A voter-approved decision to “extend” a tax is not the same as a “tax increase,” the Colorado Supreme Court ruled Monday.
City officials said the ruling was important because local governments will no longer have to describe a tax extension as a tax increase, making such proposals more palatable to voters. Under the Taxpayer’s Bill of Rights, voters must be notified if a ballot measure raises taxes.
The ruling came in a case in which Douglas Bruce, TABOR’s author, sued Colorado Springs after voters there in 2003 overwhelmingly approved the extension of a 0.1 percent sales and use tax for “Trails, Open Space and Parks.” The tax was extended from its expiration date of April 30, 2009, to Dec. 31, 2025.
Bruce claimed that the extension was a tax increase and that the city should have notified voters that it was a tax increase.
El Paso County District Judge Robert Lowrey agreed with Bruce that the extension was a tax increase and that the notice requirements of TABOR weren’t given to voters. He nullified the vote.
Colorado Springs officials called Bruce’s actions “spiteful and vindictive” and appealed.
Shane White, senior attorney for the city of Colorado Springs, said the ruling will affect all cities seeking to extend taxes.
“We are very pleased with the outcome,” he said.
Cole Finegan, Denver’s city attorney, welcomed the ruling. A tax extension “wouldn’t be characterized as a tax increase, and that is a critical, strategic distinction when you are going for a vote,” he said.
“It is a victory for local governments concerned about expiring taxes and whether TABOR’s requirements apply,” Sam Mamet, executive director of the Colorado Municipal League, said.
Bruce didn’t return calls seeking comment.
In the 5-1 decision, Justice Alex Martinez said that “tax increase” indicates that the tax burden of the individual taxpayer will be greater than its present amount. But a “tax extension” indicates a continuation of the status quo.
“Bruce asks us to interpret ‘tax increase’ more broadly, in effect suggesting that all forms of revenue increases are essentially tax increases. This definition is both inaccurate and overbroad,” Martinez wrote.
“An increase in a tax’s duration does not necessarily imply an ‘increase’ merely because both result in a net revenue gain,” the justice wrote. “For example, an increase in the number of taxpayers – without any change in a given tax – would lead to an increase in net revenue. However, few would consider this to be a ‘tax increase’ according to its everyday meaning.”
Martinez added that TABOR’s purpose is to reasonably restrain government’s growth. But he said that a tax extension “does not evoke the specter of unchecked government growth” contemplated by TABOR.
Paul Butcher, director of parks and recreation in Colorado Springs, noted that 69 percent of voters approved the extension.
“It is hard in government to find more of a mandate than that kind of a vote, especially in a very conservative, tax-adverse community,” he said. “The city attorney indicated to me that this was a landmark or watershed decision because it really defines the difference between an extension and a tax increase.”
Staff writer Howard Pankratz can be reached at 303-820-1939 or hpankratz@denverpost.com.
