The Colorado Court of Appeals has reversed a lower- court ruling that permitted the state to increase the severance tax on coal.
The three judges on the court said the increase violated the Colorado Taxpayer’s Bill of Rights in a decision that could challenge other local government efforts to boost revenues to meet budget shortfalls.
“We hold that TABOR precludes increasing the coal severance tax rate without voter approval,” the judges wrote in their ruling, which was released Thursday.
The Colorado Department of Revenue froze the tax on coal removed from the ground at 54 cents a ton in 1993 after TABOR passed.
The tax, which before that was adjusted according to inflation, remained static until 2007, when the department obtained a legal opinion from the Colorado attorney general regarding an increase, which was set at 76 cents a ton in 2008.
The department argued that the increase was made to keep pace with inflation and thus technically didn’t constitute an increase under TABOR.
The state collected $11.13 million in coal severance-tax revenue in 2008, department spokesman Mark Couch said. If the rate had remained at 54 cents per ton, the state would have collected $7.12 million.
Couch said the department will be talking to the attorney general’s office about whether to appeal the decision.
Moye White attorney Paul Seby represented the plaintiffs in the case: the Colorado Mining Association, Twentymile Coal, Mountain Coal, ColowyoCoal, Oxbow Mining, Trapper Mining and Bowie Resources.
