As the controversial and conflicting Taxpayer's Bill of Rights heads into its 25th year, at least two Republican state legislators believe the law is in need of a tune-up.
Rep. Dan Thurlow of Grand Junction and Sen. Larry Crowder of Alamosa are heading down a road as bumpy as the crumbling state highways that have partially fallen victim to TABOR's spending constraints. The lawmakers are proposing that the state's spending cap formula be tied to personal income, rather than consumer inflation plus population change.
The battle ahead is long. It was once considered unthinkable for a Colorado Republican to imagine restructuring the TABOR formula so that government could grow when economic times are good.
Legislation - which would have to be referred to voters under TABOR - is planned for the upcoming session that begins on Jan. 11, with Thurlow carrying the bill in the House and Crowder sponsoring it in the Senate.
"Isn't it time to take a 25th anniversary look, not at repealing TABOR, because I'm afraid someday that's going to be on the plate if we keep cutting the things we're cutting," Thurlow said. "The premise would be, 'Let's take a look at it and just revisit the measurement.'"
What may sound like a simple idea - to revisit TABOR as it approaches 25 years in the Colorado Constitution - it is far from easy. Republican leaders in both the House and Senate have already expressed concerns, suggesting that there may be only a small group of Republicans with an appetite for such a major TABOR shift.
The legislature is split again this year, with Republicans controlling the Senate and Democrats maintaining a House majority.
The proposal faces an uphill battle in the Senate, though observers believe that if it makes it to the floor of both chambers it has an excellent chance of passing.
Crowder bucked his caucus last legislative session by expressing support for a proposal to restructure the Hospital Provider Fee as an enterprise fund, or government-owned business. The fee is assessed on hospitals to force a match of larger federal health care dollars.
The plan - which never made it to the floor for debate in the Senate and died over GOP objections - would have exempted the hospital fee from TABOR, taking the revenue out of the TABOR calculation and lowering taxpayer rebates set aside in the general fund, thereby freeing money for spending.
"You have to realize we have responsibilities in the government to fulfill," Crowder said. "I'm a Republican. I'm not interested in raising taxes. But we have to understand our obligations to society."
Budget in a bind
The proposal comes as state budget writers must cut as much as $600 million from their spending plan, in the midst of an economic boom.
Cuts could be seen for schools, Medicaid and roads and highways in order to comply with the constitutional mandate for a balanced budget.
Lawmakers might even consider reducing the state income tax rate in order to meet TABOR rebate and budget-balancing requirements.
Taxpayers received rebates that totaled nearly $155 million in 2016 when they filed their 2015 tax returns, though some of that rebate still needs to be paid out. The last time rebates were issued was in 2005 .
Few Coloradans realize they receive the rebate without a conversation with their accountant. The rebate comes as a tax break, which is essentially taxes that are never collected, and it's difficult to notice the change over the course of a year. Individual rebates ranged from $13-$41 based on income in 2015.
The spending cap, which triggers the rebate, is based on the Consumer Price Index for consumers in the Denver-Boulder-Greeley area, or Front Range consumer inflation. That percentage of inflation from one year to the next is added to the state's percentage of population growth for the year. TABOR-defined revenue, or state fiscal year spending, cannot grow beyond the total percentage. Rebates come out of the general fund, which is used for discretionary spending.
Government fees are defined under the TABOR cap, unless those fees are put into an enterprise fund, as lawmakers tried with the Hospital Provider Fee. All of the general fund falls under the TABOR cap. Federal funds are not included.
A flawed formula?
Some economists argue that the formula - which is the brainchild of Colorado Springs politician and anti-tax crusader Douglas Bruce - is arbitrary. Bruce was convicted in 2012 for felony tax evasion, among other charges, after using a charity to hide income from state tax collectors.
Economists point out that businesses don't often use the CPI when considering costs, and that population growth is largely unrelated to inflation.
"When inflation is low, as it is now, and our economy is good, as it is now, the effect is to ratchet down the amount we spend each year. None of us would do it that way in our personal or business lives," Thurlow said, adding that he supported TABOR in 1992.
Over time, the proposal to tie the formula to personal income would likely result in fewer rebates offered to taxpayers, though that would not be the case every year. At the same time, government would not grow faster than personal income.
The idea is to take a five-year rolling average of the change in personal income, which would remove volatility because the average would be used, rather than calculating based on spikes and plummets from year-to-year.
"What I still think is a good idea is having a constraint on government, and I also think people want to vote on tax rate increases," Thurlow said. "That's okay. Unfortunately, TABOR is so much more than that."
As a constraint on government, TABOR has worked. In 1992, TABOR revenue was 6.2 percent of Colorado personal income. By 2015, that percentage declined to 4.6 percent.
In the nearly 25 years since TABOR passed, Colorado has changed remarkably. An influx of residents have been wooed by economic opportunities offered by a desired work-play lifestyle with a beautiful mountain backdrop. Colorado's population in 1992 was under 3.5 million. It's now more than 5.3 million, and expected to continue to grow.
Meanwhile, in that time, the state has gone from 23rd to 40th among per pupil K-12 education spending, according to the latest data by the National Center for Education Statistics. And reports have Colorado ranked nearly last for spending on higher education. Spending on roads depends on gas taxes that have not increased on the state level since 1992.
In order to manage the TABOR rebate process over two-and-a-half decades, lawmakers decreased the state income tax from 5 percent to 4.63 percent and the state sales tax from 3 percent to 2.9 percent.
Too little revenue - or too much spending?
Despite two Republicans leading the effort to change the TABOR formula, GOP leaders in the House and Senate are skeptical.
"It would still come down to, does this actually fix a problem, or is TABOR doing what it's supposed to be doing," said incoming Senate President Kevin Grantham of Canon City, who added that he wants to take a closer look at the bill. "Sometimes people see a problem where it isn't, instead of with the spending. Half of us here see a revenue problem, the other half sees a spending problem. That doesn't change with this bill or not.
"Anything that wants to tinker with TABOR in one form or another, whether it's statutory or constitutional, will always raise the eyebrows of skeptics."
House Minority Leader Patrick Neville of Castle Rock added, "TABOR is not the problem; spending is the problem. Our budget is bigger this year than it was last year. It's bigger every year. Just like families have to trim and keep within their budgets, we should maintain within our own budget."
One issue that could favor sponsors is the effort would only take a simple majority vote in both chambers to refer the issue to voters. Republicans hold only a one-seat advantage in the Senate.
The legislation would amend Referendum C rather than TABOR. Referendum C, backed by voters in 2005, offered a five-year TABOR timeout, allowing the state to retain and spend money above the TABOR limit, essentially eliminating the ratchet-down effect.
Because Referendum C was statutory, it would only take a simple majority vote in both chambers to ask voters to amend it, as opposed to a two-thirds majority vote for amending constitutional provisions, as is TABOR.
Because there's a line in Referendum C that defined the TABOR limit as inflation plus population growth, lawmakers are free to redefine that limit in Referendum C, rather than amend TABOR.
But the measure would still have to get to the floor of both chambers for it to make a difference.
Democrats are more open to the idea
"It's intriguing," said Gov. John Hickenlooper. "We're open to looking at different ways of trying to find some resources for things that are hard to fund, like transportation infrastructure. If that's something that could free up resources, it's certainly worth looking at."
The governor, however, pointed to the divisive nature of the legislature adding, "You can get conflict around the weather forecast. But done properly, it might be one of those things that can bring people together."
Incoming House Speaker Crisanta Duran of Denver added, "I'm receptive to the concept. After the last two sessions, where the Hospital Provider Fee, changing to the enterprise, died both times, I think we need to put all options on the table to be able to address our budget needs."