Colorado voters nix Prop CC’s plan to spend ‘excess’ tax revenue on schools, roads

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Voter Anna Wilson, left, reacts after dropping off her ballot at the pick-up site of the Denver Election Division outside the City/County Building early Tuesday, Nov. 5, 2019, in Denver. Election judge Adam Bollinger, right, looks on. (AP Photo/David Zalubowski)

DENVER | Colorado voters overwhelmingly rejected a ballot measure Tuesday asking if the state could keep tax revenue that otherwise would be refunded under limits set by the state constitution.

Democrats who control the statehouse had referred the measure, called Proposition CC, to the ballot. It asked if the state could keep revenue in those years when it has a surplus and is required to return that money to taxpayers.

The revenue would have been allocated to transportation and transit, K-12 schools and higher education. Preliminary results showed the measure losing by a double-digit margin.

Voters also were deciding whether to legalize sports betting in Colorado and tax it for water conservation. Early results suggested a close race.

The Democratic-led 2019 Legislature referred both tax measures to the ballot — but unlike sports betting, Democrats and Republicans staked opposite positions on the surplus revenue proposal.

The campaign reflected longstanding philosophical differences over the 1992 Taxpayer’s Bill of Rights, a constitutional amendment that requires voters to approve new taxes or revenue retention measures.

Democrats blame TABOR’s revenue restrictions for chronic underinvestment in Colorado’s schools, roads and universities.

Republicans credit TABOR for keeping taxes low on the private sector, allowing it to fuel the state’s economic growth.

Proposition CC asked voters if the state could keep revenue in those years when it has a surplus and is required to return that money to taxpayers. Any excess revenue would be allocated to transportation and transit, K-12 schools and higher education.

Many local municipalities have adopted similar measures to fund their school districts and public safety.

TABOR also sets an annual state income limit that can trigger tax refunds based on a formula that involves population and inflation. Critics said that prevents Colorado from taking advantage of good economic times to fund schools and transportation.

Legislative leaders from both parties endorsed Proposition DD, saying it was time to bring sports betting out of the dark and tax it for water needs.

The proposal called for a 10% flat tax on net sports betting proceeds. Parent companies operating the state’s 33 casinos could seek licenses for onsite betting as well as online and sports gambling apps.

Enabling legislation passed this year would allow the Colorado Water Conservation Board to use the tax revenue — estimated at $11 million in fiscal year 2020-21 — for grants that further the goals of a state water plan launched under former Gov. John Hickenlooper.

The plan is a living document setting long-term goals to meet the needs of a growing population, agriculture, outdoor recreation and obligations to Southwestern states that rely on the Colorado River.

The state has yet to find a way to meet the water plan’s estimated price tag of $100 million a year. But the sports betting proposal harvested a coalition of environmentalists and farming groups supporting it.

Legal sports betting has grown since New Jersey won a U.S. Supreme Court case in 2018 allowing all 50 states to offer it. But most states that moved quickly to do so have seen limited tax revenue.

An Associated Press analysis shows that seven states that reported on sports betting revenue for the fiscal year that ended in June generated a total $74 million in state taxes — a drop in the bucket for state budgets.

Reasons varied, from slow rollouts to the unavailability in some places of mobile betting.