Tax refund ideas and tax return preparation

Calls for a special session of the Colorado General Assembly on whether to retain an expected multi-million-dollar surplus that is supposed go to taxpayers next year are gaining force among statehouse Democrats.

And while House Republicans say they are firmly opposed to coming back to the Capitol before next January, Senate Republicans already are gathering ideas about bills for a special session.

There have been discussions about a special session, said House Speaker KC Becker on Wednesday, although in the end it's the governor's decision on whether to bring lawmakers back.

A special session, which would last a minimum of three days, would likely deal only with the issue of dealing with the expected surplus, she explained.

The surplus, which could be as high as $575 million, is tied to the Taxpayer's Bill of Rights requirement that state tax revenue over certain limits must be refunded in the year after they are accrued.

The June 19 revenue forecast held a bit of a surprise for state lawmakers, when economists from both the Legislative Council and the Governor's Office of State Planning and Budgeting said the state might have to refund about $1.3 billion to taxpayers over the next three years under TABOR, beginning next spring.

It would be the first TABOR refund that Coloradans have seen since 2014-15, when a $76.2 million refund was issued through an earned income tax credit. According to Legislative Council economists, smaller surpluses, accrued in 2014-15 and 2017-18, have not yet been issued.  

The largest TABOR rebate in history was in the 1999-2000 year, when $749.2 million was refunded to taxpayers through a six-tier sales tax refund mechanism.

Refunds, according to state economist estimates, would range from $38 for single filers with annual incomes below $39,900, to $644 for those with incomes above $226,000.

There's already a plan in place to ask voters statewide to approve a measure allowing the state to keep all surplus revenues collected instead of refunding those dollars. That's Proposition CC, which will appear on the November 2019 ballot. It will ask voters to allow the state to keep those surplus revenues but that wouldn't start until next year, for dollars that would be refunded in 2021.

But the special session talk concerns what to do with revenue that would be refunded before then, in 2020.

Under Proposition CC, the state would retain all revenues, including those that exceed the TABOR revenue limit. That limit is equal to either the prior fiscal year’s revenue limit plus Colorado inflation and population growth, or the current fiscal year's revenue, whichever is less.

Wednesday, House Republicans sent a letter to Gov. Jared Polis, backed by all 24 members of the caucus, opposing any efforts to come back for a special session to deal with the TABOR refund issue.

“Colorado taxpayers are on the verge of receiving their largest tax refund ever since the passage of the Taxpayer Bill of Rights. Democrat lawmakers want to strip that refund from Colorado families through a special session,” Minority Leader Patrick Neville of Castle Rock said in the letter to the governor.

“We have a constitutional duty to return money to the taxpayers when we exceed the revenue caps, and we must fulfill that obligation," Neville added. "Any effort to undermine or take away the refunds of our citizens will be strongly opposed by the House Republicans.”

Should the General Assembly come back for a special session, what they're likely to review is a proposal to revisit House Bill 1257, which became Proposition CC. While all the House Republicans opposed the measure, it had a Republican sponsor in the Senate -- Sen. Kevin Priola of Henderson, who was the only Republican in the General Assembly to vote in favor of it. 

However, Republican Sens. Jack Tate of Centennial and Owen Hill of Colorado Springs have their own draft ideas for a trio of special session bills, obtained by Colorado Politics. The drafts, dated June 28, are not final and have already been revised, sources told Colorado Politics. However, the bills show the negotiations that are ongoing over the issue of TABOR revenue and what to do about it.

Among the options under discussion:

  • Repeal House Bill 1257, which referred Proposition CC to the November 2019 ballot.
  • Refer to the November 2019 ballot a measure to retain TABOR refunds for 10 years, beginning in 2018-19, in exchange for an income tax reduction from 4.63% to 4.59%. Under that proposal, 40% would go to roads, bridges and transit, 60% to education. 
  • A third measure would put 40% of retained refunds into the highway users tax fund, 20% to the Colorado expanded learning opportunities cash fund, and 40% to public schools to fund classroom improvements on a “per pupil basis.”

If voters approve Proposition CC in November, excess revenues would be spent on education, and roads, bridges and transit services. An annual audit would keep track of how those dollars are spent.

Any bills dealing with tax measures, by law, must start in the House. And those measures will require strong majority Democratic support in either chamber, which raises questions about whether Democrats would sign off on a measure lowering the state's income tax rate.

Those who oppose Proposition CC include TABOR author Douglas Bruce of Colorado Springs, who penned an email Tuesday to those who oppose the measure, advising them to, for example, call talk radio stations with different names and voices. (The No on CC campaign disavowed those tactics via Twitter on Tuesday.)

Polis' office said in a statement Wednesday that "the Governor was elected to solve problems and bring people together and that’s what he is doing. The Governor has been engaged in listening to Democrats and Republicans to better understand their fiscal priorities and there have been many fruitful conversations."

The last special session, called by then-Gov. John Hickenlooper in October 2017, was intended to deal with errors in the hospital provider fee bill that impacted taxes collected by special districts.

Republicans, who then held control of the state Senate, opposed the call and killed the bills that would have dealt with the problem. The General Assembly resolved those issues when lawmakers convened in January 2018.

The cost to taxpayers for a special session would likely exceed $25,000 per day, based on the cost of the 2017 session, which lasted two days. Since then, all House lawmakers and half of the Senate received pay increases that began on Jan. 1 of this year.

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