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Marijuana tax fix signed into Colorado law

February 22, 2018 Updated: February 23, 2018 at 6:13 am
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photo - FILE - In this Sept. 18, 2012, file photo a caregiver picks out a marijuana bud for a patient at a marijuana dispensary in Denver. (AP Photo/Ed Andrieski, File)
FILE - In this Sept. 18, 2012, file photo a caregiver picks out a marijuana bud for a patient at a marijuana dispensary in Denver. (AP Photo/Ed Andrieski, File) 

The bill to fix the mistake made in the 2017 omnibus bill for rural Colorado has now made it into law.

Lt. Gov. Donna Lynne signed Senate Bill 88 into law Thursday afternoon. The measure restores the ability of 14 special districts to collect retail marijuana taxes, an authority they lost last year. Lynne signed the bill as Gov. John Hickenlooper is out of state at a meeting of the National Governors Association.

Senate Bill 88 fixes a drafting error in last year's bill on Sustainability of Rural Colorado. Senate Bill 17-267 changed the state's hospital provider fee into an enterprise, a government-owned business. It also gave a tax break on personal property to small businesses, and set up bonding for $1.9 billion for road and other transportation projects, with a quarter of that going to rural communities.

But it was the section on retail marijuana taxes that contained the error that no one - the sponsors, the lobbyists or the special districts - noticed until well after the measure was signed into law in late May.

Under SB 267, $30 million would go to rural schools as one-time funding. That money would come from upping the state's retail marijuana tax from 12.1 percent to 15 percent, as approved by voters several years ago.

But some of that 2.9 percent in marijuana tax revenue was already allocated to special districts, including the eight-county metro Denver Regional Transportation District (RTD). Because that exception wasn't carved out in the bill, the special districts lost their ability to collect those taxes.

Officials from RTD complained they lost $500,000 per month, beginning July 1, 2017, when the tax change went into effect. RTD wasn't alone in losing tax revenue. The error also affected the Denver Scientific and Cultural Facilities District; five regional transportation districts, mostly on the Western Slope; a hospital district in Montezuma County, a housing district in Summit County and five metropolitan districts in Eagle and Jefferson counties. In 2018-19, without a fix, those districts were at risk of losing $8.6 million total and more in years after.

Senate Bill 88 restores the authority of those special districts to once again collect the tax, with a caveat: Technically, the Taxpayer's Bill of Rights requires voters to approve any tax measure that results in higher revenues. This situation is no different, according to Senate Republicans. That it was the result of an error is of no consequence; many insist that voters should still approve the special districts' ability to collect the tax. Whether any of them will take the step of going back to voters for that permission is unknown and based on testimony during the bill's hearings appears to be unlikely.

The bill is not retroactive, which means dollars already lost are gone for good and cannot be recouped.

The error led Hickenlooper to attempt a special session last October, but Senate Republicans revolted, stating the fix wasn't a critical issue and one that could wait until January. The special session failed after two days.

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