Coloradans will get a $400 refund this summer in what the governor and legislative leaders frame as part of the Democratic-controlled state's efforts to provide immediate economic relief to residents amidst skyrocketing prices of commodities and soaring inflation but which critics view as a cynical ploy to court voters in an election year.
About 3.1 million Coloradans, counting those who would have filed their 2021 tax returns by May 31, 2022, are eligible for the rebate, which amounts to $400 for individuals and $800 for joint filers.
The money is not new. Instead, the state is obligated to refund the amount under Colorado's Taxpayer's Bill of Rights. Narrowly approved by voters in 1992, most remember the TABOR requirement that the public must approve any tax increase. At its core, TABOR seeks to limit the growth of government to population increases, plus whatever the annual Denver-Boulder Consumer Price Index, a measure of inflation, has been for the previous year. What that means in practical terms is the government could only grow by inflation and population, basically covering expenses for big-ticket items, such as schools, Medicaid, corrections and higher education, year after year with modest increases.
Under current laws, taxpayers would get their TABOR refund in the spring of 2023. Polis, with backing from legislative leaders, plan to change the schedule by sending the cash to taxpayers in August this year – just a little over two months before the November election and barely a month before big campaign ads will start hitting voters' phones, social media, mailboxes and TV and computer screens.
“People are paying more for everyday items like gas, groceries, and rent through no fault of their own. Instead of the government sitting on money that Coloradans earned, we want to give everyone cash back as quickly and easily as possible to provide immediate relief and empower people to do what they want to with their money,” Gov. Jared Polis said in a news release.
Senate President Steve Fenberg and House Speaker Alec Garnett echoed the message.
“Coloradans are up against high rates of inflation and a rising cost of living – and they’re feeling the pinch,” Fenberg, a Boulder Democrat, said. “This year, we’re able to extend much needed support to families and individuals in the form of direct relief to taxpayers. We’re helping Coloradans make ends meet during this challenging time by putting money directly back into their wallets.”
Garnett said the state is "delivering on that promise" to save Coloradans money.
The bill will be sponsored by Sen. Nick Hinrichsen, D-Pueblo, whose Senate seat is considered to be the most endangered for Democrats in the November election.
Some Republican lawmakers outright accused the Democrats of trying to buy this year's elections.
"Now he's buying elections with taxpayer dollars," said State Sen. Jerry Sonnenberg, R-Sterling, a sponsor of a November ballot measure to reduce the state's overall income tax rate.
Senate Minority Leader Chris Holbert, R-Douglas County, also noted it's an election year. He said TABOR refunds are usually measured in tens of dollars but now Polis and Democratic leaders want to give $400 to each eligible taxpayer.
"We definitely know that people are hurting and are upset about how unaffordable Colorado has become, concerned about public safety, they want better outcomes with public education. I understand why the Democrats are in such a bind, but my vote is worth more than $400," he said.
House Minority Leader Hugh McKean, a Loveland Republican, said in a statement that Polis and Democrats "can re-package their attempt to 'gift Coloradans with their own money any way they choose during this election year — but these much needed dollars are not a gift or a refund — THESE are dollars that belong to Coloradans."
In response, Polis spokesman Conor Cahill said the Republicans' claims reflect an "intellectually dishonest and cynical view."
"What would be shameful is the government unnecessarily holding on to taxpayers' hard-earned money a moment longer than needed while they experience the cost of everything rising," Cahill said. "Is that what Republicans are suggesting? The governor believes delaying these refunds would hurt Coloradans. This money should go out right away to you rather than sit in government bank accounts.”
Senate Majority Leader Dominick Moreno, D-Commerce City, holds similar views.
"The reality is that families need that relief now, which is why it's designed as an advanced payment. People can't wait until they file their taxes next year .. .when inflation is as high as it is," he told Colorado Politics. "Folks can make whatever argument they want, but people need this relief now."
TABOR's refund mechanism has three parts: the first tranche of money goes out through property tax rebates to seniors and disabled veterans. If there's money left over after that's paid for, the second tier is a temporary reduction in the state's income tax rate. Any money left over then goes to a six-tiered sales tax refund, and that's the money that's being tapped for the $400 refund, normally one that taxpayers receive through their April tax filings with the state.
The law governing the six-tiered refund is based on adjusted gross income, but the refund envisioned by Polis and Democratic lawmakers would make it "flat," which means everyone would get the same refund regardless of income. That will require legislation, with just 17 days to go in the 2022 session and with hundreds of bills, including several priority measures by the majority in progress or in some cases still awaiting introduction.
Michael Fields, president of the conservative-leaning think tank Advance Colorado Institute, said the refund is not the result of any new legislative action to give back additional dollars to taxpayers.
"It’s money that would have to be refunded anyway. They just changed how it’s refunded – and are sending it before the election," he told Colorado Politics. "This is an election year ploy to try to get Coloradans to forget about all the fees and taxes that Democrats have passed during the last 3 years.”
Fields added: "All of these people, including Polis, supported taking away our TABOR refunds completely in 2019."
Polis and the Democratic majority in the General Assembly approved a referral in 2019 that sought to eliminate the state's obligation to give back money in excess of the TABOR limit. Known as Proposition CC, the referral would have permitted the state to spend the money on public school, higher education and transportation. Voters rejected the measure that year.
Chris Brown, vice president of policy and research at the Common Sense Institute, said pushing forward the timeline for getting the TABOR refund will help alleviate some of the pressure imposed by inflation.
However, he added, the institute estimate that higher levels of inflation have cost the average Colorado household more than $4,460 since 2021.
"And while higher inflation is putting pressure on all household budgets, it is contributing to strong state revenue growth in combination with the economic recovery from the pandemic, and large federal spending," Brown said. "So, at a time when General Fund spending is expected to grow 12.7% in next year’s budget, when state reserves are more than double where they were heading into the pandemic, the government spending growth limitation of the TABOR formula has created more than $3.5B in anticipated taxpayer refunds over two years."
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