Each Colorado resident paid nearly $5,000 in state-sanctioned fees last year, according to a report by a policy think tank.

The report, which analyzed how fees have affected Colorado’s economy, found that fee revenue has more than tripled since 2008 — to $4,692 — and is likely to keep growing.

More than 30 years after Colorado voters approved the Taxpayer’s Bill of Rights (TABOR), a growing share of state spending now falls outside the voter-approved limits intended to restrain government growth.

Enterprises, or government-owned businesses, are exempt from revenue limits established under TABOR. These enterprises generated $742 million in 1994, the year TABOR went into effect. By 2025, enterprises brought in $28.2 billion, more than half the state budget.

That translates to an increase of almost 3,700%, while Colorado’s population growth, plus inflation, hiked by only 185%, according to the report from the Common Sense Institute.

This year’s report estimated that, if enterprise fees were treated as income taxes, the state’s actual tax rate would be nearly 8% — and that’s not including higher education fees. Higher education institutions are considered enterprises under TABOR, meaning tuition and fee revenue they generate is exempt from the cap.

If the latter were counted, the income tax rate would be over 14%.

Colorado’s official income tax is a flat rate of 4.4%.

At its core, TABOR limits the government’s ability to raise revenue. Political subdivisions must obtain voter approval for any tax increase, and it requires dollars above the TABOR limit to be refunded to residents. Numerous efforts have been made to repeal TABOR since its enactment. As recently as November 2020, voters rejected efforts to significantly overhaul or repeal it.

Indeed, that tug-and-pull among TABOR, taxes and fees has manifested in big fights at the ballot box and at the state Capitol. Broadly speaking, groups have sought to increase state revenue — such as the current efforts to raise up to $4 billion by eliminating Colorado’s flat income tax rate and raising taxes on higher-income earners — while others have pushed to bring down the income tax rate.

In 2020, voters approved Proposition 117, a ballot measure intended to slow enterprise revenue growth by requiring voter approval for certain new enterprises.

The opposite has happened, according to the Common Sense Institute report.

In 2020, an average of $6,965 in revenue per Colorado resident was exempt from TABOR. By 2025, it had increased to $10,628. The number of active enterprises has also increased since the passage of Proposition 117, adding 10 and expanding one.

Those 10 new enterprises have since generated $98 billion in TABOR-exempt revenue.

“For decades, the relative difficulty of raising taxes in Colorado has encouraged lawmakers to rely instead on fees to generate additional state revenue,” wrote the study’s authors, Erik Gamm and Jasbeth Hernandez. “The evidence of the years since 2020 suggests that Proposition 117 drove them only to change tactics, not to change course. As a result, lawmakers have continued to expand state revenue through fees, increasing Coloradans’ effective tax burden while avoiding the voter approval process that applies to most tax increases under TABOR.”

When is a fee and what is a tax?

In 2011, a full decade before it was implemented statewide, the City of Aspen passed an ordinance banning single-use plastic bags and requiring retailers to charge 20 cents for paper bags, with the revenue going toward the city’s waste management and recycling programs.

Seven years later, a group called the Colorado Union of Taxpayers sued the city, arguing that the fee could be considered a tax and was therefore unconstitutional under TABOR because voters had not approved it. The Colorado Supreme Court ruled in Aspen’s favor, finding that the charge was, indeed, a fee, not a tax, and therefore not subject to TABOR.

The Aspen bag fee case set a legal precedent for distinguishing fees from taxes in Colorado, Chris Stiffler, an economist at the Colorado Fiscal Institute, earlier said.

“A fee is when you get a service directly for what you’re paying, whereas a tax is something that goes into the General Fund and goes to higher ed, K-12, Medicaid or something like that,” he said. “The outcome of (the Aspen case), in my mind, was that there’s a little more flexibility in what you can define as a fee and what you can do with that revenue.”

While fees have always existed in Colorado, the creation of “enterprises” following TABOR’s passage led to a significant increase in revenues from fees, Stiffler said.

To some, fees effectively circumvent the limits imposed by TABOR, which means the state government keeps growing but in a way that’s less transparent. To others, the fees have served to generate money the state desperately needs to pay for projects or important endeavors.

Enterprise fees often go toward specific programs or projects, like water conservation, transportation infrastructure and health care. According to the report, the enterprises that generated the most revenue in Fiscal Year 2025 were higher education, the Colorado Healthcare Affordability and Sustainability Enterprise and Unemployment Compensation, which brought in a combined total of over $20 billion in revenue.