KEY TAKEAWAY: Colorado residents will lose more than $7,000 in TABOR refunds over 10 years under a Democratic proposal to divert the money to K-12 education. If approved by the full Senate, its next stop is the House.

Colorado senators on Friday gave preliminary approval to a proposed ballot measure that would take billions of dollars in Taxpayer’s Bill of Rights refunds and use the money for K-12 education.

An analysis of the proposal says about 75% of what would otherwise go to Colorado residents wouldn’t actually go to K-12 schools. Instead, those dollars would go into the state’s general fund pot — to be used by lawmakers for whatever purposes they choose.

The proposal’s title expressly states that it is for K-12 education funding.

If approved by voters, Senate Bill 135 would increase the current TABOR cap by the amount the state spends on K-12 education, currently about $4.5 billion per year.

Under the proposal, state revenues above the old cap — but below the new one — would be diverted to K-12 education at a rate of 2% more per year for 10 years. 

Republicans call it a ‘slush fund’

A non-partisan analysis obtained by Senate Republicans showed that could be as much as $9 billion over the first 10 years. There’s another pot of general fund money that will be created under the new cap, known in the proposal as the “Excess Revenues in General Fund” account.

That account would gain about 75% of the revenue available without a defined purpose, leading Senate Republicans to call it a “slush fund” that lawmakers could tap for any spending.

The analysis showed that could be as much as $28.5 billion over 10 years, meaning only about 24% of the money would actually go to K-12 education.

According to the analysis requested by Republicans, every taxpayer in Colorado would lose $7,381 in TABOR refunds between the 2026-27 and 2036-37 fiscal years under the proposed ballot measure.

At its core, TABOR requires a public vote in order to raise taxes. It also limits revenue growth. Notably, it requires excess revenue to be refunded to taxpayers.

In response to the “slush fund” argument being raised by Republicans, SB 135 co-sponsors Sen. Jeff Bridges, D-Greenwood Village and President Pro Tem Cathy Kipp, D-Fort Collins, on Friday countered with an amendment to rename the excess revenues account to the “children’s” account.

Democrats: Money will to go children

Bridges said the money would go to pre-kindergarten education and pay for health care for kids, child care, higher education and other needs. 

He previously told Colorado Politics that the analysis counted on a no-recession scenario or other economic downturns. That is why, he said, analysts don’t estimate fiscal impacts beyond two or three years. 

However, SB 135 still won’t identify how that money would be spent.

Bridges said that’s because the purpose doesn’t fit under the measure’s title, which is “State Public K-12 Education Funding.”

Putting that information into the proposal would violate the requirement that bills contain a single subject, he said.

Republicans offered their own ideas about where that money should go.

Sen. Byron Pelton, R-Sterling, pushed an amendment to put those excess dollars into the Kids Matter Fund, which was created in the 2025 School Finance Act with bipartisan support. On July 1, 2026, 65% of one-tenth of one percent of federal taxable income revenue already being collected by the state will be deposited into that account.

Those funds can only be used for total program funding and categorical programs, such as for small attendance centers, services and instruction for English-language learners, special education, gifted and talented education, vocational education and school transportation.

The fiscal analysis on the Kids Matter Fund estimated the account would earn $233 million in the 2026-27 budget but also reduce the amount of general fund available by the same amount.

Pelton said his amendment would fit under the bill’s title and another piece of legislation to outline where those excess general fund dollars would go would not be needed. 

He later used a procedural move to get a recorded vote on the amendment, which failed along party lines.

Here’s how much districts could get

Sen. Barbara Kirkmeyer, R-Brighton, noted just how much schools would get from the proposal to increase teacher pay and suggested the math doesn’t add up.

The measure sets up a “positive factor” formula to determine how much of the K-12 education money would go to school districts. In its first year of funding, 2027-28, the positive factor would first “accelerate” the phase-in of the new school finance formula created in 2024. 

An analysis obtained by Colorado Politics showed that, in 2027-28, the positive factor would be worth around $71 million. 

Four districts would get less than $1,000 that year to increase teacher pay, improve teacher retention, lower class sizes, and increase access to career and technical courses — the proposal’s stated purpose. 

Those districts are Pawnee in Weld County, enrollment 57 ($440); Liberty in Yuma County, enrollment 80 ($622); North Park in Jackson County, enrollment 127 ($870); and Hinsdale in Hinsdale County, enrollment 80 ($642). 

There are 19 school districts with 100 or fewer students, and, under SB 135’s positive factor, all but those listed above would receive between $10,000 and as much as $50,000.

At the other end, Denver Public Schools, with its 89,000 students, would receive almost $9 million. 

Republicans also pointed out that raising the TABOR cap — currently, it’s known as the Ref C cap — would allow lawmakers to increase fees, which they view as another form of taxes.

When the state has a TABOR surplus, any hike in fees would increase the amount that has to be refunded back to taxpayers. When the state is under a surplus, there’s room to increase fees.

Sen. Scott Bright, R-Greeley, offered an amendment to ban adding any more fees if voters approve the referred measure. 

Republicans told Colorado Politics that the state currently collects about $3 billion annually in fees and it could easily double with the cap raised. 

It becomes an issue of affordability for citizens, said Sen. Lisa Frizell, R-Castle Rock, during Friday’s debate. 

Kipp told her colleagues the amendment would be unenforceable.

The bill now heads to a final vote in the Senate and, if approved, it will move to the House.