Signed legislation to decrease TABOR by $2.8 billion, redistribute revenue to low-income families
COLORADO SPRINGS, Colo. (KRDO) - More than 100 bills signed into law this legislative session are expected to decrease TABOR refunds, but a Colorado Springs economist said it’s more of a redistribution of state revenue rather than a reduction.
A report by the Common Sense Institute, an organization that researches Colorado’s economy, estimates the bills signed into law this year will decrease TABOR refunds by $2.8 billion over the next three years.
CSI projected TABOR refunds to reduce by a combined $523 million in FY24, $1.06 billion in FY25, and $1.25 billion in FY26. This is 47% of the projected TABOR total ($6 billion) during those three years. However, CSI said it is still calculating how much money the average Coloradan will lose.
“The policymakers have decided we know what's best, we know the right way to redirect those dollars towards a myriad of tax credits and special programs, essentially choosing winners and losers and removing that choice from the household to direct those dollars,” said Kelly Caufield, the executive director of the Common Sense Institute.
Most of this reduction is due to state lawmakers passing legislation which will increase tax credits for low-income families, especially those with children. One of those bills, the “Family Affordability Tax Credit,” will provide tax credits of up to $3,200 for parents who are eligible. This will use $327 million to $739 million of TABOR refund money over the next three years, the most of any bill passed during the legislative session.
Another bill will increase tax credits for child care, using $44 million to $207 million of TABOR refund money over three years. A number of other programs and tax credits are also cutting into TABOR, including one for senior housing, teachers, and workforce development.
Bill Craighead, the program director of the University of Colorado Colorado Springs Economic Forum, said the state isn’t changing the amount of money going back to Coloradans but instead changing how they distribute it.
“The total amount of income in the pocket of Coloradans is not really changing,” he said. “It's just which Coloradans are benefiting most.”
Craighead said those financial benefits will depend on who you are and your socio-economic status as well as a number of other eligibility requirements.
“One school of thought would be lower-income families, families dealing with the cost of child care, they're the ones that need it most, so this is great because it benefits them the most,” Craighead said. “Other people would say, ‘Well, higher income people who pay the most taxes should get the most benefit.’ They're not going to like this as much.”
The Common Sense Institute said lawmakers shouldn’t be deciding how taxpayer’s money is spent.
“Nearly $3 billion in TABOR refunds is redirected through targeted tax credits and other specific programs and causes, removing the choice of the individual household to determine what's best in terms of how they want to spend their dollars,” Caufield said.
While lower-income families are expected to see the most financial benefit from the state’s excess revenue, Craighead said lawmakers did find a compromise, adding another funding mechanism for TABOR refunds. This year TABOR refunds will be distributed by lowering the state income tax rate, which Craighead said typically benefits those who make more money.
“The state legislature basically has to make a choice and whatever choice they make is going to have distributional consequences that some people are going to like and some people are going to dislike.”
The Colorado Department of Revenue says that this year if you claimed a 2023 refund, the TABOR refund will be combined and issued with your state tax refund. Unlike the 2022 Colorado cashback, no separate check will be issued. You must claim the state sales tax refund (TABOR refund) when filing your state income tax return.
