STATE FINALLY ADMITS THEY WANT TO TAKE REAL TAX REFUNDS, UP TO $1.3 BILLION OVER THE NEXT THREE YEARS
Colorado taxpayers possibly headed for both TABOR refund and tax cut
Anna Staver, Denver Post PUBLISHED: June 19, 2019 at 10:06 am | UPDATED: June 19, 2019 at 4:23 pm
Coloradans are inching closer to their first TABOR tax refunds in years, according to updated state revenue forecasts released Wednesday.
In fact, state collections have been so strong that taxpayers are likely to get both a sales tax refund and a state income tax cut, according to Kate Watkins, the chief economist for Colorado's Legislative Council.
She and her team estimate TABOR will drop the state's income tax rate from 4.63 percent to 4.5 percent for both 2019 and 2020. For someone who makes $50,000 a year that's a savings of $65. The sales tax refund amount is based on a complicated formula, but it ranged from $13 to $41 when the state last gave them out, in 2015.
The prospect of money going back to taxpayers is a departure from the March forecast, when Legislative Council thought there wouldn't be any TABOR tax refunds for the next few fiscal years. The difference is that now the state knows how much it collected in taxes for 2018 - the first year after congressional Republicans and President Donald Trump passed their tax reform package. And the upward revisions, Watkins said, were "considerable."
"For the current year, we're expecting all three mechanisms to be triggered," she said.
The three mechanisms are how Colorado returns money it collects that's above and beyond what's allowed by the Taxpayer Bill of Rights. The first $150 million above the revenue limit goes to pay back local governments who give property tax cuts to seniors and veterans. Anything above that gets returned as either a refund on residents' state income taxes or a cut to the income tax rate.
Legislative council estimated about $574 million would be refunded through those three tiers after people file their 2019 tax returns.
The revenue forecast presented by Gov. Jared Polis' team was slightly more conservative. His Office of State Planning and Budgeting predicted $140 million in sales tax refunds as part of people's tax returns next spring but not enough money for a drop in the income tax rate.
The news of the first TABOR tax refunds since 2015 comes at the same time a group of lawmakers are trying to convince voters to give up these dollars. Proposition CC, which is on this November's ballot, asks permission for the state to keep all the tax dollars it collects and spend them on K-12, higher education and transportation in equal amounts.
When the supporters of CC first announced their plans, it looked like that might amount to $0 for each group for the foreseeable future, but now Lauren Larson, director of the Office of State Planning and Budgeting, predicts it will be as much as $1.3 billion for the next three years.
"That is the big story to take from this," Joint Budget Committee Chair Dominick Moreno, D-Commerce City, said. "You know, I think a lot of people felt that why are we going to the ballot with this and asking voters for permission to retain revenue when projections show that we are not going to be over our TABOR cap. This very much makes the case to voters that if this permission is not given then we will be issuing refunds for the foreseeable future."
Conservatives who oppose Proposition CC see this forecast as good news for their side because now they can point to real dollars that voters would be giving up if the measure passes.