By Shaina Cole | Contributing Writer, Rocky Mountain Voice
Colorado’s fight over spending limits is back at the Capitol, and this time it could end up in front of voters.
The Senate Finance Committee voted 6–3 on March 12 to advance SB26-135, teeing up a 2026 vote on whether the state can keep revenue above the TABOR cap instead of sending it back as refunds.
It comes down to a basic question: should that extra revenue go back to taxpayers, or stay with the state? What follows is less straightforward.
How the bill works
The proposal does not rewrite TABOR itself. Instead, it puts that decision to voters—whether to allow the state to keep and spend money that would otherwise be refunded.
If voters sign off, the state could retain revenue above the cap, up to an amount tied to K–12 education funding.
The bill then lays out how those dollars would be distributed.
In the early years, some of that money would be directed to schools, with increases capped at about 2 percent for things like teacher pay, retention, class size, and career training.
Schools are only part of the picture.
Before any of it reaches classrooms, the state would first use the money to reimburse local governments for property tax exemptions. After those obligations are met—and after the education allocation is made—any remaining funds would be placed in a state account within the general fund, where lawmakers could spend them on other priorities.
That structure would remain in place for ten years.
After ten years, that education requirement drops off entirely, leaving future legislatures free to decide how the money is spent.
Once that revenue is built into the state’s base, future TABOR limits would be calculated from a higher starting point.
What changes under the proposal
Right now, any revenue above the constitutional limit is refunded unless voters approve keeping it.
This measure would shift that balance.
The bill’s fiscal note estimates the state could retain about $817 million in the first year alone—money that would otherwise be returned to taxpayers. Of that total, a portion would go toward property tax reimbursements and education funding, with the remainder available for other state spending.
Refunds, however, are not guaranteed every year. State forecasts show no TABOR surplus is expected in the current fiscal year, with larger surpluses projected in future years—when this measure would begin to apply.
The push comes as lawmakers deal with tighter budgets, with recent Legislative Council Staff forecasts showing a roughly $399 million shortfall and no TABOR surplus this year.
Meanwhile, spending in major areas has surged. Medicaid alone has more than doubled over the past decade—up about 101 percent—and now makes up roughly a third of state spending.
Even with fewer students in the system, education spending hasn’t slowed. That shift is showing up in a broader push at the Capitol to retain money that would otherwise be refunded to taxpayers under TABOR.
Supporters say it brings stability to school funding
Supporters who testified in committee described a system they say has struggled to keep up.
Kevin Vick, president of the Colorado Education Association, told lawmakers the measure would allow for more consistent investment.
“This critical measure will allow Colorado voters to raise Colorado’s outdated revenue cap and finally allow our state to make meaningful and desperately needed investments in public education,” Vick said.
He pointed to what educators describe as a persistent gap.
“The result is a $3.5 to $4 billion annual shortfall in our public schools,” Vick said.
Teachers echoed that concern, describing ongoing tradeoffs inside schools.
Candace Mosher, president of the Poudre Education Association, said those pressures have defined her career.
“The entire duration of my career has been surrounded by creative maneuvering of financial dollars in every school and district I have ever worked because of the budget stabilization factor that has forced us to do more with less,” Mosher said.
She said the bill would allow the state to put existing revenue toward classrooms.
“SB 135 offers a practical way forward. It allows Colorado to invest revenue the state already collects into our public schools so we can better support students and the educators who serve them, all without raising taxes,” Mosher said.
Raina Castillo of United for a New Economy said the proposal would expand what the state can do—not just for schools.
“Senate Bill 135 will raise the cap and increase state spending on education to better fund our teachers and schools,” Castillo said.
“By increasing the amount of revenue the state can spend, it opens up more funding for health care, food assistance, and other important programs.”
Critics say the measure expands state spending
Opponents told lawmakers the bill reaches beyond education funding.
Kim Monson, president of the Colorado Union of Taxpayers, criticized the proposal in direct terms.
“Senate Bill 26-135 is dishonest and deceptive.”
“Couched in helping children, paying teachers more, is actually taking our TABOR refunds ultimately forever.”
She argued the structure amounts to a permanent change.
“So Senate Bill 135 is the most sophisticated attempt yet,” Monson said. “Market a permanent TABOR cap raise as a temporary education measure.”
Monson also pointed to the fiscal note.
“The fiscal note confirms the gain. $817 million in refunds vanish in year one and after 10 years, every dollar of retained revenue goes wherever the legislature decides.”
Another witness, Ms. Justman, raised concerns about how the measure is presented to voters.
“The title is incorrect because it does not let Colorado taxpayers know that they will lose their TABOR tax refund,” Justman said.
“These TABOR funds are what every Colorado parent, grandparent, and others depend on.”
Critics say the bill isn’t just about school funding. They argue it would change how much the state can spend and give lawmakers more control over money that would otherwise be refunded.
The debate spills onto social media
The debate has also played out online, where critics have focused on how the measure is being described.
Kristi Burton Brown, former chair of the Colorado Republican Party, wrote on X:
“If you oppose blank checks to the govt, you will NOT like SB26-135.”
“The legislature is putting this on the ballot with HIGHLY misleading ballot language & claim this is just for education. The reality is that education gets a paltry sum while the state gets billions.”
The Adams County Republican Party issued a similar warning:
“ALERT: Your TABOR refunds are on the line!”
“Democratic senators just voted on SB26-135, a scheme to permanently gut TABOR protections. By using ‘education’ as a lure, this bill would allow the state to keep BILLIONS in tax overcollections that belong to YOU.”
Now it heads to appropriations
The measure now moves to the Senate Appropriations Committee for a closer look at the numbers.
If lawmakers approve it, the final decision won’t be made at the Capitol.
Voters would see the measure on the November 2026 ballot and decide whether TABOR refunds continue—or whether the state keeps and spends that revenue instead.
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