Colorado high court hears challenge to tax freeze
September 11, 2008
DENVER ” Proponents of a law that increases school funding told the Colorado Supreme Court on Thursday the plan didn’t need to go to a vote to satisfy the state Constitution because voters had already agreed to give schools more money.
Opponents told the justices the law is an unconstitutional tax increase because it didn’t go to voters.
The 2007 law froze residential property taxes in school districts where they were expected to decline. It’s expected to raise $1.7 billion for education over the next 11 years.
In its first year, school districts were allowed to keep $118 million in property taxes that would otherwise have been refunded under the Taxpayer’s Bill of Rights, or TABOR, an amendment to the state constitution.
Gov. Bill Ritter is appealing a district court ruling that the law violated TABOR.
Attorney John W. Mill, representing the Colorado Department of Education, said voters in 174 of the state’s 178 school districts have voted to allow their districts to keep all the money that otherwise would have to be refunded under TABOR.
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“All means everything. They meant all revenue,” Mill told the court.
The attorney for the challengers, Richard Westfall, said voters who approved those measures between 1995 and 1998 had no way of knowing the state would change the rules and increase the amount of property taxes they paid each year.
He said many school districts told voters there would be no tax increase if they could keep the money.
Justice Michael Bender said school districts and the state didn’t collect any more money than they did before because of the new law.
He said any increase in taxes paid by property owners was due to the increased value of their property. He said property values and taxes could decline because of the mortgage crisis, and that’s not a tax increase.
“There is no net revenue gain,” Bender said.
The lawsuit asks the state to pay back the $118 million, even though it has been spent by the school districts.
The suit was filed by Mesa County, a business owner and four taxpayers with the help of the conservative Independence Institute think tank. Defendants are the Department of Education and Ritter.
In May, Denver District Judge Christina M. Habas sided with the plaintiffs, ruling the revenue should have been approved by Colorado voters under TABOR.
Habas rejected the state’s argument that the education finance law redistributes revenue rather than raising it.
She refused to order the state to pay it back, saying she doesn’t believe the courts have that authority.