Colorado voters approved the sale of legal marijuana thinking the revenues derived would go towards areas like schools or treatment for substance abuse. Instead, it’s possible that the marijuana tax money may be returned to them.
A Tuesday economic forecast from the state’s Legislative Council said that state spending is trending higher than previously estimated. If that holds true, under TABOR statutes, the higher spending could trigger a one-year refund on any new sources of revenue — like the taxes on marijuana.
“The idea of having to issue a refund or going back to voters hat in hand is disappointing,” said Sen. Pat Steadman, D-Denver, the vice-chair of the Joint Budget Committee, which hosted the briefing.
Creating a referendum asking voters if the state could keep the money from pot taxes is one possibility — another is that the issue won’t come up at all because the actual numbers won’t match the estimate.
“It’s a moving target, one with lots of interpretations,” said Natalie Mullis, the chief economist for the Legislative Council.
In June, 2013, the council forecast that state spending would be $12.08 billion dollars; on Tuesday that estimate was amended to $12.21 billion. Under TABOR rules, that $133 million difference would necessitate a refund of the revenues received from the pot taxes, about $54 million.
However, the state legislature could decide to not accept the Council’s prediction; on Tuesday, Gov. Hickenlooper’s office issued its own forecast, which says spending will be closer to the $12.08 figure and not trigger a TABOR refund.
The legislature could also ask the state’s Supreme Court to issue an opinion on how it would interpret the numbers and whether a refund would be required under TABOR rules, or it could accept the council’s forecast and decide this fall to ask citizens to vote to allow them to keep the money.
According to Mullis, a preliminary sense of what the actual spending is won’t come until September, with the final numbers arriving in late December or January.
On Wednesday, House Speaker Mark Ferrandino said his chamber was still deliberating how to react to the forecast.
“There’s still time to figure out what the right policy decision is,” he said.
The introduction of TABOR into the conversation recalled the controversy that arose in the wake of last fall’s floods, when the question of whether accepting federal relief funds counted against TABOR spending limits.
“The more I learn about TABOR the less I like it and the more insidious I think it is to state government,” said Rep. Cheri Gerou, R-Evergreen.
JBC Chairwoman Crisanta Duran, D-Denver, said situations like the flood recovery, or a possible pot refund are the reason why there should be conversations about revising TABOR. Ferrandino said that while wholesale changes aren’t likely for at least the next couple of years, there’s a chance that some tweaking may occur.
“As issues like the flood recovery come up, there could be conversations across the aisle,” he said. “There would be bipartisan support on some of the smaller issues to make changes that would avoid some of these unintended consequences.”