The Taxpayer’s Bill of Rights (TABOR) has wreaked havoc on local governments and their residents for more than 30 years. With government at every level hamstrung by TABOR, every year local governments put forward extremely important and consequential initiatives to better meet the needs of their residents. November 2024 will be no different.

This November, several local governments are asking their voters to opt out of the revenue cap imposed by TABOR and redirect some of the funds from lodging taxes to address child care and affordable housing needs in these communities. 

The ability to ensure adequate funding for local services is complicated by TABOR. Local governments are limited in the types of revenue they can raise – TABOR bans local income taxes and real estate transfer taxes – and, as mentioned, the constitutional amendment limits how much revenue governments can spend. TABOR leaves local governments with few avenues to increase services for their residents and means governments must continue to ask their residents to lift these restrictions. These prohibitions speak to how TABOR continues to hold back communities across our state.

Debrucing

Every taxing district in Colorado – the state, cities, counties, and special districts – are subject to the revenue limits prescribed in TABOR. TABOR says that spending can only increase from the previous year by population growth plus inflation. If government collects more revenue than the above-mentioned cap, it must be returned to voters. These limits are harmful, and as the Bell Policy Center has previously documented, undermine public investment and prevents governments from meeting the needs of a changing economy and the community. 

Debrucing lifts the above-mentioned cap, allowing governments to retain and spend all of the revenue they collect. To debruce, governments must receive approval from their voters. In all, 51 of the 64 counties in the state, 230 out of the 274 municipalities, and 177 out of 178 school districts, have debruced since TABOR’s inception in 1992. And in 2024, several other governments have put measures on the ballot to debruce.

• Jefferson County: Jefferson County has asked its residents twice in the last four years to eliminate its revenue cap, and will be trying once more in November 2024 through Ballot Issue 1A. The county is looking at $30 million in budget cuts in 2025 if it is not able to raise its cap this November. That is the harm of TABOR, and how the amendment constricts government investment. The county’s full General Fund expenditures are upward of $273 million, so this would represent a cut of 11 percent. If voters were to approve Ballot Issue 1A, that money would then be put toward transportation, infrastructure, and public safety. That would allow investment in repairing roads and bridges, wildfire and flood mitigation, mental health programs, and crime prevention strategies.
• Arapahoe County: Like Jefferson County, Arapahoe County is also one of the 13 counties in Colorado to have not eliminated the revenue cap that is part of TABOR. Arapahoe County would have to cut up to $35 million in county services if voters reject Ballot Issue 1A in November. Due in part to the TABOR cap, the county has more than $316 million of deferred maintenance and transportation projects waiting to be taken up – projects that would create jobs and help communities within the county grow and thrive. With substantial growth in the greater metro Denver area, these needs have only increased over the past several years. With property taxes being the main source of revenue for counties, Arapahoe County claims that in 2024 it had forgone $74 million in property tax revenue so as to not go over the revenue limit. If Ballot Issue 1A were to pass, then the county would be able to collect all tax revenue and put more money toward road and transportation maintenance, crime prevention and mental health first responders, and housing affordability and homelessness prevention.
• Regional Transportation District (RTD): RTD is a special taxing district for public transit that encompasses Denver, Jefferson, Boulder, Broomfield, Adams, Arapahoe, Douglas, and Weld counties. If voters in those counties approve Issue 7A – the debrucing measure – then RTD would be able to retain and spend an additional $50-$60 million. 

As a public transit agency, RTD is committed to ensuring access for all, so having that money available will ensure better service and mobility for the millions of people who depend on the service. Seventy five percent of RTD’s revenue comes from a 1 percent sales and use tax within its district. That totaled $932 million last year. To juxtapose this measure with the two county debrucing efforts above, RTD is currently allowed to retain its revenue over the cap, but that allowance is expiring and so RTD is now looking for a permanent debruce of its revenues. 

The agency says that it needs the money to complete upcoming projects, such as the East Colfax Bus Rapid Transit, and to study similar efforts on Colorado and Federal boulevards in Denver. It is also looking to hire more bus and train operators to ensure faster and timelier service.

• City of Lakewood: The City of Lakewood has passed several small and temporary debrucing measures since TABOR’s passage. Most recently, the city voted in 2018 to eliminate the revenue cap for all revenues for nine years, encompassing 2017 through 2025. With the debrucing measure expiring at the end of 2025, the city is seeking a permanent debrucing in the November election. If Ballot Issue 2A were to pass, the money that the city retains above the cap would be split into thirds to be spent for open spaces and parks, public safety-related equipment and personnel, and improvement and maintenance of sidewalks and roads.
• South Adams County Water and Sanitation District: The South Adams County Water and Sanitation District has found itself in a difficult position. Because of TABOR’s revenue limits, it has been forced to forgo state grant money. Accepting that money would put the district over the cap and force it to send the grant money to its own taxpayers. To avoid this from happening, the district is unable to apply for certain state grants. The state offers the grant money for a variety of projects the district is hoping to undertake, including a new treatment plant to eliminate harmful chemicals in the water and replacing turf with native plants that need less water. These are all important projects for health and water sustainability. To access this money, the 70,000 people in Commerce City who are a part of the district should support the debrucing measure, known as Ballot Issue 6A, this November.

Lodging Taxes for Housing and Child Care

In 2022, the Colorado legislature passed a new law which allows local governments to diversify how certain revenue can be spent, in turn creating a new tool to directly address major issues in communities across the state. HB22-1117 allowed lodging tax revenue, or revenue from taxes assessed on hotel rooms and short-term rentals, to be used for services outside of tourism and marketing. Because of the strain that tourism was putting on housing and child care, the legislature realized that allowing local governments to reallocate existing tax revenue, or increase lodging tax revenue, toward these uses would be a good way to alleviate some of the problems. Notably, TABOR limits how governments can raise revenue, making the provisions in HB22-1117 an important avenue for meeting important community needs.

Since HB22-1117 became law, at least eight Colorado counties have passed a ballot measure to utilize lodging tax revenue for housing and/or child care, and now others are trying to use that same path in 2024.

• Grand County: Grand County is looking to increase its lodging tax from 1.8 percent to 2 percent. The tax is projected to raise $2.25 million annually to be put toward tourism marketing, child care, and housing. Grand County needs 700 additional homes for local residents, and money from the tax would help to decrease that number. And, according to Grand Beginnings, a nonprofit focused on supporting early childhood education in Grand and Jackson counties, licensed early childhood programs in Grand and Jackson County only have capacity for 40 percent of young children in those counties. This new influx of money would allow for more slots for children across the county, who otherwise have no local access to licensed child care.
• La Plata County: La Plata County is not asking voters to raise taxes this election, but for the authorization to reroute revenue from its existing lodging tax to housing and child care. In total, 70 percent of the current revenue would go to those needs, with a projected $500,000 to child care annually, according to Chalkbeat. According to the Early Childhood Council of La Plata County, child care costs can be 25 to 30 percent of a family’s annual income, putting a significant burden on families. Using the reallocated revenue to bring down costs of child care for families would alleviate a real financial strain.

• City of Montrose: Montrose is seeking an increase of its lodging tax from .9 percent to 6 percent, which is projected to raise about $1.5 million in its first year of implementation. With a city-wide survey showing that child care and housing were the two most important issues for Montrose residents, half of the money raised will be allocated for those two purposes. Seventeen percent, or about $250,000, would go toward more child care slots, and 33 percent, or close to $500,000, would be available for incentives to go to developers to build more affordable housing. 

TABOR has made work difficult for local governments in trying to ensure revenue for needed services. With a dearth of avenues to raise revenue for important public needs – like housing, infrastructure, child care, and many more – and a limitation on the ability to use existing revenue, local governments continually have to go to voters for approval of various governmental duties. As many areas of Colorado have significantly grown, the needs of Coloradans have also grown, and that has forced more discussion on the best way to balance taxation with necessary support for residents. These conversations have led to many vital local ballot issues across the state that will determine whether local governments can meet the needs of their communities.