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Colorado Legislature finds that fixing pot tax error is a bridge too far

October 3, 2017 Updated: October 4, 2017 at 6:10 am
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State Rep. Dan Pabon, D-Denver, argues for a legislative fix to a mistake made during the last session. (Photo by Joey Bunch/Colorado Politics)

Two bills intended to fix an inadvertent error made in a law passed by the Colorado legislature in the 2017 regular session were both killed by the Senate Transportation Committee, with a 3-2 Republican majority citing constitutional concerns over what Democrats said should be an easy fix.

Monday, the Senate Transportation Committee, on a 3-2 party line vote, dispatched a Senate bill that would have restored the rights of certain special districts to collect marijuana tax revenue.

Tuesday, the same committee did the same thing to the identical House version, and with that the special session called by Gov. John Hickenlooper came to an abrupt end.

It's only the second time in the past 20 years that a special session had nothing to show for the work by lawmakers.

This session is expected to cost taxpayers about $50,000.

Hickenlooper in a statement placed blame with the Republicans.

"It is disappointing that the Republican-controlled Senate refused to fix an error, acknowledged as a mistake by all involved. Coloradans expect us to work together and solve problems," he said. "This week, we failed to do so. The special districts will continue to have unintended funding cuts - cuts that will have real implications for Coloradans who rely on buses to get to work, cultural institutions to educate their families, and other services.

"In the end, partisan politics overshadowed the clear intentions of Colorado voters. These tactics only divide us and fuel cynicism. We have been raised to own up to our mistakes and fix them. Most Coloradans believe these values should apply to everyone, especially to government."

Senate President Kevin Grantham, R-Canon City, and Senate Majority Leader Chris Holbert, R-Parker, speaking to reporters after the session adjourned, reiterated their irritation over the order from the governor to come back to the Capitol when they claimed there wasn't an agreed-upon plan on how to fix the taxing problem.

But they also expressed their concern that reinstating the tax might require approval from voters under the Taxpayer's Bill of Rights (TABOR). Democrats cite court opinions that say the issue can be rectified by the General Assembly without voter approval.

"We will look at all those options" to fix the problem and will talk to the governor as well as parties both inside and outside the building on possible solutions, Grantham said. "But we're not willing to sacrifice our constitutional principles to do so."

Tuesday began with the House wrapping up its work on its version of the bill to provide an exemption to at least nine special districts to renew collection of marijuana sales taxes.

The special districts, with the eight-county Denver area Regional Transportation District as the largest, are on par to lose about $7 million in 2017-18 because of a mistake in a 2017 omnibus bill intended to help rural Colorado. Known as "Sustainability of Rural Colorado," Senate Bill 17-267 changed the state's hospital provider fee program into an enterprise - a government owned business - and placed $30 million from marijuana taxes into a one-time boost to rural schools.

It's that change in marijuana taxes that has caused headaches for the governor, lobbyists, lawmakers and the special districts.

Under SB 267, the state sales tax of 2.9 percent was eliminated, and the special sales tax on recreational marijuana was hiked from 10 percent to 15 percent, the maximum allowed by voters. But in eliminating the state sales tax, everyone failed to notice that certain special districts had been allowed to collect marijuana taxes out of that state sales tax.

For RTD, it's a hit of a half-million dollars per month. The Denver area Scientific and Cultural Facilities District stands to lose almost $600,000 in 2017-18. Small regional transportation authorities, a district that helps provide affordable housing in Summit County, and a hospital district in Montezuma County also are losing money because of the error.

On September 14, Hickenlooper issued an executive order that would bring lawmakers back to the Capitol to fix the problem.

And that's when things started going south.

Republicans, especially those in the Republican-controlled state Senate, called the special session a waste of time, and that the issue could wait until the legislature returns in January. Even the original Republican sponsors of SB 267, Senate President Pro-Tem Jerry Sonnenberg of Sterling and Rep. Jon Becker of Fort Morgan, steered clear of the fix on their bill.

Tuesday morning, House members spent more than an hour on final debate about the fix.

House Minority Leader Patrick Neville, R-Castle Rock, said the glitch the legislature seeks to fix reflects Colorado's "Washington-style budgets." He said he would gladly wear the accusation of being a strict interpreter of the state Constitution. "The Constitution does not have a price tag," Neville said.

Senate Democratic Leader Lucia Guzman was disappointed in the lack of any outcome.

"The Colorado General Assembly was not at its best over these past two days, and that is profoundly disappointing," she said in a statement. "This error is costing counties like Pitkin, Eagle, and San Miguel thousands in transportation dollars, and could result in services like rides for the disabled being cut, or perhaps bus fares being increased."

Sponsor Sen. Kerry Donovan, D-Vail, hinted at the future, suggesting a working group between now and January that could figure out a solution and give the special districts confidence the General Assembly would try to fix the problem.

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