Colorado Municipal League untangles special session-driving tax issue
Author: Joey Bunch - September 14, 2017 - Updated: September 14, 2017
As often is the case, the Colorado Municipal League is the go-to source to explain complicated issues that we untrained reporters struggle to fully grasp. That’s the case with the tax bugaboo that has Gov. John Hickenlooper working on plans to call lawmakers back to Denver for a special session next month.
The mistake was introduced when the legislature hurriedly passed Senate Bill 267 at the end of the last session to reclassify the state’s hospital provider fee. The aim was to get it out from under a constitutional spending cap in order to drum up money for rural hospitals and transportation without — only technically — a tax increase.
For special districts, however, it was a significant tax decrease, which was never lawmakers’ aim.
In July CML’s deputy director, Kevin Bommer, wrote the clearest, most definitive explanation to date that Pulitzer Prize-winning publications in Colorado could only admire.
A critical part of the deal was an increase in marijuana taxes that will fund other portions of the deal, such as a business personal property tax credit. However, the decision to exempt marijuana from the state’s base sales tax and increase the special sales tax rate was made on the fly. The resulting fallout has become a cautionary tale for many in the state that blame local sales taxes for being complicated but fail to look at state policies that muddy the waters.
Bommer cited some reporting from the venerable Denver Post, but noted the state’s newspaper of record wasn’t the first to take a shot explaining the legislative quagmire. He’s right. The driver of this political conversation was Sherrie Peif of Complete Colorado. The Post rode her reporting coat tails four days later.
“As a general rule, changes in the state sales tax base automatically apply to statutory entities – statutory municipalities, counties, and special districts,” Bommer explained in his July 24 blog. “With over 80 different state sale tax exemptions on the books and legislation every session that propose more, the Colorado Municipal League is perennially busy ensuring that the state’s decision to exempt something from its own base does not automatically exempt it in statutory municipalities. (Home rule municipalities are thankfully unaffected by state exemptions, and such decisions on exemptions are purely local)
“The process was no different for SB 267.”
Read Boomer’s excellent Legislative Matters blog here.
There were critics that the compromise was being rushed through at the time. One of the most clear and notable was Michael Fields, Americans for Prosperity’s Colorado clutch man who urged lawmakers to slow down and think deeply instead of swiftly on far-reaching tax policy. For years, the GOP has been resistant to reclassifying the hospital provider fee, because it represented monkeying with the Taxpayer’s Bill of Rights, the constitutional amendment that conservatives revere like Reagan because it caps state spending.
Fields enjoyed an I-told-you-so moment Wednesday night after Colorado Politics was the first to report that Gov. John Hickenlooper’s staff is working on dates for the special session.
He said on Twitter:
— Michael Fields (@MichaelCLFields) September 14, 2017