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Legality of tax-rate freeze argued before high court

Measure raised $118 million more in state revenue

By Berny Morson, Rocky Mountain News (Contact)

Published September 11, 2008 at 11:48 a.m.
Updated September 11, 2008 at 11:53 p.m.

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Lawyers for Gov. Bill Ritter told the Colorado Supreme Court on Thursday that a 2007 measure that raised $117.8 million of additional revenue for the state was not a tax increase that needed voter approval.

But lawyers challenging the governor argued that the additional money required a vote under the Taxpayer's Bill of Rights, a constitutional amendment approved by voters in 1992.

The seven-member panel set no date for a ruling. However, TABOR itself says the court must give priority to cases brought under that section of the state constitution.

The 2007 measure was backed by Ritter and Colorado Treasurer Cary Kennedy, as well as the Democratic leadership in the House and Senate. The additional money it raised was used to shore up state programs, particularly in higher education and health care.

Denver District Judge Christina Habas ruled for the tax opponents in May, saying the legislature should have referred the matter to voters.

The new law froze property tax rates in 115 of the state's 178 school districts. Because property values continued to rise, the constant rate produced more tax revenue - $117.8 million this year.

Although the revenue went to school districts, the state - not the schools - benefited from the increase. That's because state aid payments to schools decline when property tax revenues increase.

Lawyers for Ritter and the Colorado Department of Education told the Supreme Court that a referendum was not needed for the state to retain the $117.8 million. That's because voters in 174 districts already had voted in separate referendums between 1995 and 2006 to let school districts retain revenue beyond the caps set in TABOR.

Voters in many districts were assured by school boards that their taxes would not go up as a result of the referendums.

Those assurances carry no legal weight, said John Mill, who represents the education department. The ballot items said the districts may retain all of the money they may one day collect, Mill said. "All is an unambiguous term," he said.

Richard Westfall, arguing for opponents of the 2007 law, said the fact that the state realized $117.8 million should have triggered a statewide referendum. TABOR requires a vote whenever a public policy change results in a revenue increase to the state or a local district.

"What (the 2007 law) did was, it changed the rules of the game," Westfall said.

Justice Michael Bender did not seem convinced by that argument.

Bender said rising property values - not the rate freeze - are responsible for the tax increase. The freeze could just as well bring lower taxes now that some property values are dropping, he said.

Earlier, Justice Allison Eid referred to Colorado Attorney General John Suthers' opinion that a statewide vote - not 174 local votes - was needed to for the state to retain the $117.8 million.

Mill, the board of education attorney, said the only change under the 2007 law was in local property taxes, not state taxes. There is no state property tax.

Taxes were not frozen in four districts that did not pass the same referendums as the other 174 districts.

Comments

  • September 11, 2008

    2:51 p.m.

    Suggest removal

    2yme66rmn writes:

    Folks, Bill Ritter is out to bill all of US, WE THE PEOPLE, anytime he gets the chance. WE need to stop this mathematically challenged Governor NOW! How he got away with his campaign misappropriation of funds and then mortgaged his house to pay back the wrongdoing is beyond me. Isn't the oversight and auditing powers functioning now at all. The Democrat liberal agenda in Colorado is getting to be more out of control everyday. Since the Chicago influence of Federico Pena left his carbon footprint in our fine state, the residue is sticking to everything. Governor Ritter doesn't even know the law which he tended to for a long time. He is out of control and his cronies are covering his actions. The actions of this Governor are very much like the situations that are plagueing Detroit, Chicago and Phildelphia. The liberals are only about their holding office and feathering their political futures. Senator Bill Bradley wrote a fine book about what is wrong with politics in the United States and how the group goes about taking advantage of WE THE PEOPLE. Wake up CITIZENS! Read something about what is going on in OUR COUNTRY and then do something to make the necessary changes for conservative practices. Who does audit the spending in OUR state?

  • September 11, 2008

    3:08 p.m.

    Suggest removal

    mokey writes:

    2yme66rmn writes: "Who does audit the spending in OUR state?"

    In the case of the bill that Gov. Ritter had passed to freeze the TABOR (downward) adjustment to property taxes, the Supreme Court will effectively audit that action. I'm concerned about this because the Supreme Court does NOT apparently have a favorable opinion of TABOR. This works both ways, BTW, as President Bush has appointed conservative members to the Supreme Court who apparently are making conservative rulings on issues. The current STATE supreme court is stacked with Romer era folks who don't like TABOR's hold on government spending.

    2nd BTW, sometimes the courts rule in ways not anticipated by the people who appoint the judges. The Supreme Court has ruled against Bush on several issues -- the Detainees and skirting EPA rules are just a couple of examples.

    3rd BTW, Colorado is still a very conservative state when it comes to its budget. In almost every program -- higher education, services to the disabled, K-12 education, etc. -- Colorado is in the BOTTOM third of spending. So I just don't get all the crowing about Ritter. After all Ritter is still living under the TWO (count them TWO) tax CUTS by Bill Owens early in his administration. AND Referendum C was passed not under Ritter's watch but by a coalition of moderate republicans and democrats during the Owens Administration.

    Finally, 2yme66rmn, the Legislative Audit Committee, reviews state financial and programmatic practices and is rarely ever kind.

    If you go the General Assembly website and click on Audit Committee link, you can get their calendar and hearing dates/agenda and also listen to them over the web.

  • September 11, 2008

    3:18 p.m.

    Suggest removal

    psyclone writes:

    For the RMN writer, Berny Morson:

    Why did you refer to the plaintiffs as "conservative opponents" but NOT the defendants, Ritter, Kennedy & the Democratic leadership as "liberal proponents"?

    This sort of blatant bias in news reporting is why I canceled my subscription to the newspaper.