by Jacob Baus

Few things are certain in life. In the General Assembly, school finance is one of the few things that is annually certain.

School finance has a reputation for being a confusing topic. That is a somewhat fair reputation because it is easy to quickly lose the forest for the trees. But the goal of this article is to try to make school finance less confusing.

Let us start with the basics.

Colorado Constitution

Pursuant to the Colorado Constitution, the General Assembly is responsible “for the establishment and maintenance of a thorough and uniform system of free public schools throughout the state.”[1] This “thorough and uniform” requirement significantly informs much of Colorado’s education policy, especially its school finance policy.

But what does “thorough and uniform” mean? Generally, the Colorado Supreme Court has held that “…’thorough and uniform’…[provides for] a public school system that is of a quality marked by completeness, is comprehensive, and is consistent across the state [and] does not demand absolute equality in the state’s provision of educational services, supplies, or expenditures.”[2] When examining the school finance formula in light of the thorough and uniform requirement, the Colorado Supreme Court has held that the formula adopted by the General Assembly that calculates every school district’s total program uniformly “is of a quality marked by completeness, is comprehensive, and is consistent across the state.”[3]

(For more information concerning the Colorado Supreme Court’s analysis of the “thorough and uniform” requirement and its application to school finance, please read the LegiSource article “Supreme Court Upholds General Assembly’s Authority as Education Policymaker”.)

District Total Program Versus Other Revenue

A school district’s revenue comes from multiple sources. One revenue source that all Colorado school districts receive is called “district total program.” A district’s total program is the financial base of support for public education in that district.[4] (More detail on where total program funding comes from below.) The school finance formula, codified by the General Assembly, annually determines each district’s total program.

A school district may have other sources of revenue that are distinct from its total program. For example, a district may receive a grant for a particular purpose such as new computers or federal funding because of the poverty rate of its student population. Additionally, a school district may have obtained voter approval for a bond for a one-time purpose such as a new school facility or a mill levy override (not to be confused with a district mill levy) for an ongoing administrative purpose such as an increase in teacher pay.

Total Program Formula

The school finance formula is comprised of distinct elements and factors that are calculated using uniform formulas that apply district-specific characteristics – most commonly, the district’s student population or a specific group of the student population.

For example, one element of the school finance formula determines the amount of “district English language learner funding.”[5] A district’s English language learner funding is determined by multiplying the number of English language learner students enrolled in the district by a dollar amount that is determined by a standard formula.

Therefore, if District A has 104 English language learner students, District A’s English language learner funding is determined by multiplying 104 by the English language learner funding amount. If District B has 219 English language learner students, District B’s English language learner funding is determined by multiplying 219 by the English language learner funding amount.

After all of the formula’s distinct elements and factors[6] are calculated, they are added up, and the result is the district’s total program.

How is the District’s Total Program Funded?

Generally, a district and the state each pay a portion of a district’s total program. The district pays its obligation (“local share”) first, and the state backfills the remaining difference between the local share and the district’s total program (“state share”).[7] Given this backfill arrangement, there are instances when a local district is able to fully fund its total program without any state share.

The local share is comprised of two revenue sources: specific ownership tax revenue and property tax revenue.[8] Specific ownership tax is a tax that is collected on vehicles, and there are some parameters regarding the amount of this total tax revenue that is used for local share purposes.[9] With respect to property taxes, each district is required to levy a certain number of mills (not to be confused with a mill levy override). The number of mills that a district is required to levy for its local share is determined based on district-specific characteristics.[10]

The state share is comprised of money from the general fund, the state education fund, and the state public school fund.

What is Next?

After reading this article, you may have more questions about the topics briefly addressed, such as mill levies or the state education fund. Or, you may have questions about something that was not addressed but you have heard about, such as categorical program funding.

Hopefully, this article is the first in a series of articles that attempt to achieve the ambitious, and possibly delusional, goal of making school finance less confusing. In the meantime, the Office of Legislative Legal Services, and our sibling agencies, the Legislative Council Staff and the Joint Budget Committee Staff, are available to answer questions or provide available information regarding school finance and what it means for the school districts in your legislative district.

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[1] Colo. Const., art. IX, sec. 2.

[2] Lobato v. State, 304 P.3d 1132, 1139 (Colo. 2013).

[3] Id. at 1141.

[4] Sec. 22-54-103.3 (1), 22-54-103.5 (1), and 22-54-104 (1), C.R.S.

[5] Sec. 22-54-103.5 (7) and 22-54-104 (4.3), C.R.S.

[6] Other funding factors include a district’s at-risk funding, extended high school funding, and cost of living.

[7] Sec. 22-54-106 (1)(b), C.R.S.

[8] Sec. 22-54-106 (1)(a), C.R.S.

[9] Sec. 22-54-103 (11), C.R.S.

[10] Sec. 22-54-106, C.R.S.

Editor’s’note: With all of the recent action at the federal level to provide COVID-19 relief, we though now might be a good time to repost a recent article explaining the interaction between state and federal laws. This article was originally posted August 8, 2019.

by Samantha Bloch

The United States is a federal system in which federal laws and state laws coexist. But what happens when state law conflicts with federal law?

The short answer is that “state laws that conflict with federal law are ‘without effect’.” This is the doctrine known as federal preemption, which is based on the Supremacy Clause of the U.S. Constitution. This clause creates a hierarchy of laws in which the U.S. Constitution is at the top, followed by acts of Congress and ratified treaties, and ending with state laws. Its purpose is to ensure that states don’t pass laws that undermine the goals of the United States.  While a state could pass a law that conflicts with a ratified treaty, this blog post will focus only on conflicts between state and federal law.

The U.S. Constitution establishes a strict division of legislative authority between the federal government and the states in certain matters. For example, most foreign affairs issues and some aspects of the regulation of interstate commerce are reserved to Congress. Under the Tenth Amendment, powers not delegated to the federal government or prohibited to the states are reserved to the states. However, the U.S. Constitution also provides room for concurrent powers: legislative powers that both Congress and the states may exercise.

One such power, the power to tax, is usually not subject to federal preemption. For all other concurrent powers, if there is direct conflict between a state law and a federal law, courts will invalidate state law under the Supremacy Clause. But when exactly does a state law enter into direct conflict with a federal law?

The first element that needs to be present is a federal law regulating the activity that is the subject of the state law. The existence of such a law is, however, not enough. Courts pay particular attention to whether it was Congress’s purpose to supersede any conflicting state law. In the presence of concurrent powers, the Supremacy Clause does not limit the federal government’s power to preempt. But it is necessary for Congress to specifically exercise this power if it wants to effectively limit states’ legislative authority. A federal agency acting within the scope of the authority delegated to it by Congress also has the power to preempt state measures.

Two concepts are useful in determining the preemption purpose of a law or regulation: express preemption and implied preemption.

Express preemption is the most direct expression of Congress’s or an agency’s purpose. This form of preemption exists when a federal statute or regulation contains explicit language stating that it intends to preempt all state law regulating the activity that is the subject of the statute. The 2018 Restoring Internet Freedom Order issued by the Federal Communications Commission provides a recent example of an express preemption clause. It states that it “preempt[s] any state or local measure that would effectively impose rules or requirements that [it] has repealed or decided to refrain from imposing … or that would impose more stringent requirements for any aspect of broadband service that [it] addresses.” This renders all attempts by states to impose net neutrality obligations on internet service providers futile since the order would automatically trump any state measure attempting to impose additional or more rigorous requirements.

Implied preemption occurs when federal law does not explicitly state that it intends to preempt all conflicting state law but it is still possible to determine that Congress or an agency intended to preempt state law in that particular area. This is the case, for instance, when it is impossible to comply simultaneously with the federal law and the state law or when state law interferes with the objectives of the federal law. For example, a state cannot pass laws regulating air and water if they interfere with any goals or requirements established by existing federal environmental laws.

Implied preemption also includes the concept of field preemption. Field preemption exists when Congress has so broadly regulated a certain field of law that it implicitly must have chosen to prevent states from effectively legislating in that area. An example of this is U.S. immigration law, which is a field exclusively occupied by federal laws and regulations.

In an implied preemption analysis, courts presume that Congress intended to defer to states in matters of traditional state action. For example, when states are legislating, within their historic police powers, there is a presumption that Congress’s purpose was to not supersede state measures unless there is a clear and manifest purpose to the contrary. Therefore, a court will only invalidate a state law in a field traditionally occupied by state measures in the presence of an express preemption clause.

In the absence of federal law, or when Congress has not expressly or impliedly barred states from passing legislation to regulate certain activity and provide broader protections or benefits than what is available under existing federal law, state laws are usually valid. Except, of course, when they don’t comply with other constitutional obligations. In fact, the “dormant” Commerce Clause doctrine prevents states from passing measures that discriminate against or unduly burden interstate commerce, even in the absence of conflicting federal legislation. That, however, is a subject for an other blog post.

by Thomas Morris

What happens when the demand for a commodity exceeds supply? Economic theory predicts that the price for the commodity will increase. We’re all aware that water in Colorado is relatively scarce; in particular, the northern Front Range is highly dependent on water imported from the Colorado River, which is subject to increasing demands and dwindling supply. Are increases in the price of water sufficient to address this deficit?

As we’ll see, due to multiple layers of state, interstate, and federal law and a combination of climate change effects, prolonged drought, and demand increases, our Colorado River water supply is at risk, and more is required to avoid fairly serious adverse consequences than simply relying on the market to equalize the supply and demand for water.

The law of the river. The use of Colorado River water is strictly governed by the so-called “law of the river,” which is a complex interplay of interstate compacts, federal statutes and regulations, United States Supreme Court decrees, and applicable state law.

To avoid having California’s rapid growth gobble up available Colorado River supplies, in 1922 the seven states in the Colorado River basin[1] entered into an interstate compact. The Colorado River Compact (codified in article 61 of title 37, C.R.S.) allocated 7.5 million acre-feet[2] (Maf) of water per year to the upper basin states (including Colorado) and 8.5 Maf to the lower basin states, for a total 16 Maf.[3] Later, the upper basin states entered into the Upper Colorado River Compact (codified in article 62 of title 37, C.R.S.), pursuant to which 51.75% of the upper basin’s supplies were allocated to Colorado.

Naturally, the states presumed that the river’s supplies were adequate, even plentiful, to meet these allocations. Indeed, from 1905 to 1921 the flow at the boundary between the upper and lower basins was about 18 Maf. Unfortunately, the 1922 compact was negotiated during a time of relatively high flows: rather than more than 16 Maf of flow per year, actual supplies under current conditions may be as low as 14.8 Maf. Moreover, climate change is likely to reduce this supply even more:

Colorado River flows decline by about 4 percent per degree Fahrenheit increase . . . . Thus, warming could reduce water flow in the Colorado [River] by 20 percent or more below the 20th-century average by midcentury, and by as much as 40 percent by the end of the century.[4]

Despite this somewhat grim outlook, the upper basin’s ability to comply with its delivery obligation to the lower basin is enhanced by two facts:

• The 1922 compact states the delivery obligation as 75 Maf over 10 years rather than 7.5 Maf each year; and
• Numerous reservoirs with significant storage capacities are located in the upper basin. These reservoirs, including Lake Powell[5] and several reservoirs referred to as the Aspinall Unit, store excess supplies in wet years and release them in dry years to comply with the delivery obligation.

Staving off a shortage declaration through demand management. The federal Bureau of Reclamation operates the Aspinall Unit as well as Lake Powell and Lake Mead, which is the lower basin’s primary reservoir. Pursuant to an agreement[6] between the seven compacting states, the bureau operates the Aspinall Unit and Lakes Powell and Mead to maintain the water level in Lake Mead above 1,075 feet in elevation. If the water drops to that level, the bureau makes a “shortage declaration” that triggers mandatory restrictions on water diversions and usage in the lower basin. A shortage declaration may also be the first step toward a determination that the upper basin has failed to comply with its delivery obligation, which would result in the curtailment of upper basin diversions that postdate the 1922 compact.

In order to reduce the risk of a shortage declaration occurring, the upper and lower basins have both recently adopted updated drought contingency plans.[7] Congress has approved the plans.[8]

In particular, the upper basin’s drought contingency plan involves three elements:

• Augmentation, consisting of weather modification efforts to increase precipitation and the removal of phreatophytes (plants that have deep root systems that draw water from near the water table and often consume an unusually large amount of water);
• Operating the Aspinall Unit to benefit storage in Lake Powell; and
• Demand management.

Demand management in this context means, roughly, a temporary, voluntary, and compensated reduction in consumptive water use by specific water rights owners. In Colorado, demand management could involve a front range metropolitan water provider (whose water rights postdate the 1922 decree and thus whose diversions would be curtailed if the upper basin failed to meet its delivery obligation) paying a senior agricultural user on the western slope to temporarily not divert water from the Colorado River or its tributaries. The metropolitan water provider would then be able to continue to export Colorado River water to its Front Range water users. As the saying goes, water flows uphill toward money.

The General Assembly recently supported the development of demand management programs by enacting SB 19-212. The bill appropriates $1.7 million from the general fund to the department of natural resources for use by the Colorado Water Conservation Board.  The board will use this money for stakeholder outreach and technical analysis to develop a water resources demand management program.

The days of hoping that Colorado River supplies will somehow recover or that the lower basin will, by some miracle, substantially reduce its water consumption enough to avoid a shortage declaration are over. Colorado is preparing for a hotter, drier climate in which water demands continue to increase while supplies diminish. Water demand management is one of the primary tools (along with conservation and the development of additional storage) that will be used to adapt to this new normal.

 

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[1] The seven states of the Colorado River Basin are Wyoming, Colorado, Utah, New Mexico, Arizona, Nevada, and California. The upper basin consists mainly of Wyoming, Colorado, and Utah; New Mexico, Arizona, Nevada, and California are mainly in the lower basin.

[2] An acre-foot is the amount of water required to cover one acre to a depth of one foot. An acre is about the size of a football field, including both end zones.

[3] For comparison, Colorado consumes about 5.3 Maf per year, but this includes water that has been reused multiple times. See the state water plan, Figure 5-1. https://www.colorado.gov/pacific/cowaterplan/plan

[4] http://theconversation.com/climate-change-is-shrinking-the-colorado-river-76280

[5] Lake Powell is located directly above the boundary between the upper and lower basins; releases from Lake Powell are the primary method by which the upper basin complies with the 1922 compact.

[6] Colorado River Interim Guidelines for Lower Basin Shortages and Coordinated Operations for Lake Powell and Lake Mead”, 72 FR 62272 (11/2/07); https://www.govinfo.gov/content/pkg/FR-2007-11-02/pdf/E7-21417.pdf

[7] Agreement Concerning Colorado River Drought Contingency Management and Operations; https://www.usbr.gov/dcp/docs/final/Companion-Agreement-Final.pdf

[8] Colorado River Drought Contingency Plan Authorization Act; https://www.congress.gov/116/bills/hr2030/BILLS-116hr2030enr.pdf

by Samantha Bloch

The United States is a federal system in which federal laws and state laws coexist. But what happens when state law conflicts with federal law?

The short answer is that “state laws that conflict with federal law are ‘without effect’.” This is the doctrine known as federal preemption, which is based on the Supremacy Clause of the U.S. Constitution. This clause creates a hierarchy of laws in which the U.S. Constitution is at the top, followed by acts of Congress and ratified treaties, and ending with state laws. Its purpose is to ensure that states don’t pass laws that undermine the goals of the United States.  While a state could pass a law that conflicts with a ratified treaty, this blog post will focus only on conflicts between state and federal law.

The U.S. Constitution establishes a strict division of legislative authority between the federal government and the states in certain matters. For example, most foreign affairs issues and some aspects of the regulation of interstate commerce are reserved to Congress. Under the Tenth Amendment, powers not delegated to the federal government or prohibited to the states are reserved to the states. However, the U.S. Constitution also provides room for concurrent powers: legislative powers that both Congress and the states may exercise.

One such power, the power to tax, is usually not subject to federal preemption. For all other concurrent powers, if there is direct conflict between a state law and a federal law, courts will invalidate state law under the Supremacy Clause. But when exactly does a state law enter into direct conflict with a federal law?

The first element that needs to be present is a federal law regulating the activity that is the subject of the state law. The existence of such a law is, however, not enough. Courts pay particular attention to whether it was Congress’s purpose to supersede any conflicting state law. In the presence of concurrent powers, the Supremacy Clause does not limit the federal government’s power to preempt. But it is necessary for Congress to specifically exercise this power if it wants to effectively limit states’ legislative authority. A federal agency acting within the scope of the authority delegated to it by Congress also has the power to preempt state measures.

Two concepts are useful in determining the preemption purpose of a law or regulation: express preemption and implied preemption.

Express preemption is the most direct expression of Congress’s or an agency’s purpose. This form of preemption exists when a federal statute or regulation contains explicit language stating that it intends to preempt all state law regulating the activity that is the subject of the statute. The 2018 Restoring Internet Freedom Order issued by the Federal Communications Commission provides a recent example of an express preemption clause. It states that it “preempt[s] any state or local measure that would effectively impose rules or requirements that [it] has repealed or decided to refrain from imposing … or that would impose more stringent requirements for any aspect of broadband service that [it] addresses.” This renders all attempts by states to impose net neutrality obligations on internet service providers futile since the order would automatically trump any state measure attempting to impose additional or more rigorous requirements.

Implied preemption occurs when federal law does not explicitly state that it intends to preempt all conflicting state law but it is still possible to determine that Congress or an agency intended to preempt state law in that particular area. This is the case, for instance, when it is impossible to comply simultaneously with the federal law and the state law or when state law interferes with the objectives of the federal law. For example, a state cannot pass laws regulating air and water if they interfere with any goals or requirements established by existing federal environmental laws.

Implied preemption also includes the concept of field preemption. Field preemption exists when Congress has so broadly regulated a certain field of law that it implicitly must have chosen to prevent states from effectively legislating in that area. An example of this is U.S. immigration law, which is a field exclusively occupied by federal laws and regulations.

In an implied preemption analysis, courts presume that Congress intended to defer to states in matters of traditional state action. For example, when states are legislating, within their historic police powers, there is a presumption that Congress’s purpose was to not supersede state measures unless there is a clear and manifest purpose to the contrary. Therefore, a court will only invalidate a state law in a field traditionally occupied by state measures in the presence of an express preemption clause.

In the absence of federal law, or when Congress has not expressly or impliedly barred states from passing legislation to regulate certain activity and provide broader protections or benefits than what is available under existing federal law, state laws are usually valid. Except, of course, when they don’t comply with other constitutional obligations. In fact, the “dormant” Commerce Clause doctrine prevents states from passing measures that discriminate against or unduly burden interstate commerce, even in the absence of conflicting federal legislation. That, however, is a subject for an other blog post.

by Richard Sweetman

[Editor’s note: We originally posted this article on October 3, 2013. Since that time, the Florida law has been amended. This reposting is an update to the original article.]

No, Colorado does not have a “Stand Your Ground” law. We have a “Make My Day” law.

Wait; I’m serious. Let me explain.

“Stand Your Ground” Laws

A “Stand Your Ground” law is similar to a standard self-defense statute, in that it allows a person to use deadly force in self-defense when the person has a reasonable belief that deadly force is necessary to prevent death or serious bodily harm. However, a “Stand Your Ground” law expands upon the traditional self-defense doctrine in one or more ways. For example, a “Stand Your Ground” law may:

• Identify locations where a person may use deadly force under certain conditions, including dwellings, vehicles, businesses, and other public places where the person is legally present;
• State explicitly that a person has “no duty to retreat” before resorting to the use of deadly force in self-defense;
• Establish a presumption of reasonableness in favor of a person who uses deadly force under certain conditions;
• Establish civil immunity for a person who uses deadly force under certain conditions; or
• Allow a person to use deadly force to stop the commission of certain felonies.

Florida’s “Stand Your Ground” law (Fla. Stat. 776.013), which has attracted much attention in the past, reads:

            (1) A person who is in a dwelling or residence in which the person has a right to be has no duty to retreat and has the right to stand his or her ground and use or threaten to use: (. . .)

            (b) Deadly force if he or she reasonably believes that using or threatening to use such force is necessary to prevent imminent death or great bodily harm to himself or herself or another or to prevent the imminent commission of a forcible felony.

The Florida law also creates the following presumption:

            (2) A person is presumed to have held a reasonable fear of imminent peril of death or great bodily harm to himself or herself or another when using or threatening to use defensive force that is intended or likely to cause death or great bodily harm to another if:

            (a) The person against whom the defensive force was used or threatened was in the process of unlawfully and forcefully entering, or had unlawfully and forcibly entered, a dwelling, residence, or occupied vehicle, or if that person had removed or was attempting to remove another against that person’s will from the dwelling, residence, or occupied vehicle; and

            (b) The person who uses or threatens to use defensive force knew or had reason to believe that an unlawful and forcible entry or unlawful and forcible act was occurring or had occurred.

This presumption eliminates the burden of proof for a person who used deadly force—that is, the burden to prove that he or she had a “reasonable fear of imminent peril of death or great bodily harm.” The presumption shifts the burden to the prosecution, who must prove otherwise.

Florida adopted its “Stand Your Ground” law in 2005 and amended it in 2014 and 2017. Since then, according to the National Conference of State Legislatures, the number of states with similar laws has grown to 22.

Colorado’s “Make My Day” Law

Colorado adopted its “Make My Day” law in 1985. At that time, the phrase “make my day” had been popularized by the 1983 Clint Eastwood film Sudden Impact and then revived by President Reagan in his 1985 threat to veto any tax increase legislation sent to him by the U.S. Congress. The law is codified at section 18-1-704.5, C.R.S.

Colorado’s “Make My Day” law is similar to a “Stand Your Ground” law, in that both laws may be seen as expansions upon the old common law “castle doctrine.” Under this doctrine, a person has no “duty to retreat” before resorting to the use of deadly force when faced with imminent peril in his or her home. Compared to a “Stand Your Ground” law, however, Colorado’s “Make My Day” law is a relatively limited expansion.

The very idea of a statutory “castle doctrine” in Colorado is a little strange because the castle doctrine, by its own terms, is an exception to another doctrine—the duty to retreat. And except in certain specific circumstances, there has never been a duty to retreat in Colorado. (See People v. Toler, 9 P.3d 341, 348 (Colo. 2000), citing Boykin v. People, 45 P. 419 (Colo. 1896).) It is therefore no surprise that Colorado’s “Make My Day” law does not mention a duty to retreat; it has never been necessary for the General Assembly to state explicitly that no such duty exists in Colorado.

The “Make My Day” law is like the “castle doctrine” because it is limited to dwellings. Rather than stating that there is no duty to retreat in a dwelling, however, Colorado’s law lowers the standard for justifying the use of deadly force against an intruder in a dwelling.

Under Colorado’s law, any occupant of a dwelling may use deadly force against an intruder when the occupant reasonably believes the intruder (1) has committed or intends to commit a crime in the dwelling in addition to the uninvited entry and (2) might use any physical force, no matter how slight, against any occupant of the dwelling. This is a lower standard of justification than appears, for example, in Colorado’s historical self-defense statute, which is codified at section 18-1-704, C.R.S.

Colorado also has longstanding statutes justifying the use of physical force in special relationships (18-1-703, C.R.S.), in defense of premises (18-1-705, C.R.S.), and in defense of property (18-1-706, C.R.S.).

Perfectly Clear?

So do you now understand the difference between a “Stand Your Ground” law and Colorado’s “Make My Day” law? Not entirely? Well, that’s okay. Frankly, the distinctions are not entirely clear—partly because 22 variations of the “Stand Your Ground” law now exist. But the table below, which contrasts Florida’s law with Colorado’s law, can help you remember the key differences. For more information about “Stand Your Ground” laws, visit the NCSL website.

By Jery Payne

Editor’s note: This article is an update to “So You Want A New Special License Plate,” posted September 15, 2011.

An issue emerged during the 2014 legislative session. Some legislators — of both parties — began to question whether fund-raising special license plates violate section 25 of article V of the Colorado Constitution:

      Section 25. Special legislation prohibited. The general assembly shall not pass local or special laws in any of the following enumerated cases, that is to say; … granting to any corporation, association or individual any special or exclusive privilege, immunity or franchise whatever. …

This prohibits something that is commonly called “special legislation,” which is legislation that gives a named person or group a special right that other groups don’t have. Now, laws reward and punish people all the time, but the law is considered fair if people have an opportunity to enter or exit the rewarded or punished group. For example, people who graduate from medical school are eligible for the reward of a license to practice medicine. Although not everybody can get into medical school, the law doesn’t make that decision, so we say that the group isn’t closed. It’s up to the person to figure out how to get into the group. Imagine, if instead, doctors were licensed only by being named in a bill. A lot of medical-school graduates might never be licensed, so we would say the group is closed.

Arguably, fund-raising special license plates violate the rule against special legislation. Most of these plates require a person to make a donation to a group — usually a charity — before the state will issue the plate. In return, the charity gives the donor a receipt. To get the plate, a person must show this receipt. Otherwise, the state won’t issue the plate.

The issue is that the statute typically names a specific group. Other charities might help the same folks and have the same qualifications, but they can’t receive plate donations unless they get a bill passed also.

Originally, legislators tried to avoid this issue by not having the state collect the money. But other legislators began to question whether this really avoids the issue. The group is still closed, they argue, so it doesn’t matter if the state touches the money.

Now, we don’t actually have any case law that deals specifically with this issue. So until a court rules on this issue, we can’t be sure if these plate statutes would be overturned. But quite a few legislators have said they will vote against any license-plate bill that specifically names a group.

There is, however, a way to avoid this issue altogether: Don’t name the group. Instead, describe the characteristics that make the group deserving of donations. This approach was used last year in House Bill 15-1313 to describe a group that is dedicated to helping the Rocky Mountain National Park:

      42-3-249. Special plate – Rocky Mountain National Park. (3) (a) At least once every five years, the department shall designate an organization to qualify applicants to be issued the Rocky Mountain National Park license plate. The organization must:

(I) Be based in Colorado;
(II) Have been in existence for at least ten years;
(III) Manage a conservation program for the benefit of the park;
(IV) Help promote the stewardship of the park;
(V) Fund trail building and maintenance within the park;
(VI) Provide interns or volunteers to staff visitor centers or deliver education programs to visitors; and
(VII) Have provided at least five hundred thousand dollars’ worth of support annually to the park for the last five years.

This approach may avoid trouble.

 

By Sharon Eubanks

What’s up with the news reports saying the state has to refund state tax revenues collected on recreational marijuana? Didn’t voters already approve recreational marijuana and two new state taxes on recreational marijuana at two separate elections? It makes no sense that the state will have to refund tax revenues collected on recreational marijuana. Why are these refunds required? Well, here’s the scoop.

At the statewide election held in November of 2013, Proposition AA asked voters to approve imposing two new taxes on legalized recreational marijuana – a state excise tax and an additional state sales tax. Because this ballot question included tax increases, Article X, Section 20 of the Colorado Constitution (TABOR) required the state to include certain financial information in the Blue Book, which is the ballot information booklet that Legislative Council Staff prepares and provides to the public before an election.

TABOR requires the Blue Book to include “[f]or the first full fiscal year of each proposed district tax increase, district estimates for the maximum dollar amount of each increase and of district fiscal year spending without the increase.” (TABOR Section 20 (3)(b)(iii).) To comply with these requirements, the 2013 Blue Book analysis for Proposition AA included the following estimates for fiscal year 2014-15:

• State Spending Without the New Taxes   —  $12.08 billion
• State Revenue from the New Excise and Sales Taxes  —   $67 million

TABOR imposes consequences if the actual fiscal year spending and revenue amounts from an approved tax increase exceed the estimates provided to voters before the election. Specifically, TABOR Section 20 (3)(c) requires that, if either the resulting tax revenue or actual fiscal year spending exceeds the Blue Book estimates, then the voter-approved tax increase is reduced and the state must refund the revenues that exceed the estimates. The only way to avoid these impacts is “by later voter approval.” The General Assembly may obtain this later voter approval by referring a ballot question to prevent the tax rate reduction and to allow the state to keep all of its revenue.

If the recreational marijuana tax revenue in 2014-15 exceeds the Blue Book estimate of $67 million or if actual state fiscal year spending in 2014-15 exceeds the estimate of $12.08 billion, and the state has not obtained the later voter approval, then the state must:

• Reduce the rates of the recreational marijuana taxes; and
• Refund amounts that exceed the Blue Book estimates for fiscal year 2014-15 up to the total amount of the recreational marijuana tax revenues collected in that fiscal year.

Based on the Legislative Council Staff’s December 2014 Revenue Forecast, it is currently projected that the amount of recreational marijuana taxes collected in fiscal year 2014-15 will be $58.7 million, which is below the Blue Book estimate, and fiscal year spending for fiscal year 2014-15 will be $12.347.3 billion, which is above the Blue Book estimate. These estimates will likely change in subsequent revenue forecasts, but legislative staff expects that, by the end of fiscal year 2014-15, total recreational marijuana tax revenues will remain below the Blue Book estimate and actual fiscal year spending will still exceed the Blue Book estimate.

With total fiscal year spending for fiscal year 2014-15 likely to exceed the Blue Book estimate, the General Assembly may consider legislation during the 2015 session to:

• Refer a ballot question at the 2015 statewide election to prevent the recreational marijuana tax rate reductions and allow the state to keep all of its FY 2014-15 revenue above the Blue Book estimates; or
• Specify how to comply with TABOR in terms of how to reduce the rates of the recreational marijuana taxes, how to refund the marijuana tax revenues and to whom, and what revenues to use to accomplish this refund (e.g., recreational marijuana tax revenues or general fund revenues).

To date, a legislator has not introduced a bill dealing with these issues. But the 2015 session is only almost half over, so there is still time for the General Assembly to take up this issue. Stay tuned!