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Colorado’s looming budget cuts have lawmakers questioning the state’s reliance on fees to pay for government services.
Fees have long been seen as a politically attractive option for government officials when they want to fund a new program. That’s not just true in Colorado. But here, fees have unique advantages — as well as downsides — because of the Taxpayer’s Bill of Rights.
On the one hand, they’re an expedient way to raise money for a program without new taxes — which require voter approval in Colorado — and without the need to compete with other priorities like education and health care.
As Joint Budget Committee staff director Craig Harper told the budget-writing panel earlier this month, “there’s a lot of benefit to a program having a dedicated revenue source that they’re not having to fight for as much each year.”
But that logic only holds true in years where there’s room beneath the state revenue cap to increase services.
“A dedicated revenue source competes with everything else in the budget now,” said JBC Chair Jeff Bridges, D-Greenwood Village. “Colleagues will come to me and say, ‘oh no, my bill pays for itself as a fee.’
“Well, actually that fee counts against everything else that we have in the general fund. Every fee is competing with higher ed, with K-12, with all of the programs that we fund,” he said. “Just because something has a fee that supposedly pays for itself doesn’t mean that it’s not taking money away from everything else in the budget.”
Budget writers have been eyeing the state’s fee-driven cash funds with consternation for years because of how they interact with the TABOR cap.
Some fees are collected by government-run enterprises that are exempt from TABOR, but not all are. So when the state is over the cap, every dollar collected through a fee that’s subject to TABOR is a dollar the legislature can’t spend on other services out of the general fund. Instead, that dollar has to be refunded to state taxpayers through the annual refund process.
Last budget cycle, Bridges jokingly declared war on cash funds for that reason — but lawmakers didn’t make much headway in limiting their growth.
This year, cash funds are expected to rise by 7.5% — that’s faster than the 5.8% combined rate of inflation and population growth that determines how much the TABOR cap can grow. The TABOR growth rate is expected to slow to 3.7% next budget year, according to Colorado Legislative Council Staff.
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CORRECTION: The Nov. 19 newsletter incorrectly reported how long it has been since a state senator resigned so soon after winning reelection. It has been more than a decade. In 2010, Democratic state Sen. Chris Romer of Denver resigned shortly after being reelected to his seat to launch a bid to become Denver’s mayor. That bid was ultimately unsuccessful.
SUNSETTING CASH FUNDS?
Gov. Jared Polis’ budget proposal targets cash funds in a number of ways.
The biggest request is to sweep a combined $118 million in interest earnings this year and next that have been generated by 55 state cash funds. That would allow the state to spend that money on general state services. The trade-off is less money for the programs these cash funds were created to fund in the first place, like maintenance, water conservation projects and IT upgrades.
Polis also wants the JBC to reduce car registration fees, asking lawmakers to cut them by $65.1 million just three years after the legislature increased them to fund transportation projects.
JBC members, however, want the administration to go even further. Sen. Barbara Kirkmeyer even suggested putting every cash fund through something similar to the state’s sunset review process, in which lawmakers periodically review whether state entities are serving their purpose and decide whether to keep them around.
“I honestly think we should take a hard look at sunsetting the cash funds for now,” Kirkmeyer, a Republican from Brighton, said during a budget hearing this month. “Maybe some of these things were expansions of programs that we can’t afford. Maybe some of these just need to flat out go away.”
Either way, she said, the onus should be on the administration to defend each cash fund’s continued existence — and explain why the programs they fund deserve the money more than essential services like K-12 and Medicaid in a year when lawmakers are looking to make $1 billion in cuts.
While cash funds are putting more pressure on the state budget than they have in recent years, it’s worth noting that this year isn’t an outlier, historically. The $3 billion the state will collect in cash fund revenue this budget year isn’t that much more than the $2.9 billion it collected in 2015-16 — and it’s actually less if you adjust for inflation. Cash fund revenues are projected to rise to $3.1 billion in the 2025-26 budget year, absent legislative changes.
In the 1992-93 fiscal year — the first state budget under TABOR — the $1.8 billion the state collected in cash funds represented 35% of all the revenue it generated subject to the cap. Today, cash funds are less than 16% of the $19.1 billion TABOR limit.
YOU HEARD IT HERE
The Colorado Democrat made the remark Monday during a virtual town hall with college students.
Hickenlooper said he assumed the Department or Energy or Department of Commerce — or even a nonprofit with a big budget — had a comprehensive plan for how to tackle climate change.
“But there’s no business plan,” he said. “I think that’s partly because we have so much uncertainty about how we measure these points of pollution. It’s just there’s so much uncertainty.”
Here are some other highlights from the event:
STORY: How might Trump’s vow to abolish the U.S. Department of Education impact Colorado schools?
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THE POLITICAL TICKER
SENATE DISTRICT 29 VACANCY
A Democratic vacancy committee in state Senate District 29 will meet Jan. 6 on Zoom to select a replacement for state Sen. Janet Buckner, D-Aurora, who is resigning Jan. 9.
Buckner ran for reelection this year uncontested.
The Democratic vacancy committee in Senate District 31 hasn’t announced when it will meet to pick a replacement for Sen. Chris Hansen, a Denver Democrat who is also resigning Jan. 9 — a day after the 2025 legislative session begins— after winning reelection Nov. 5.
SPACE COMMAND
Add the Colorado House GOP caucus to the bipartisan list of Colorado officials who are lobbying President-elect Donald Trump to keep U.S. Space Command in Colorado.
In a letter addressed to Trump on Friday, legislative Republicans suggested that not only would a relocation be bad for Colorado’s economy, it could also be detrimental to national security.
“Such a move risks economic setbacks not only for our local communities but also for national interests reliant on the seamless operation of our space defense initiatives,” read the letter, signed by Minority Leader Rose Pugliese of Colorado Springs and other House Republican leaders. “The loss of high-paying jobs, increased operational costs, and the potential destabilization of Colorado’s aerospace industry could reverberate far beyond our state’s borders, impacting the nation’s overall economic and strategic outlook.”
READ MORE
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ELECTION 2026
Who has filed paperwork to run for reelection to Congress in 2026
The end of the 2024 election means the beginning of the 2026 election cycle, and as such several members of Colorado’s congressional delegation have already filed paperwork to run for reelection in two years.
The filings let them start raising money, but they could still change their minds about running for reelection between now and Election Day 2026.
Some highlights:
THE DENVER POST: Lauren Boebert briefly joins Cameo, charging $250+ for personalized video messages 🔑
THE BIGGER PICTURE
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