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Posted on: October 13, 2021

Commissioner Kraft-Tharp Talks TABOR

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Having lived in Jefferson County for 24 years, I know firsthand our quality of life is unparalleled. We have a reputation as a wonderful place for all to thrive. However, the quality of services the county provides to residents and local businesses come at a cost.   

As many of you know, we have been operating in a tight financial environment over the last several years. Our primary revenue source is property taxes, and it is limited in various ways based on state law called the Taxpayers Bill of Rights (TABOR).  

TABOR continues to be a topic that many people struggle to fully understand and presents many challenges to the county budget. So, I thought I would take this opportunity to share more information about TABOR, including what it is, what does it do, how does it affect the County’s budget and more.  

What is TABOR? An amendment to the Colorado Constitution enacted by voters in 1992 that limits the amount of revenue governments in Colorado can retain and spend, including the state, counties, cities, schools, and special districts.  

What does TABOR do? It contains several provisions concerning revenue for state and local governments in Colorado. The two principal provisions are the requirement of voter approval for tax increases, and the limitation on the growth of revenue from one year to the next. Some of those provisions include: 

  • TABOR limits the growth of revenue, not spending - although the annual growth limit is referred to as the “fiscal year spending limit” in the constitution, it is a limit on the amount of total revenue that state and local governments may collect. TABOR does not place limits on the amount of money that may be budgeted, appropriated, or spent. Additionally, TABOR places a limit on total revenue and a specific limit just on property tax revenue. 
  • TABOR prohibits tax increases without voter approval - if lawmakers or local officials want to implement a new tax or increase an existing tax rate, they must first seek approval from the voters within that taxing jurisdiction.  
  • TABOR establishes different revenue limits for state and local governments - the amount of revenue that can be received each year can only grow according to specific growth factors, depending on the level of government. This local growth factor fails to keep pace with the demands stemming from the county’s population growth. What does this mean for Jefferson County? We continue to provide services to an increasingly larger group of people and maintaining roads and other infrastructure for a higher level of population, without having the funding to support these increases. This is the root of the continuing budget challenge facing the county.  
  • TABOR requires excess revenue be refunded to taxpayers - if the total revenue collected by the state or local government exceeds the TABOR limit in any given year (both overall revenue and property tax revenue), then that excess amount must be refunded to taxpayers the following fiscal year.  
  • TABOR enables voters to forego refunds of excess revenue - state and local governments can seek approval from the voters to allow excess revenue to be retained and spent. This action is commonly known as “de-Brucing,” referring to Douglas Bruce, the principal architect of the TABOR amendment. De-Brucing is not something that applies to a government, it is something that applies to excess revenue. And a government cannot simply opt out of TABOR by “de-Brucing.” Even if a government is granted approval by voters to retain its excess revenue, it is still fully subject to all the other provisions of TABOR. 
  • TABOR requires state and local governments to establish and maintain a 3% emergency reserve - governments in Colorado must set aside an amount of money in reserves equivalent to 3% of their fiscal year spending. This reserve can only be used for declared emergencies such as natural disasters or public health pandemics – revenue shortfalls or changes in the economy do not qualify as an emergency. If this reserve is utilized, it must be restored the following year. 

How Does TABOR affect the County Budget? The major impact on the county budget is that often we cannot retain all the revenue that we collect, despite a growing economy and new construction. TABOR causes county revenue to drop dramatically and quickly in times of an economic downturn and is only allowed to grow on average approximately 3% per year during recovery thereby causing the county to reduce expenditures and services.

Is the TABOR refund always made to the taxpayers by check? The Colorado Constitution allows lawmakers and local officials to determine how to return the money. Examples include a credit to the following year’s property tax bill, a temporary adjustment to the mill levy, or a refund check. 

Why doesn’t the county just keep these refund checks to address its budget challenge? We must obtain prior approval from the voters to retain and spend any revenue more than TABOR limits. If we do not have voter approval, that excess revenue must be returned to the taxpayers.

Jefferson County, unlike other Colorado counties, does not have permission from voters to re-invest dollars over our TABOR cap back into essential county services, like transportation, roads, and public safety. Did you know that even state grants for public safety, parks, roads, housing, and mental health count against our TABOR cap? 

In the coming weeks, the Board of County Commissioners will review, and ultimately approve, the 2022 county budget in November. As we continue these conversations for 2022 and beyond, we urge you to let us know what services and programs matter most to you. What are your budget priorities? How do you feel it is best for Jefferson County to try and solve these issues? To share your views, contact us at (303) 271-8525 or [email protected].

Once again, I want to thank you for the privilege of serving you and I look forward to hearing from you. You can reach me at [email protected] or call my direct line at 303-271-8511.

Tracy

 

To learn more about the budget challenges, visit www.jeffco.us and click on the Financial Realities page link on our home page. You can also see the county’s Financial Transparency Portal.

To learn more about the Jefferson County Commissioners, visit our website. The Board of County Commissioners’ public hearings are held on most Tuesdays at 8:00 a.m. and we invite you to join us for public comment. Click here for details.

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