Gov. John Hickenlooper is preparing to release his state budget for the next fiscal year on Nov. 3 — the day before Election Day — raising the stakes on whether he will support returning money to taxpayers.
The timing adds a political complication for the Democratic incumbent. For the first time in 15 years, Colorado tax collections are expected to exceed the revenue cap under the state’s Taxpayer’s Bill of Rights, triggering the potential for refunds.
The forecast for fiscal year 2015-16 projects about $130 million over the TABOR cap and another $30 million from excess recreational marijuana taxes. The constitutional provision mandates refunds when revenue exceeds the rate of inflation and population growth, unless voters decide to return the money.
The possibility of a refund indicates the state’s economy is rebounding, but state government programs are still recovering from years of spending cuts.
The situation forces Hickenlooper and state lawmakers to decide whether to refund the money or get voters’ permission to spend it.
Hickenlooper is required under state law to present his budget Nov. 1 but this year it falls on a Saturday, giving him until the following Monday to issue the proposal.
With two weeks left to finish his plan, the governor remains uncertain on which direction he will go.
Henry Sobanet, the governor’s budget director, said Monday that the office’s state spending proposal is not yet complete and no decisions have been made about the excess revenues.
“We are still working through the options right now,” he said.
In a recent Denver Post gubernatorial debate, Hickenlooper avoided taking a firm stance on the issue.
He said a refund “makes sense” but added that “there are a lot of competing needs,” citing education and economic development as two areas that need more state money.
The question carries political implications in the much-watched governor’s race.
Republican challenger Bob Beauprez made it clear he wants to see a refund. “I support returning it to taxpayers,” Beauprez said in the same debate. “That was the intent of the law and taxpayers have every right to think it’s carried out.”
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The potential for a refund on marijuana taxes adds a complication in this year’s budget negotiations.
In 2013, Colorado voters approved taxes on pot, but the state’s forecast for how it would impact state spending fell short. Under TABOR, any revenues above the forecast must be refunded and a temporary tax cut is required to reduce future revenues.
“This isn’t happening because (recreational pot) taxes are exceeding the estimates, it’s happening because the economy is growing and the state budget is growing because we’re recovering economically after a severe state recession,” said Sen. Pat Steadman, a Denver Democrat and vice chairman of the Joint Budget Committee.
But unlike a standard TABOR refund through tax breaks and credits, state law doesn’t prescribe how to return the extra marijuana tax money.
“We are kind of sailing into unchartered waters,” said Sen. Kent Lambert, a Colorado Springs Republican and budget writer.
Hickenlooper’s office said the governor remains undecided on how to address the issue.
The potential for a marijuana refund first became known in March and Steadman said he wanted to put the pot refund on this election’s ballot. But he said Hickenlooper’s office pushed back because of the potential political implications.
“My idea of dealing with it this year were quickly shot down,” Steadman said in a recent interview. “Somebody within the governor’s office, they didn’t want this question on the ballot in the same year as his election.”
Even before the governor’s budget plan is released, state budget writers are beginning to discuss the options.
Lambert said he preliminarily supports the state keeping the excess marijuana money to boost state building projects or education spending.
“I would say it was the intent of most voters not to give it back to the drug lords,” Lambert said.
State Rep. Crisanta Duran, a Denver Democrat who leads the budget committee, said there are different options available, and the outcome of the election — notably partisan control of the legislature — may set the tone.
“Who is in office matters a lot,” she said.
Staff writer Ricardo Baca contributed to this report.
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