Colorado Gov. Jared Polis listens to a reporter’s question during a news conference April 25, 2022, at the Colorado State Capitol building. (Screenshot via Facebook)
Democratic state lawmakers plan to send $400 checks to Colorado taxpayers this summer, Gov. Jared Polis announced at a Monday news conference. The refunds — which are required under the Colorado Constitution, but normally go out in different ways — will lighten the burden of crushing inflation, state leaders said.
The Denver-Aurora-Lakewood consumer price index, which accounts for inflation by measuring the costs of food, energy and other goods and services, rose 9.1% from March 2021 to March 2022. The latest economic forecast by nonpartisan Legislative Council Staff predicted that the consumer price index would grow by another 7% this year.
“We’ve recovered more than 100% of the jobs that were lost during the pandemic,” Polis said. “But we also know that despite there being good jobs out there, the rising costs are a real challenge for Colorado families.”
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The $1.4 billion needed for the $400 refund checks would come out of the fiscal year 2022 revenue surplus that the state would otherwise be required to send back to taxpayers next year. Such refunds are required under the Taxpayer’s Bill of Rights, a constitutional amendment approved by voters in 1992.
TABOR sets a revenue limit for each year based on the prior year’s limit plus the rate of inflation and population growth. Any taxes the state collects above that amount must be refunded to taxpayers through one or more of the following mechanisms: property tax reimbursements for local governments, an income tax rate reduction and a sales tax refund. These mechanisms are determined, and can be changed, by the Legislature.
The sales tax refunds for a given year typically are paid out after people file their taxes the following year, but the plan announced Monday would send out $1.4 billion of the expected revenue surplus for fiscal year 2022, which ends June 30, a year early. Single filers would get $400 each, while joint filers would get $800. Lawmakers plan to save $300 million of the expected 2022 surplus for tiered sales tax refunds next year, which would go out at the normal time: in 2023 after people file their taxes.
The other two TABOR refund mechanisms — an income tax rate reduction and local government reimbursements — would also be used as normal in 2023 under the new plan. Since Colorado also saw a revenue surplus in 2021, those are already in place for 2022.
State Treasurer Dave Young, a Democrat, said the state would ensure that cash flow is sufficient to meet or exceed the expected revenue surplus that would pay for the refund checks. “We will do this by closely following our investment policy, which stresses safety, liquidity and yield, in that order of priority, as key goals for all of the taxpayer funds entrusted for us,” Young said at the news conference.
Legislative leaders say the $400 checks represent a more equitable way of sending out the sales tax refunds than the typical method, which sends out different amounts in six tiers based on income level. Lower earners would have received less money under the tiered structure, while the highest earners would have received more than $400.
In a written statement, Colorado GOP Chairwoman Kristi Burton Brown described Monday’s move as an “election year TABOR flip-flop.” Previously, some Democratic state lawmakers had expressed hopes of sending most of the money to low-income people while leaving out high earners.
“I’m happy that Jared Polis and the Democrats in the state legislature have publicly reversed course and are now joining Republicans in touting the Taxpayer’s Bill of Rights,” Burton Brown said. “For years, these same Democrats have worked to undermine TABOR and fought to increase fees and taxes on everyday Coloradans. However, I’m pleased to see their apparent change of heart, even if it is clearly just an election year game.”
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