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Politics and Government

The political stakes for Proposition CC are huge. It’s a test case for a major fiscal overhaul in Colorado.

The supporters of the ballot question to end TABOR's limits on tax collections signaled that the measure is just the first step toward untying the state's fiscal knot

Gov. Jared Polis speaks at a kickoff event in support of Proposition CC, a 2019 ballot measure regarding TABOR spending caps. (John Frank, The Colorado Sun)
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This November, Proposition CC will ask Colorado voters to permanently lift the spending limits in the Taxpayer’s Bill of Rights, but the political stakes embedded in the question are even more consequential. 

The ballot question represents the most significant overhaul to TABOR since voters approved the constitutional provision in 1992, and serves as a test case for a broader Democratic effort to overhaul how the state levies taxes and spends money.

If voters approve Prop. CC, Democratic leaders and their allies believe it would give them momentum for a broader agenda to revamp property tax rates, increase taxes for key priorities and put in place a progressive tax system. If it fails, it raises questions about the viability of future ballot campaigns on fiscal issues.

“This is totally a rehearsal for future efforts, and I think we are learning how to do this in the current political climate,” said Scott Wasserman, the president of the Bell Policy Center, an organization critical of TABOR. 

The ramifications became clear on Wednesday as Gov. Jared Polis and like-minded advocates launched a campaign to win voter support ahead of the Nov. 5 election. 

Polis, a Democrat, called TABOR an “arbitrary, antiquated formula,” and other supporters emphasized that the ballot question is just a start to a broader conversation about needed changes to the state’s fiscal system. 

“I think this is a good first step in educating the voting taxpayers and public about what TABOR does and how it does affect essential services for the state of Colorado,” Treasurer Dave Young, a Democrat, said in an interview after the kickoff event.

For Young and Polis — as well as other Democratic leaders — Prop. CC also serves as a referendum on their leadership in the year since the party took complete control at the state Capitol.

MORE: TABOR faces a reckoning with Prop. CC. Here’s what you should know about its impact on state spending

The evidence of the measure’s outsized importance is evident in fundraising reports. 

Coloradans for Prosperity, the lead supporter who organized the event at Metropolitan State University, reported raising $1.7 million in campaign donations through Sept. 25. Pat Stryker, one of the state’s largest Democratic donors, contributed $350,000 to the effort, and Dan Ritchie, chancellor emeritus at the University of Denver, gave the same. The National Education Association, the Washington, D.C.-based teachers union, gave $200,000.

The stakes are evident to conservative critics, who likewise see Prop. CC as a harbinger of more efforts to allow increased spending and taxes in the future. 

Americans for Prosperity, the national conservative-leaning political organization backed by billionaire Charles Koch, has spent $462,000 fighting the effort, the latest reports show. The group’s local chapter will debut television and radio commercials against the proposition starting Friday.

“If they win this, I think they will argue that Coloradans are changing their minds and will go forward with more changes,” said Michael Fields, the executive director of Colorado Rising Action, a leading opponent of the ballot measure. But at the same time, he said: “If we can beat this, how do they come back with a legitimate campaign to do anything bigger? I think this hampers that.”

MORE: Is Colorado’s 2019 ballot question about TABOR spending caps really a tax hike? The answer is sort of.

Prop. CC is just one part of the fiscal puzzle for Democrats

Prop. CC asks voters for permission to end the current population-plus-inflation growth limits on annual tax revenue — one of two major spending restrictions in TABOR.

In the next three fiscal years, Colorado is estimated to collect between $542 million and $1.7 billion in tax revenue above the cap, according to the latest projections from the governor’s office and legislative economists.

If approved, the money would get split among higher education, K-12 education and transportation needs. If voters reject Prop. CC, then the money would get returned to them as a rebate on their taxes. The Democratic-led General Assembly put it on the ballot with support from only one Republican lawmaker.

The additional revenue allowed would come in years of economic prosperity, but conversely in a downturn, where tax revenues slow, it would not net any more money for the state. And the ballot measure’s supporters acknowledge it’s not the entire fix they think is needed.

“This isn’t the whole solution by any means, but it’s a real step in the right direction,” Ritchie said at the campaign launch event. “The question is really simple: Are we willing to give up our small, temporary refunds to fund some things that really need it in this state?”

MORE: If Prop CC fails, here’s how much you’d get from a TABOR refund

The ballot question does not alter the other major provision in TABOR that requires voter approval for tax hikes. But liberal-leaning organizations are considering bigger changes, including a potential repeal of the constitutional measure.

Democrats and their allies are debating many different options designed to untie a knot of conflicting constitutional provisions that limit lawmakers ability to pay for education and transportation.

In addition, liberal-leaning organizations are proposing a complete revamp of the state’s tax system by abandoning the current flat income tax and moving to a progressive system that makes wealthier earners pay more than lower-income individuals. 

And Polis promised in his campaign for governor that he would take a tax hike to the ballot and win approval to generate more money schools and early education.

MORE: Jared Polis made a lot of promises in bid for governor. Here’s his progress on the 10 biggest.

Asked by The Sun if the fortunes of Prop. CC will impact his ability to pass a tax hike, Polis didn’t answer directly. He called the ballot question “a common sense bipartisan measure.”

Reeves Brown, who led a statewide organization designed to build support for a TABOR overhaul, sees this year’s ballot measure as a starting point with “hugely high” stakes. “This is a very important measure,” he said, because “it paves the way for a more deliberate discussion about what else we can do to untie that knot. This is one thread.”

The Bell Policy Center is one of the prominent groups pushing for broader tax reforms in Colorado, and Wasserman sees the current Prop. CC campaign as a pivot point for the conversation. “This is a very huge opportunity to talk about very real revenue needs,” he said. “I do think we are going to have to have a conversation about taxes down the line.”

If Prop. CC fails, Wasserman and others advocates say it won’t preclude future ballot campaigns for tax increases or other fiscal reforms. “It’s not like we are going away if this fails,” he said, “because the revenue needs aren’t going away.”

Rising Sun