Tuesday, March 17, 2009

Another reason to leave Colorado

The state constitution is whatever the courts say it is.

That's the upshot of yesterday's 6-1 ruling by the Colorado Supreme Court upholding a tax-rate freeze championed by Gov. Bill Ritter and passed by the 2007 legislature.

For those of you outside Colorado, here's this convoluted story in a nutshell.

The 1992 constitutional amendment known as the Taxpayer's Bill of Rights requires, among other things, a vote of the people before approving "any new tax, tax rate increase, mill levy [property tax hike] above that for the prior year -- or a tax policy change directly causing a net revenue gain to any district."

Another provision of TABOR -- the one that drives liberals really crazy -- requires the government to issue tax refunds if revenues grow faster than inflation plus population growth. Residents of individual school districts can elect to forgo reductions in property tax rates that would be mandated by TABOR, again by popular vote. Since 1995, 174 of the 178 school districts in Colorado have voted to "de-Bruce," a process named after TABOR author Douglas Bruce.

But four haven't; in fact, their residents had voted no in elections to de-Bruce. But when Ritter and the legislature moved in 2007 to freeze mill-levy rates across the state, suspending scheduled tax-rate reductions, that move delivered an extra $117 million to state coffers immediately, and over time would bring many million more to the state in higher taxes that no voters approved. Moreover, as the Independence Institute's Jon Caldara pointed out last year, that $117 million didn't go to fund education at the local level; it was diverted to the state's General Fund to close a short-term budget deficit.

The Mesa County Commission, the Independence Institute and several other taxpayer groups filed suit in court, calling the tax freeze an unconstitutional tax policy change that lacked voter approval -- and they won in Denver District Court. (Trying to track down that opinion, which seems to have disappeared from the Web.)

But the state Supreme Court reversed the lower court ruling, saying the legislation was not a tax policy change but instead an extension of the de-Brucing election most of the other districts had approved.

My former boss Vincent Carroll, now at The Denver Post, nails it:

The audacity of the court’s claim is breathtaking. There is not one voter in this state who consciously approved the freezing of mill levy rates yesterday, today, and some day in the future when residential property values rebound and start to accelerate skyward again — not one who heard that issue debated at a local election. To the contrary, many were explicitly told their votes would have no impact on future taxes.

Voters merely agreed to forgo any surplus collected by their districts under the existing system, which did not foresee frozen rates.


Critics of the court say a gang of unelected judges are rewriting the state constitution because they disagree with the policy preferences of voters. (Where have we heard that before?)

All I know is, as someone who values separation of powers and government that's played by the rules, it looks like a good time to leave Colorado.

UPDATE: The District Court opinion, by Judge Christine Habas, is available through the Attorney General's Web site. Colorado AG John Suthers thought the law was unconstitutional, btw, and issued his own opinion about it in 2007 here.

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