Colorado taxpayers are projected to receive refund checks next year that are slightly smaller than anticipated, state economists said Wednesday, though the exact amounts will be determined by whether voters approve a 10-year property tax relief plan on the November ballot.
If the ballot measure, Proposition HH, doesn’t pass, Taxpayer’s Bill of Rights refund amounts will be at least $587 — or $40 less than anticipated — for people who are single tax filers and earn up to $50,000. The refund checks will be at least $1,854 — or about $150 less than anticipated — for people who earn $278,001 or more.
If Proposition HH passes, the TABOR refund checks will be flat rate and not determined by income levels. Under revised data presented to the legislature Wednesday, the checks would be $832 for single tax filers, down from the $898 that was anticipated.
In both cases, the refund amounts are doubled for joint tax filers.
The exact sums could still shift slightly depending on the state’s accounting methods for tax revenue collected in the 2022-23 fiscal year, which ended June 30 and on which the TABOR refunds are based. The checks will be sent out next year after people file their 2023 tax returns.
Greg Sobetski, chief economist for Legislative Council Staff, the nonpartisan agency for the Colorado General Assembly, said Wednesday the downward reduction from the amounts the state estimated in the state’s 2023 ballot guide, also known as the blue book, happened because there has been a larger-than-anticipated number of tax filings in the state. (The blue book is sent to every Colorado voter.)
With more tax filers, the state has to send more refund checks out, meaning the size of the checks is reduced.
In all, the state is expecting to refund about $3.7 billion in revenue that was collected in the 2022-23 fiscal year. The state must refund the money because of the TABOR cap on government growth and spending.
The cap is based on annual growth in population and inflation. Any money collected over the cap must be refunded under TABOR, a 1992 constitutional amendment approved by voters.
The updated TABOR refund amounts were presented Wednesday to the legislature’s Joint Budget Committee as the panel received two tax revenue and economic forecasts, one from Legislative Council Staff and the other from the governor’s Office of State Planning and Budgeting.
Both forecasts were relatively optimistic. The legislature is expected to thoroughly exceed the TABOR cap through at least the 2024-26 fiscal year, meaning lawmakers will have all the money they are entitled to spend under the fiscal policy.
Elizabeth Ramey, principal economist with Legislative Council Staff, said the risk of recession remains elevated, but that the risk has been dissipating throughout the year.
“Unemployment rates continue to be low and steady in both the state and the nation, which continues to indicate there was a tight labor market,” she said. “Overall and economic data continue to indicate that the economy is resilient, but we do have some pockets of weakness showing up in sectors that are particularly sensitive to interest rates.”
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.
Alex Carlson, long-range planning and fiscal resilience manager for the Office of State Planning and Budgeting, put the risk of recession in the next year at 33%, down from 45%.
“Labor demand could remain stronger than anticipated, despite slowing consumer spending over the course of the next year,” Carlson said.
Gov. Jared Polis celebrated the economic news.
“Colorado’s economy continues to be strong — companies and entrepreneurs are starting and expanding businesses in our state,” the governor said in a written statement.
But Polis acknowledged that “high housing costs contribute to inflation and threaten our economic livelihoods.”
The next quarterly forecasts will be presented to the Joint Budget Committee in December ahead of the 2024 legislative session, which begins in January and lasts 120 days.
CORRECTION: This story was updated at 9:15 a.m. Friday, Sept. 22, 2023, to correct the anticipated TABOR refund amount for Colorado taxpayers in 2024. It is $587.