Colorado Lawmakers Lean on Fees to Sidestep TABOR Tax Limits

By: Marissa Ventrelli | Colorado Politics

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

A new report shows that fee-funded “enterprises” — state-owned businesses exempt from TABOR’s revenue cap — have expanded dramatically, raising worries that lawmakers are increasingly relying on fees, rather than taxes, to fund government programs.

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.

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