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Your Colo. tax refunds could disappear

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Wednesday, May 6, 2015 8:44 PM
The Democratic-controlled state House passed a bill that could eliminate constitutionally required refunds to taxpayers, but the measure faces stiff Republican opposition in the GOP-controlled state Senate, where its future looks bleak.

DENVER - Colorado taxpayers may not see refunds in the years ahead after a measure advanced out of the Democrat-controlled House on Monday.

But the future of House Bill 1389 is rocky, as Republicans have expressed frustration with the measure, suggesting that it is a tricky way around the constitutionally protected Taxpayer's Bill of Rights, without asking voters for permission.

The bill now heads to the Republican-controlled Senate with only two days left in the legislative session. It passed the House by a party-line vote of 33-31. The bill could be introduced in the Senate as early as Monday.

"We need to put some common sense and some reasonableness back into our budget and the way we fund our investments," said House Speaker Dickey Lee Hullinghorst, D-Boulder, a sponsor of the bill.

The legislation would restructure a fee paid by hospital providers to exempt it from TABOR. The fund is expected to climb past $689 million annually. By restructuring it as an enterprise fund, the cash would not count as revenue subject to refunds under TABOR, thereby allowing lawmakers to spend the money on things such as schools and transportation.

Refunds are paid to taxpayers when the state takes in excess revenue. The hospital-provider fee only adds to that excess, so the proposal would lower that total revenue. The state would still be able to use the fund to meet its purpose, which is to force a higher federal match from the federal government on Medicaid expenses.

Republicans worry that the move would be illegal, suggesting that voters must have a say over any exemption. They point out that the fund is not solely used for hospitals, pointing out that money has been diverted for other uses.

"It's been used for many other things. It's not an enterprise fund. ... That is why it was never designated as an enterprise fund," said Rep. J. Paul Brown, R-Ignacio. "This gets around TABOR. ... It should go to a vote of the people, and in good conscience, even though I would like to vote for this bill, I cannot in good conscience."

The bill came after Gov. John Hickenlooper, a Democrat, presented a plan to lawmakers, asking them to fix the budget conundrum, especially as the state faces looming refunds. Those refunds tie the hands of government from spending on key areas, said the governor's office.

Under the proposal, refunds would be paid to taxpayers from the upcoming budget that begins in July - about $70 million - and an additional estimated $117 million in the following fiscal year. The bill would kick in for the third year, with refunds estimated at around $500 million.

"This is vitally important to the work we're going to do next year," Hullinghorst said. "If we don't do that, we're going to be faced with a budget crisis."

pmarcus@durangoherald.com

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