2024 Colorado Legislative Session: TABOR Takings Tracker

PDF OF FULL REPORT

Author: Erik Gamm and Chris Brown

TABOR Takings Tracker

Legislators placed Coloradans’ TABOR refunds squarely in their crosshairs during the 2024 legislative session, having passed over 100 bills that would slash the TABOR refund to a quarter of its projected size if signed into law. Amid a period of state revenue growth in unprecedented excess of the Referendum C spending cap and a state budget larger than $40 billion for the first time in history, the state’s legislative majority has seen fit to circumvent the standard refund mechanisms through a long list of proposed tax rate reductions, tax credits, and redistribution efforts. Since the last issue of this report five days before the end of session, five TABOR-impacting bills were defeated, four new ones were introduced, and several others were amended heavily.

By the end of the legislative session, lawmakers passed 101 bills that will affect TABOR refunds. Most of these redirect money out of refunds towards targeted tax reductions for specific groups, mainly families and low-income Coloradans. Through such measures, the state will diminish taxpayers’ agency to decide, whether by saving, investing, or donating to charity, how best to allocate money that they would normally be owed. Voters rejected Proposition HH, which proposed to take TABOR refunds in exchange for limited property tax relief, just last November.

• 101 bills were passed during the 2024 legislative session that, if signed into law, will reduce projected TABOR refunds by a combined $2.8 billion (47%) of the $6 billion projected between FY24 and FY26.
  • These bills propose to reduce the TABOR refund by a combined $523 million in FY24, $1.06 billion in FY25, and $1.25 billion in FY26. The recent announcement that an additional $67 million in TABOR refunds is owed to taxpayers due to an accounting error is not reflected in this report.
  • The reduction in refunds over the next three years is similar in size to the FY23 TABOR refund. Of the $3.28 billion available, $3.1 billion was distributed as direct payments of $800 to each Colorado taxpayer. The remaining $180 million was diverted via an expansion of the Earned Income Tax Credit approved during the 2023 session.
  • The two most impactful bills from the 2024 session (see the list below) will reduce TABOR refunds by $1.8 billion, more than 42%, between FY25 and FY26. The rest of the bills would reduce refunds by a total of $391 million (9%) over that period.
  • Some major bills, like SB24-166, were lost in the final days of the session.
• SB24-228, which is expected to be signed into law shortly, proposes to change the TABOR refund mechanism by lowering the state income tax rate according to the level of excess state revenue. When it comes into effect, Coloradans’ TABOR refunds will be partially replaced by income tax reductions.

The figure below shows projected TABOR refunds in the next three fiscal years and the amounts of those refunds that each bill would remove.

2024 legislation will reduce the current fiscal year’s TABOR refund to $1.3 billion, which is 71% of the latest projection. The refund will subsequently fall to $851 million in FY25 and $1.04 billion in FY26—both less than half of what’s currently projected. Several bills signed into law after the 2023 session, mostly tax credits and refunds similar to those under consideration now, also reduced these projections prior to the start of the current session.

76% of the proposed FY26 TABOR refund reduction comes from just two bills:

• HB24-1134: Adjustments to Tax Expenditures to Reduce Burden
  • Expands several state income tax credits including the EITC
• HB24-1311: Family Affordability Tax Credit
  • Creates refundable tax credits for low-income filers with children

Both bills reallocate their refund impacts through tax credits and/or transfer payments to individuals and couples; HB24-1311 expires after ten years and HB24-1134 will continue to reduce revenue subject to TABOR indefinitely. Upon the first release of this report, there were three other bills that proposed to reduce the FY26 refund by more than $100 million, but two were curtailed substantially and one was defeated altogether. As a result, though four new bills and several late amendments to existing bills made up much of the difference, the 2024 session’s TABOR impact is somewhat less than it appeared poised to be at the beginning of May.

Although the loss of $2.8 billion in refunds would be realized largely as tax cuts, and regardless of whether the policies behind it are beneficial or not, the legislature’s approach to these cuts broadly undermines TABOR’s intent by divorcing taxpayers’ contributions to state revenue from the values of refunds they receive and deciding for them how that money should be spent instead.

Full List of Bills