are trying to get a separate measure on the 2020 ballot that repeals it entirely.

Colorado Sun staff writer Jesse Paul contributed to this report.

The Associated Press is an independent, not-for-profit news cooperative, serving member newspapers and broadcasters in the U.S., and other customers around the world. The Colorado Sun is proud to be one of them. AP journalists in more...