TABOR Rebates:Just the Facts

What are TABOR Rebates?

When state revenues (Fiscal Year Spending) exceed a voter approved cap (rate of change in CPI plus rate of change in state population), the Colorado Constitution requires money be refunded to taxpayers.

Reasonable Means to Return Money

“…districts may use any reasonable method for refunds under this section, including temporary tax credits or rate reductions”

-Colorado Constitution—Article X Section 20

FY 2013-2014 FY 2014-2015 FY 2015-2016 FY 2016-2017 $10,900

$11,400

$11,900

$12,400

$12,900

$13,400

$13,900

Total TABOR Revenue Legislative Council Total TABOR Revenue OSPB TABOR limit/Ref C Cap Legislative Council TABOR limit/Ref C Cap OSPB

Mill

ions

FY 2014-15OSPB: $196.8 million

above capLeg. Council: $48.2 million

below cap

FY 2015-16OSPB: $186.5 million

above capLeg. Council: $116.7 mil-

lion above cap

FY 2016-17OSPB: $269.2 million

above capLeg. Council: $620.4 mil-

lion above cap

TABOR Rebates Predicted This Fiscal Year by Governor’s Office and Next Year by Legislative Council

Revenue Subject to Cap Comes from Taxes and Cash Funds

2007-08

2008-09

2009-10

2010-11

2011-12

2012-13

2013-14

2014-15

2015-16

2016-17

$0

$2,000

$4,000

$6,000

$8,000

$10,000

$12,000

$14,000

$16,000

Cash Funds General FundThe Cap Time Out Cap

Estimates

FY 2014-15General Fund: $9.5 billionCash Funds: $2.7 billion

Income and

Sales Tax

Fees

Cash Funds

General Fund

TABOR Rebates

TABOR Rebates are Paid from General Fund

Legislature Has Authorized Three Refund Mechanisms

First, (and last) Sales Tax rebate based on income

Second, Earned Income Tax Credit

Third, temporary reduction in the income tax rate from 4.63% to 4.5%

Size of the Rebate Depends How Money is ReturnedCurrent Estimates of OSPB

FY 2014-15 FY 2015-16 FY 2016-17$0

$50

$100

$150

$200

$250

$300

Mill

ions

of D

olla

rs

Earned Income Tax Credit

$85.5 million

6 Tier Sales Tax Refund

$114.9 Million

Income Tax Rate Cut

From 4.63% to 4.5%$241.8 million

6 Tier Sales Tax Refund

Total: $27.4 million

$200.4 million

$269.2 million

$186.5 million

6 Tier Sales Tax Refund

$186.5 Million

TABOR Rebates Impact Money Available for Transportation and Capital Construction

If TABOR rebate is 1-3% of General Fund then transfers are cut by half. (1% of General Fund revenue = $101.6 million)

If TABOR rebate is above 3% of General Fund, the transfers is eliminated. (3% of General Fund revenue = $304.8 million)

December Estimates Amounts Reduce Transfers by 50%

Capital Construction Fund

Highway Users Tax Fund

FY 2015-16

$51.3 million

$25.6 million

$0

$205 million

$102.5 million

$0

FY 2016-17

$54 million

$27 million

$0

$216 million

$108million

$0

1.8% of GF Rebate Expected ($186.5 m)

2.6% of GF Rebate Expected ($269.2 m)

***OSPB Estimates

Current

Current

TABOR refund 1-3%

TABOR refund 1-3%

TABOR refund above 3%

TABOR refund above 3%

Ways to Address the Conundrum

• changes in what counts as revenue subject to the cap

• elections that allow the state to keep revenue above the cap

• significant changes to the constitution.

*(proposals to reduce revenue collections)

Marijuana Rebate not Related to Revenue Cap

Blue Book Estimate FY 2014-15

December Estimate FY 2014-15

State spending without new taxes

State revenue from new tax

$12,080 $12,299

$67 $58.7

(dollar figures in millions)