Under a deal announced by top Democrats this week, Colorado residents can expect temporary income tax cuts and new tax credits for low- and middle-income families this year, with hundreds of millions of dollars left over for refunds owed under the Taxpayer’s Bill of Rights.
That would cover an expected $2 billion surplus under TABOR, the constitutional amendment that limits state revenue growth and requires that excess money be returned to taxpayers.
But in 2025 and beyond? The effects of the deal get real murky, real fast.
A legislative fiscal note for the tax cut measure, Senate Bill 228, predicts Coloradans would get income tax cuts worth over $400 million in each of the next two years, plus over a billion dollars a year in refund checks and a slight cut to the sales tax rate.
But that fiscal analysis is missing a key piece of the package: the large tax credits now moving through the state legislature, which would make future tax cuts far less likely than they initially appear.
The two most significant tax credit measures are House Bill 1311, the proposed family affordability tax credit, which provides up to $3,200 per child to qualifying families, and House Bill 1134, which would expand the earned income tax credit, an antipoverty program that benefits low-income households.
If fully funded, the family tax credit would provide as much as $700 million each year in refundable tax credits to families who make up to $85,000. The earned income tax credit could pay out as much as $200 million annually.
It’s not clear how much of those credits would actually be provided. They’re designed to shrink if the TABOR surplus is expected to be too small to cover their cost.
The income tax cuts are likely to shrink next year as well — if they don’t go away entirely.
To understand why, you have to understand a little about how tax credits affect the TABOR surplus. Under the legislation, the proposed tax credits are not technically a TABOR refund mechanism. Instead, they reduce the amount of revenue collected by the state, which in turn, results in a smaller TABOR surplus.
That may sound like a technicality, but it’s important for the tax deal. The income tax cut would be a refund mechanism — one that takes effect only if there’s over $480 million in the surplus. (Enough to cover a senior property tax break with $300 million left over.)
Moreover, the size of the tax cut depends on how big the surplus is. The maximum cut would take the tax rate down to 4.25% from 4.4%, in years where the leftover surplus exceeds $1.5 billion. But the cut can be as small as 0.04 percentage points — if it happens at all.
This budget year, there’s plenty of money in the surplus to trigger the maximum income tax cut. But in future years, the tax credits will reduce the surplus before the refund mechanisms get triggered. How much they reduce refunds will depend on how many tax credits the legislature approves in the coming days.
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TABOR FORECASTS VARY
Bill sponsor Rep. Chris deGruy Kennedy, a Lakewood Democrat, on Thursday told The Sun he expects there to be enough money in the surplus to fund most of the tax credits and a smaller income tax cut in the second year of the deal.
But that could depend on what else the legislature does before the end of the session. There are a number of other large tax credit bills that have passed at least one chamber and would further reduce the money available for refunds.
To complicate matters further, the revenue forecasts from nonpartisan Colorado Legislative Council staff economists — which are used to provide fiscal estimates on legislation — are quite different from those of the Governor’s Office of State Planning and Budgeting, which lawmakers used to craft next year’s budget.
The legislative staff forecast anticipates a TABOR surplus of $1.8 billion in this budget year, which ends June 30, that would be paid out in 2025. That’s followed by surpluses of around $1.9 billion and $2.3 billion in the next two budget years.
The Office of State Planning and Budgeting, however, expects the state to owe $2 billion in 2025, followed by smaller refunds of $1.3 billion and $1.7 billion.
For context, the major tax credit bills still moving through the legislature — a list that includes help for renters, seniors and affordable housing projects —could be worth as much as $1.4 billion combined next year.
YOU HEARD IT HERE
Soper made the remark Wednesday during the House GOP’s weekly meeting with reporters.
As of this morning, no property tax bill has been introduced, though we know Democrats are working feverishly with Republicans on a proposal. If the legislation has GOP backing, that may prevent a Republican filibuster. But we also hear there may be multiple bills.
The legislative session ends Wednesday. The latest a bill can be introduced and still have enough time to pass is Monday.
THE NARRATIVE
Dave Williams talks ballot measures, elections and abortion during GOP town hall
Colorado GOP Chairman Dave Williams met with about 100 party members Tuesday morning during a Zoom town hall meeting focused on the upcoming elections.
Here are some highlights of the one-hour meeting — a first for Williams — based on a recording provided to The Unaffiliated:
ELECTION INITIATIVES
Williams criticized proposals backed by Kent Thiry, the wealthy former CEO of the Denver-based dialysis giant DaVita.
“The whole goal of Kent Thiry and his financial backers is to eliminate the caucus and assembly process and convert our system,” Williams said. He called the approach a threat to both parties.
That used to be true. Thiry and his associated group, Colorado Voters First, submitted proposed measures for the 2024 ballot that would have eliminated the caucus and assembly process and forced candidates to gather petition signatures instead. But they have abandoned those plans.
Instead, Thiry and Colorado Voters First are pursuing measures that would make Colorado’s primaries open, with candidates from all parties running against each other, after which the top four vote-getters would advance to a ranked choice general election. Thiry also wants to do away with legislative vacancy committees and replace them with special elections.
Nevertheless, Williams encouraged people on the Zoom call to sign petitions for initiatives that would enshrine the caucus and assembly process, as well as closed party primaries, in the state constitution. Another measure being pursued by conservatives would ban ranked choice voting in Colorado at any level.
It’s unlikely, however, that backers of those initiatives have Thiry’s deep pockets, so the initiatives are unlikely to go anywhere.
Meanwhile, Williams said the prospects look good for the party’s federal lawsuit seeking to keep unaffiliated voters from participating in partisan primaries. (A preliminary injunction requested by the GOP was rejected in February and the case may now take years to resolve.)
“We have a Republican-appointed judge,” Williams said. “So it’s a little bit better than what we would normally face.”
But Williams also noted the lawsuit will be moot if voters approve Thiry’s initiative seeking to make Colorado’s primaries open.
GOP CHANCES IN 2024
Williams was bullish on Republicans’ chances in this year’s elections.
“The Democrats sense that they’re about to lose power that they’ve achieved thus far,” Williams said. “They know that the voters are about to restore balance back to the state and give Republicans gains.”
He said polling he’s seen has former President Donald Trump down 5 to 7 percentage points to President Joe Biden in Colorado. Williams said a strong showing by Trump in the state (he lost by 13 percentage points in 2020) could help GOP candidates down the ballot.
Here’s the reality: Mathematically speaking, Republicans cannot win back a majority in November in the Colorado Senate, the House is almost certainly out of reach and the only statewide state-level contest on the ballot is for University of Colorado regent. While the GOP may be able to chip away at the Democratic supermajorities at the state Capitol, the state party’s best chance of a meaningful victory in November is in the toss-up 8th Congressional District.
This year can be, at best, a rebuilding year for Republicans.
ON ABORTION
Williams pushed back against someone on the call who suggested that Republican candidates can’t win elections if they support total bans on abortion.
“The reason we lose on the issue of abortion isn’t because we don’t have the right cut-off date or things of that nature,” Williams said. “Most voters don’t think that taxpayers should be paying for abortion. Most voters don’t think employers should be forced to cover it, or health insurance companies should be forced to cover it. They don’t agree that abortion should be allowed up into the moment of birth. These are things that Republican candidates can and should talk about, because it highlights the extremism of the Democrats.”
STORY: Colorado GOP leader angers candidates, county leaders with primary endorsements
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THE POLITICAL TICKER
COURTS
A federal judge Thursday denied Rocky Mountain Gun Owners’ request for a preliminary injunction halting Colorado’s enforcement of a new state law prohibiting unserialized firearms and firearms parts, known as ghost guns.
ELECTION 2024
Robert F. Kennedy Jr., who is running for president as an independent candidate, will visit Colorado later this month. He will appear at a private reception in Castle Rock on May 18 that is closed to the press and then will host a rally at the Stanley Marketplace in Aurora on May 19. Kennedy’s campaign must gather 1,500 signatures from voters in each of the state’s eight congressional districts to get their candidate on the ballot.
JOINT FUNDRAISER
The Frisch Victory Fund is a new joint fundraising committee that will raise money for Democrat Adam Frisch’s campaign in the 3rd Congressional District, his Mountain Third leadership PAC and the Colorado Democratic Party. Donors may write a single check to be divided among participating committees. Frisch, a former Aspen city councilman who narrowly lost to Republican U.S. Rep. Lauren Boebert in 2022, faces no primary challenger while six Republicans are vying June 25 to face him in the November general election.
TRUMP CONSULTING
Former state Rep. Justin Everett’s Comma Consulting Group is earning $8,000 a month for consulting with Donald Trump’s campaign, according to Federal Election Commission data. Everett is the chairman of the Trump campaign in Colorado.
NEW DEMOCRATIC CONSULTING FIRM
Annie Orloff has left her job as deputy chief of staff at the Colorado Secretary of State’s Office to start a political consulting firm. MAC Group Consulting also includes Michael Whitehorn, former chief of staff to Secretary of State Jena Griswold, and Claire Simonson, who served as deputy finance director for Griswold’s 2022 reelection campaign.
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COLORADO SUN POLITICS & GOVERNMENT STORIES
CONGRESS
Highlights from the week Colorado’s congressional delegation had in Washington
U.S. Reps. Yadira Caraveo, D-Thornton, and Lauren Boebert, a Republican currently representing the 3rd Congressional District, each had bills pass the House this week and move to the Senate.
Caraveo’s bill to give NOAA better capabilities to forecast weather and support communities during wildfires passed the House 341-48 on Monday. She cosponsored the bill with two California Republicans.
Boebert’s Trust the Science Act to remove gray wolves from the Endangered Species Act passed 209-205 on Tuesday. Caraveo was one of four Democrats who voted for the bill.
In a written statement, Caraveo said “farmers and ranchers across Colorado (have) shared with me their concerns about the threat gray wolves pose to their livestock. Agriculture and beef production are critical to Colorado’s economy, so cattle need to be kept out of harm’s way in order for that industry to carry on productively.”
Caraveo was also one of 13 Democrats who voted in favor of a measure denouncing President Joe Biden’s immigration policies. Her 8th Congressional District is one of 22 considered toss-ups in November that could decide control of the House.
Caraveo explained that vote in another written statement: “Congress is ultimately responsible for immigration law, which is why I have pressed for common-sense, bipartisan solutions throughout my first term in office. Given that Republicans are making a spectacle out of this national problem, the president needs to take decisive executive action to establish orderly protocol for migrant crossings at points of entry along the southern border.”
The Colorado delegation was divided on a bill to adopt the definition of antisemitism adopted by the International Holocaust Remembrance Alliance, which passed 320-91. Reps. Jason Crow, D-Centennial; Doug Lamborn, R-Colorado Springs; Joe Neguse, D-Lafayette; Brittany Pettersen, D-Lakewood; and Caraveo voted for the bill. Boebert and Rep. Diana DeGette, D-Denver, voted against it.
DeGette said in a statement that the measure brought by “House Republicans today is their third misguided attempt to penalize colleges and universities with whom they disagree.”
She added: “As college campuses are working to balance their students’ right to free speech and their safety, this bill misses the mark. Stripping critical funding from colleges and universities does not make students safer.”
THE DAILY BEAST: Lauren Boebert met with chants of “Beetlejuice” by George Washington University students
THE BIGGER PICTURE
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Corrections & Clarifications
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