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The Colorado State Capitol through the Ralph L. Carr Colorado Judicial Center on Tuesday, July 20, 2021, in Denver. (Olivia Sun, The Colorado Sun)

Colorado taxpayers would receive a refund check of roughly $650 or $1,300 next year from the state under a last-minute bill introduced Saturday by Democrats in the legislature.

The measure deviates from the current plan to distribute about $2 billion in Taxpayer’s Bill of Rights refunds in checks based on taxpayers’ income level, with more money being sent to higher earners. Instead, the legislation, House Bill 1311, would make refunds the same for all taxpayers. 

Single filers would receive roughly $650, while joint tax filers would receive $1,300. The checks would be mailed to taxpayers next year after they submit their tax return.

The change would mean the lowest income Coloradans receive nearly $200 more than they were projected to get under the default system, while the state’s highest earners would get hundreds — if not more than 1,500 — dollars less.

A nonpartisan legislative staff analysis of how House BIll 1311 would affect Coloradans’ TABOR refunds. The change would mean the lowest income Coloradans receive nearly $200 more than they were projected to get under the default system, while the state’s highest earners would get hundreds — if not more than 1,500 — dollars less.

The one-year course correction, which hinges on voters approving a separate property tax relief measure poised to be on the November ballot, comes with three days left in the 2023 legislative session and as state lawmakers are racing to work through dozens of other bills. 

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Three days is the minimum necessary to pass a bill in the General Assembly. The 2023 lawmaking term ends Monday at 11:59 p.m.

The bill — sponsored by Democratic Reps. Chris deGruy Kennedy and Mike Weissman, as well as Democratic Sens. Chris Hansen and Nick Hinrichsen — was immediately heard Saturday afternoon in the House Appropriations Committee, where it passed on a 6-4, party-line vote. The measure’s introduction was such a surprise that the bill wasn’t posted on the legislature’s website when the committee hearing began.

Republicans in the House said they had no idea House Bill 1311 was coming and were furious. “Buckle your seatbelt,” said Rep. Rod Bockenfeld, a Watkins Republican, signaling the GOP will mount major opposition of the legislation.

The change also comes after The Colorado Sun reported Monday that the Democratic majority in the legislature was slated to let the refunds be distributed through a default income-based system adopted by the General Assembly in 1999, when Republicans were in charge

Under the system — called the six-tier sales tax refund mechanism — people who make more money get bigger refund checks in the mail. The idea presumes that people who earn more money pay more in taxes over the course of a year.

Until Saturday, Democrats were set set to let the refunds for money collected during the current fiscal year, which ends June 30, be distributed through the six-tier system. That’s even though they have blasted the mechanism as inequitable, arguing that TABOR refunds should go primarily to people who need the money most. 

What is TABOR?

The Taxpayer’s Bill of Rights, or TABOR, is a 1992 constitutional amendment that requires voter approval for all tax increases in Colorado. It also caps government growth and spending, mandating that tax revenue collected in excess of the cap be refunded to taxpayers. The cap is calculated using inflation and population rates.

Read more here.

DeGruy Kennedy said he and Hinrichsen planned to introduce a measure flattening TABOR refunds at the beginning of the 2023 lawmaking term but that they delayed their effort until the property tax relief measure was done, which they expected to be in April. In the end, the property tax bill wasn’t introduced until Monday.

“We decided to hold because we wanted to figure out how the two things interacted,” deGruy Kennedy said Saturday. “And here we are on day 118, finally introducing the bill that we’ve been intending to introduce all along.”

Hansen said consensus on introducing the measure “started to gel” only in the last few days but that the proposal has been discussed among legislators for months.

“The legislature is a bit like a procrastinating student: If you can take one more day, you take one more day,” Hansen said. “Our deadline was today.”

The Sun’s reporting earlier in the week prompted criticism over how the Democratic majority wasn’t acting to change course as they did last year. That helped reignite the conversation about whether to change the TABOR refund process.

In 2022, ahead of the November election, Gov. Jared Polis and Democrats in the legislature made a one-year change, sending out TABOR refund checks much earlier — in August and September — and in amounts that were the same for everyone rather than based on income. Each Colorado taxpayer received $750 or $1,500, depending on whether they were a single tax filer or a joint filer. 

The governor and Democratic state lawmakers celebrated the refunds — branding the checks a “Colorado dividend” — even though the party has in the past pushed to end TABOR refunds and generally loathes TABOR, the 1992 constitutional amendment approved by voters. 

The exact amount of money the legislature will have to refund is in flux. The Governor’s Office of State Planning and Budgeting forecast in March that the state would collect $2.7 billion in excess of the TABOR cap in the current fiscal year. (That’s money that would be refunded in April 2024.)

That amount is subject to change based on economic conditions. The legislature is also planning to tap into potentially hundreds of millions of dollars of the surplus to expand tax breaks for families and lower-income Coloradans and to offer people relief from what is expected to be a sharp rise in property tax bills. And, finally, about $150 million of the TABOR refunds will automatically go to local governments to account for any property tax exemptions claimed by local seniors and disabled veterans.

In the end, the surplus available for refund checks may be closer to $2 billion, according to Colorado Sun estimates. 

Nonpartisan Legislative Council Staff projected in March that, under the six-tier system, Colorado taxpayers with an adjusted gross income of less than $50,001 in 2023, the bottom tier, would get a $480 TABOR refund check if they are a single filer and a $960 if they file jointly. 

LCS projects that people in the top income tier, who have an adjusted gross income of $279,001 or more, would get a $1,514 refund check if they are a single filer and a $3,028 check if they file jointly.

Nonpartisan Colorado Legislative Council estimates for TABOR refund check amounts under the six-tier refund mechanism for taxes collected by the state in the 2022-23 fiscal year, which ends June 30. (Screenshot)

The Bell Policy Center, a liberal-leaning fiscal policy nonprofit, has called the six-tier system unfair. It pointed out in 2021 that 79% of Colorado taxpayers fell into the bottom three tiers. 

The refund mechanism change under House Bill 1311 would only happen if the legislature also passes Senate Bill 303, which would refer the 10-year property tax relief plan to voters in November, called Proposition HH. Voters would have to approve Proposition HH, too, for the flat-rate TABOR refund system to go into effect. 

Rep. Lisa Frizell, a Castle Rock Republican, accused Democrats of holding Coloradans’ TABOR refunds hostage. She unsuccessfully attempted to amend House Bill 1311 to decouple the two measures.

Should Proposition HH not pass, the TABOR refunds would still be distributed, just through the six-tier sales tax mechanism.

DeGruy Kennedy said part of the thinking behind House Bill 1311 is that it will help tenants contend with rent increases caused by rising property tax bills in Colorado stemming from skyrocketing home values. Homeowners would get a break under Proposition HH and renters would get a larger TABOR refund check under House Bill 1311.

That’s why, he said, the two measures were tied together.

DeGruy Kennedy said the measure was drafted in consultation with Gov. Jared Polis’ office.

House Bill 1311 passed the House on a preliminary vote Saturday night. It will get a final vote in the chamber on Sunday before immediately moving to the Senate, where it will have to pass on a preliminary vote Sunday to have enough time to be sent to the governor before the legislature adjourns Monday.

UPDATE: The measure passed the Senate and was sent to the governor at 11:15 a.m. on Monday.

Colorado Sun staff writer Elliott Wenzler contributed to this report.

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Jesse Paul

The Colorado Sun — Desk: 720-432-2229 Jesse Paul is a political reporter and editor at The Colorado Sun, covering the state legislature, Congress and local politics. He is...