Supreme Court’s tax decision is Mullarkey

by | Mar 23, 2009 | Blog, Capitol Review, Notes | 3 comments

Colorado’s constitution plainly says that state and local governments can’t raise taxes without permission from voters.  If only the Colorado Supreme Court could read plain language.

Instead, the court’s liberal majority ignores terms that should obviously protect taxpayers and instead emphasizes extraneous arguments that accommodate government.

This latest legal chicanery comes from the same playbook that turned the First Amendment’s guarantee of religious freedom into a tool to suppress religious speech.

Now voters who allowed their local school to keep, rather than refund, excess property tax collections are being hit with a backdoor property tax increase imposed by Gov. Bill Ritter and Democrat legislators.

Three factors determine property taxes: property value, the assessment rate, and mill levy.

If your home is worth $200,000, the assessment rate is 8%, and the mill levy is set at 50, the tax calculation looks like this: $200,000 x .08 (assessment rate) = $16,000 taxable value x .050 (mill levy) = $800 property tax.

When Colorado voters added the Taxpayers Bill or Rights (TABOR) to the state constitution, they prohibited state and local governments from enacting “a tax policy change directly causing a net tax revenue gain” without voter permission.

TABOR also limited total tax revenue increases to the combined rates of inflation plus population growth.  If population plus inflation increase by 5% but total property valuation increases by 10%, the excess must be refunded to taxpayers and future mill levies reduced to avoid collecting the excess again.

Lawmakers from both parties have understood that neither the mill levy nor the assessment rate can be increased without a public vote. (The last attempted vote failed by a 3-to-1 margin.)

In 174 of Colorado’s 178 school districts, voters have authorized their schools to keep the excess with the understanding — based on explicit promises from school and state officials — that taxes would remain subject to the population-plus-inflation limit.

Enter Colorado’s newly empowered Democrats, who pay lip service to taxpayers but pledge allegiance to government. Ritter and his minions decided — without voter approval — that reducing mill levies was no longer necessary if voters had given their local school permission to keep excess revenues.

As a result, taxpayers coughed up an extra $117 million in the first year — an amount estimated to double every three years. This obvious “tax policy change” resulted in a “net revenue increase” which, to anyone without a law degree, clearly means voter permission is required.

But not according to Chief Justice Mary Mullarkey who ruled that Ritter and his fellow tax-hikers were merely implementing the wishes of the voters in those 174 districts — albeit years later.

Assurances to voters by school officials that taxes would remain capped don’t matter, the court said, because those voters approved ballot questions that permitted schools to retain “all revenues” — even revenues that didn’t exist at the time of the vote.

Worse, those tax dollars won’t increase funds for local schools.  As local taxpayers dig deeper, the state will reduce its contribution — instead paying more for welfare entitlement programs or to colleges and universities.

The consequences for voters and for schools are unfortunate.  Voters can no longer take the word of school officials that “no one wants to raise your taxes.”  Even if local officials don’t; state officials might and, thanks to Mullarkey, they can do so without the consent of voters or local schools.

Colorado Association of School Boards also backed the tax hike, leaving many local officials with egg on their faces. School leaders who conscientiously recognize the potential backlash from voters who feel betrayed should present taxpayers with the opportunity to re-instate the TABOR limit on property tax revenue and ask voters if their school can keep the change under that limit.

For voters and taxpayers, the recurring lesson is that constitutional limits on government are worthless if lawmakers won’t abide by them and judges won’t enforce them.


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