Lawmakers end special session empty-handed
To some, it was a simple mistake, one that no one in the Colorado Legislature regardless of political party meant to make.
To others, it didn’t matter that it was unintentional. Because it was made, and certain special districts lost the authority to assess sales taxes on retail marijuana, it would be a violation of the Taxpayer’s Bill of Rights to try to fix it without — again — going to the voters.
That was the argument that Republicans used to kill two identical bills lawmakers considered this week during a special session called by Gov. John Hickenlooper.
The special session was intended to repair an error the Legislature made during its regular session earlier this year when it approved Senate Bill 267. That bill did many things, one of which was to do away with a 2.9 percent state sales tax on retail pot and replace it with an increased excise tax, from 10 percent to 15 percent, something the voters approved in Proposition AA in 2015.
The legislative intent on passing that new law was to impact state government only, and not local government. What no one noticed while lawmakers did that, however, was that certain special districts, primarily transit authorities around Colorado, also were impacted, resulting in them collectively losing millions of dollars in already-approved voter revenue.
“On May 30, Senate Bill 267 was signed into law. Into law,” said Rep. Jim Wilson, R-Salida. “So no matter what it was before, it now is what it is. By law, the 2.9 percent was repealed. Ended. Terminated.”
As a result, Republican lawmakers argued that it would be a violation of the Colorado Constitution under TABOR to try to bring that tax back, even if it’s only for a handful of special districts that had the authority to assess it.
For their part, Democrats tried to argue that TABOR never intended such a “ridiculous” outcome, saying the courts have repeatedly agreed with that assessment.
House Majority Leader KC Becker, D-Boulder, said there are numerous legal ways for the Legislature to fix its error, and a bill that she and Sen. Kerry Donovan, D-Vail, introduced into the special session was one of them.
She said voters have repeatedly approved taxing recreational marijuana, and it makes little sense to ask them again.
“Our mistake doesn’t take away the fact that voters approved these taxes. This is not a new tax,” Becker said. “How can this be called a tax policy change when all we want to do is turn back to the policy we never meant to do away with to begin with? It just doesn’t fit under the strictest interpretation of TABOR.”
Democrats pointed to a case filed by Mesa County commissioners in 2009 against then Gov. Bill Ritter when he and the Legislature approved a change in how property tax mill levies could be assessed by school districts.
In that case, the Colorado Supreme Court ruled that it didn’t constitute a tax policy change requiring approval by school district voters.
Regardless of that argument, and while the measure did clear the Colorado House on a 37-25 vote Tuesday, it died in the same Senate committee that killed an identical bill on Monday, with Sen. Ray Scott, R-Grand Junction, again voting it down.
Sen. Randy Baumgardner, R-Hot Sulphur Springs and chairman of the committee, also voted against it. One of the special districts impacted by the error operates partly in Garfield County, which he represents.
In the end, Rep. Dan Thurlow, R-Grand Junction, was the only Republican in the entire 100-member Legislature who voted for the fix.
Because of the stalemate between the House and Senate over the issue, the Legislature ended the special session after only two days. It takes at least three to pass a bill.
Not counting the salaries of legislative staff and lawmakers, the state spends about $25,000 extra each day the Legislature is in session, most of which is paid in the form of per diem to legislators.
While the error had a greater monetary impact on the state’s largest special districts, such as the Denver Regional Transportation District, which stands to lose about $8 million a year, that constitutes a small portion of their overall budgets, said House Minority Leader Patrick Neville, R-Castle Rock.
But Western Slope Reps. Diane Mitsch-Bush, D-Steamboat Springs, and Millie Hamner, D-Frisco, said it’s really the smaller districts that will be hardest hit.
“In Gunnison County, the impact is expected to be about $60,000 less in 2018 than what their voters approved and wanted to spend,” Hamner said. “The impact they anticipate is about a 23 percent reduction in senior transportation services.”
The change inadvertently impacted transportation authorities in the Roaring Fork Valley, the Gunnison Valley and San Miguel County. They each stand to lose about $116,000, $85,000 and $13,000 a year, respectively.
Some of those districts said they may have to raise rates on consumers to cover the loss in recreational marijuana sales tax revenue.
As for a permanent fix, the issue is expected to come up again when the Legislature meets for the 2018 legislative session in January.