Despite objections from legislative staff and Republican opposition, Senate Democrats on Friday moved forward with a proposal to reroute $306 million in taxpayer refunds.

Already, critics are preparing to sue over the proposal that seeks to take $300 million in Taxpayer’s Bill of Rights refunds over the next two years to cover what Democratic lawmakers believe is an overpayment from a previous fiscal year.

House Bill 1419 won preliminary approval from the state Senate on Friday. It now awaits a final vote in the chamber and will then go back to the House, which must concur with any amendments adopted.

The alleged overpayments in 2024–25 TABOR refunds were never reflected in the state’s 2024–25 budget because they stemmed from H.R. 1, the Trump administration tax package that significantly altered federal deductions.

Colorado closed its books for the 2024–25 fiscal year on June 30, 2025. The congressional budget was signed four days later, after the fiscal year had ended and after all TABOR refunds tied to 2024 tax filings had already been paid.

TABOR refunds operate on a one‑year lag. The 2024 refunds were issued before the law changed.

At its core, TABOR, adopted by voter initiative in 1992, limits the revenue that the state and its political subdivisions can keep and spend. When more money is collected than the limit set by TABOR, the “excess” dollars are refunded to taxpayers.

Joint Budget Committee staff told the committee in February that the 2024-25 refund does not appear to qualify as an “over-refund” under current law. They recommended the committee “weigh the potential legal risks of the proposal to treat it as an over-refund against the potential benefits of doing so.”

The JBC’s four Democratic members moved forward with HB 1419 anyway.

The potential for a lawsuit took center stage during a Senate Appropriations Committee hearing on Wednesday.

“Why would we open ourselves up for more lawsuits?” asked Sen. Byron Pelton, R-Sterling, during the hearing.

“All we’re doing in this bill is making up for that difference exactly as is already required for us to do in existing law,” responded Sen. Jeff Bridges, D-Greenwood Village.

A fiscal analysis on House Bill 1419 noted that, if the state does not collect a TABOR surplus in 2025-26, which is expected, the legislation would require the state controller to determine the amount of the FY 2024-25 TABOR surplus that was “over-refunded.”

The fiscal note said that’s $136.1 million in 2026-27 and $153 million in 2027-28. The 2026-27 budget included a placeholder at $153.1 million — meaning that’s the amount of TABOR refunds that would not be paid.

The likelihood of a lawsuit increased on Friday, when Advance Colorado announced it would sue the state over HB 1419 — even though the bill is still moving through the legislature — and over the state’s budget bill, House Bill 1410, which Gov. Jared Polis signed into law the same day.

“The state cannot attempt to fix its budget issues on the backs of hardworking citizens who are owed their TABOR refunds by law,” said Michael Fields of Advance Colorado. “Refusing to follow the Colorado constitution for monetary benefit is unacceptable, and we will defend TABOR in court or at the ballot box whenever the government tries to take money that belongs to the people.”

The group did not say when the lawsuit would be filed.