While enterprise funds are unique to Colorado, government by user fee or service charge isn’t. State governments across the country use fees and charges to supplement revenue to provide important services and programs to its residents. While Colorado does it slightly more than the national average, many states, including some of our neighbors, use them even more.

Many user fees make sense — for example a state parking garage that operates through user fee — but many others increase inequities in the system, as user fees are a greater hardship for low-income families than for high-income ones. These facts are important to keep in mind when looking at enterprise funds in Colorado.

Features of Enterprise Funds & Specific Examples

An enterprise fund is a specific type of “state-owned business” authorized by the Colorado Constitution under the Taxpayer’s Bill of Rights (TABOR). There are a number of important aspects that characterize a legal enterprise fund in Colorado: 

• It’s a government-owned business, housed in an existing state agency and run by a state employee
• It can only receive up to 10 percent of its annual revenue from state and local governments grants combined
• The bulk of the revenue for enterprises comes primarily from user fees
• Enterprises have bonding authority, meaning they can take out debt based upon the projected revenue from their user fees
• Enterprises cannot levy taxes and must provide goods or services in exchange for fees

There are currently more than a dozen enterprise funds in Colorado that have a total revenue of $17.9 billion. Those with the largest revenues are:

• Higher education enterprises
• CollegeInvest
• The state lottery
• Colorado HealthCare Affordability & Sustainability Enterprise

Enterprise funds, as laid out in TABOR, are important for our state because their revenues aren’t subject to the revenue cap. This means Colorado doesn’t have to cut other programs to make way for these funds. As Colorado’s debate on the state’s current fiscal structure continues to rage, enterprise funds and their purpose and uses will have to be a part, so it’s critical we better understand them. Our primer on these funds helps do just that.