While Colorado voters soundly rejected a Democrat-backed ballot measure on property taxes, they had no problems approving a proposal to allow the state to retain tobacco tax revenues.

Proposition II has so far secured 66% of more than 1.1 million votes tallied so far, the unofficial count showed. 

The proposal allows the state government to retain and spend tobacco and nicotine revenues that would otherwise be refunded back to taxpayers.

The measure was a true-up of sorts for Proposition EE from 2020, which increased tobacco taxes and, for the first time, imposed taxes on vaping products. The revenue from EE funds expanded preschool programs, as well as K-12 education, rural schools, affordable housing, eviction assistance, tobacco education, and health care. 

Here’s the issue: A 2020 state estimate said Proposition EE would increase revenue from cigarette, tobacco product, and nicotine product taxes by $87 million in fiscal year 2020-21 and $176 million in 2021-22, the first full year under the measure. The amount of new revenue will increase as the measure is phased in, with $276 million expected to be generated in the budget year 2027-28.

The actual revenues, however, are coming in higher than that. Proposition II would permit the state to retain the additional dollars, estimated at $23.65 million in 2023-24. Those dollars would be placed into the newly-created Proposition EE Refund Cash Fund.

Had the measure failed, the Department of Revenue would have been required to reduce the Proposition EE tax rates on cigarettes, tobacco, and nicotine created via Proposition EE by 11.53 % and refund the money to taxpayers by June 30, 2024.  

In a statement on Tuesday night, Gov. Jared Polis praised voters for passing the measure.

“This year, we saw historic demand from Colorado families for free universal preschool,” Polis said. “Coloradans value early childhood education and I am thrilled people voted in favor of providing more funding for our free universal preschool program that is saving families money, and this voter-approved measure will help fund more preschool for kids.”

He added: “Thank you to all voters who made their voices heard, and thank you for continuing Colorado’s clear history of supporting early education.”

No committees stepped forward to support or oppose the ballot measure.