DENVER — Fee versus tax.
It is a debate that seems to have no end in Colorado.
Since voters approved TABOR, the Taxpayer Bill of Rights, in 1992, tax increases get put on a ballot for voters to decide.
Though, that does not happen when lawmakers create fees. Those do not get put to a vote.
In November, voters passed Proposition 117, which would put some of those fees to a vote in the future. If the state creates an enterprise that is projected to collect more than $100 million in fees in the first five years, voters get to decide if that enterprise, and the fees associated with it, get created.
Yet, a newly introduced transportation bill at the state Capitol would generate an estimated $3.8 billion in new fees over 10 years, and would not require a vote.
Some of the new fees include:
- Two cent per gallon gas fee next year, increasing one penny each year until it reaches eight cents per gallon
- Higher electric vehicle registration fees
- Five new fees on deliveries totaling almost 27 cents per delivery
- Two new fees on rideshares that total 15 cents per ride if an electric vehicle is utilized and 30 cents per ride if it is a gas-powered vehicle
"They’re basically trying to do legislative gymnastics to get around it," said Colorado Rising Action Executive Director Michael Fields. “It’s clear they’re just trying to find any way to not go ask voters.”
Fields and Colorado Rising Action got Proposition 117 on the November ballot, which passed with 52.6% of the vote.
Under the transportation bill, four new enterprises will be created and will collect some of the fees, and one existing enterprise will be expanded. Based on the projections, the four new ones will remain under the $100 million over five years limit required for a vote. The existing one will collect the majority of the money, but would be exempt from a vote because it is already existing.
The existing enterprise, called the Colorado Bridge Enterprise, was created by lawmakers in 2009 and funded with vehicle registration fees, which also did not need voter approval. Under the new transportation bill, that enterprise would have its name changed to the Statewide Bridge and Tunnel Enterprise and collect a number of fees, including the new gas fee.
“The one big enterprise that they’re going to use is an existing one. They’re going to rename it, restructure it, put a new fee into it and say that it doesn’t apply because it’s not a new enterprise," said Fields. “If you look at the different enterprises that they’re going to set up, I would say that they serve primarily the same purpose, which is transportation funding, and so they should be counted as one group, and therefore it should go to voters."
Two of the bill's sponsors said that the plan was to set up the enterprises this way, and was not intended to skirt Proposition 117.
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“No, I don’t believe it for a second," said Fields. “There’s no doubt that we’ll file a lawsuit if this passes in its current form, especially."
"I think they've designed this in a way that will withstand any court scrutiny," said former Republican Attorney General and current Colorado Springs Mayor John Suthers.
Suthers was at the news conference on Tuesday announcing the 197-page transportation bill.
"My background as Attorney General tells me that these are genuine fees," said Suthers.
The Colorado Supreme Court has heard two significant cases dealing with fee vs. tax. One is from the early 90s dealing with E-470. The other is a decision from 2018 involving the city of Aspen's decision to start a 20 cent bag fee.
In that Aspen case, the Colorado Supreme Court determined "that if the primary purpose of a charge is to raise revenue for the general expenses of government, then the charge is a tax…a charge is not a tax if the primary purpose of a charge is to defray the reasonable direct and indirect costs of providing a service or regulating an activity, because such a charge does not raise revenue for the general expense of government."
"It was a fee and not a tax because it directly relates to a cost of government," said attorney Meaghan Fischer, a former deputy public policy director for the House Republicans. "If the primary purpose is to defray a cost of service that the government is providing, you usually are going to end up with a fee."
Since the Aspen bag fee funded a waste-management program, and not general Aspen spending, it was a fee. From a state standpoint, a fee collected by an enterprise would be considered a fee if it is a reasonable cost to fund that program, and not be used generally for schools, health care, prisons or anything else the state funds.
"Unfortunately, they did not define what a tax was in (TABOR), so that's why we have continuous lawsuits on this exact topic," said Fischer. "I think the legislators obviously caught on to how they can get around TABOR, it's not a secret there."
Beyond a Proposition 117 concern, Fischer sees a possible lawsuit stemming from the Colorado Bridge Enterprise being expanded and keeping more money than TABOR would normally allow, though an enterprise is exempt from TABOR.
"I think, what you're going to get into, is whether that expansion of that enterprise is going to trigger TABOR," said Fischer.
“This would dwarf any other revenue increase, and I think this is exactly what the voters wanted to do, is vote on big fees," said Fields.
The largest revenue increase Colorado voters have approved happened in 2005 with the passage of Referendum C.
That referendum allowed the state to keep beyond TABOR limits for five years, and then slowly increase the cap for following years.
In 2019-20, the state kept $2.6 billion more than if voters would have rejected Referendum C in 2005.
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