Special session ends with a thud
The General Assembly returned to work this week for a brief special session that was intended to deal with a mistake found in the omnibus rural Colorado measure signed into law in May.
On Sept. 14, Gov. John Hickenlooper issued an executive order requiring lawmakers to come back to the Capitol to fix an inadvertent error in Senate Bill 17-267, known as “Sustainability for Rural Colorado.”
The measure, co-sponsored by two lawmakers from northeastern Colorado, prevented a half-billion dollar budget cut to Colorado hospitals, preventing the potential closure of as many as a dozen rural hospitals, including two in northeastern Colorado, according to Republican Senate President Pro-Tem Jerry Sonnenberg of Sterling.
The law also included a $30 million one-time funding boost for rural schools. That boost is to be paid for by increasing the sales tax on recreational marijuana from 10 percent to 15 percent, the maximum approved by voters in a 2015 statewide referendum.
However, that portion of the law had a mistake, missed by lawmakers, the governor’s staff and by lobbyists for a handful of special districts, which provide services such as transportation and affordable housing. The law combined two taxes into one: the state sales tax of 2.9 percent and the 10 percent recreational marijuana tax. The state sales tax went away, but part of that state sales tax was going to the special districts. That’s costing those districts almost $7 million per year in lost revenue.
The largest of those special districts is the eight-county Denver area Regional Transportation District, which is losing about a half million dollars per month, according to RTD officials. The metro-area Scientific and Cultural Facilities District, which funds 275 arts and cultural organizations, also is losing money, at about $50,000 per month. SCFD funds the area’s largest arts organizations, including the Denver Zoo, the Museum of Nature and Science, the Denver Art Museum and hundreds of smaller organizations in the metro area.
Also losing revenue: a handful of transportation authorities on the Western Slope, a hospital district in Montezuma County and an affordable housing district in Summit County.
So fixing the problem should be simple, according to the governor and Democrats. Most Republicans, including SB 267 co-sponsor Rep. Jon Becker of Fort Morgan, disagreed.
Becker announced before the session started that he would not back the measure unless the special session order also looked at transportation. Hickenlooper’s order was narrowly tailored to only deal with the error in SB 267.
The issue for Republicans, particularly in the state Senate, was that changing the law to allow the special districts that marijuana sales tax would require voters in those special districts to approve the change. That’s required by the Taxpayer’s Bill of Rights, according to Senate President Kevin Grantham of Canon City and Senate Majority Leader Chris Holbert of Parker.
Democrats and backers of the fix disagree, pointing to court decisions on TABOR that have already addressed similar situations.
Attorney Mark Grueskin, who has been on the winning side of several of those cases, told the Senate Transportation Committee on Monday, Oct. 2, that the state Supreme Court has already dealt with these kinds of errors. He pointed to a 1995 decision involving an error made by the Arapahoe County assessor, one that resulted in refunds to taxpayers. But the Arapahoe County school district stood to lose revenue because of the error, and the district unilaterally raised the local mill levy (property taxes) to pay for already-issued bonds. The court ruled that the mill levy was not an increase because it addressed an error and that voters had already approved the bonds and the revenue was needed to pay off those bonds.
Holbert has maintained that the requirement for a vote has to do with a line in TABOR that says voters must approve a change in tax policy. Grueskin pointed to a more recent case involving Mesa County. In that lawsuit the state Supreme Court said tax policy changes apply only when the revenue that results is so much that the revenues would push the district over its revenue limit and that voters would then have to approve the district spending those extra dollars.
But Grueskin’s analysis and pleas from the special districts failed to draw even one Republican vote in the transportation committee, although it is believed that either of the bills would have succeeded had they been allowed to go to the full Senate.
In order to pass legislation, a bill needs a minimum of three days. The special session never made it that far. Senate Republicans on the transportation committee, in two days, dispatched the two bills offered by Democrats to fix the problem, and the session was over.
The issue now awaits the General Assembly when lawmakers return next January.
Sonnenberg originally worked on a bill to fix the problem that he intended to offer in January, but he told this reporter he’s no longer planning to work on it, due to the confusion over whether voters would have to approve the change. He also criticized the governor for hastily calling a session without working with lawmakers first to have a plan in place for how to resolve the problem.
The lack of progress in this week’s special session is the first since 2001 when a governor has called lawmakers back and nothing was accomplished, out of six special sessions called between 2001 and this year.
“This was a waste of taxpayer dollars,” Sonnenberg said. (The session is estimated to cost taxpayers about $50,000 for the two days.) “This is the first special session I’ve been associated with when there hasn’t been a plan to go in and solve the problem. We didn’t even see a draft of the bill until the [first day],” he said.
Sonnenberg acknowledged that the legislature made a mistake with SB 267, a drafting error that should be easy to fix. But like most Republicans, Sonnenberg is convinced TABOR requires the fix come with a vote. The Constitution says if you implement a new tax, increase a mill levy or do a policy change that increases the collection of taxes, that has to go to a vote of the people.
“I can’t support that fix” if it violates the Constitution, he said. But Sonnenberg also added that he is hopeful that other lawmakers with a background in constitutional law will figure out in the next three months how to resolve the problem.