After only one short year of legalized recreational marijuana sales, the state of Colorado has done a pretty good job in bringing in some tax revenue. In the first year alone, Colorado made almost $60 million in tax revenue that was allocated to be spent on funding construction projects for schools, paying for the implementation of marijuana education campaigns and paying the salaries of the numerous marijuana inspectors and regulators that the government has hired.
However, state lawmakers are beginning to scramble because of a strange legal scenario that may require the state to return the large quantity of tax revenue. And, as anyone could imagine, the state government doesn’t exactly want to do this.
The main problem seems to be with a voter-approved provision called the Taxpayers Bill of Rights, which passed in 1992. Within the legislation of this bill there’s an anti-spending provision which affects almost every aspect of public life, including schools, health care, government-run businesses and general repairs throughout the state. However, the provision has a clause that if the state of Colorado somehow collects more tax revenue than the government had anticipated, then they are required to refund the entire amount collected for the year.
When the state filed its overall revenue estimates last year, the numbers they presented ended up being too low. And due to the anti-spending provision in the Taxpayers Bill of Rights, the government is now required to return all the money back to the taxpayers it was collected from. From that sum, $40 million was allocated by voters to be used to fund school construction and repair projects throughout the state.
Not only does this sound like an uncomfortable situation for Colorado lawmakers to deal with, the state itself could be in jeopardy of losing all of the funding they could have received from the tax revenue, leaving them to pay for the proposed projects from the state’s general fund. This could end up costing the taxpayers even more in the long run.
However, with Colorado’s “anti-tax” beliefs, there has arisen a number of questions on how to handle the situation so that both lawmakers and taxpayers are satisfied with the results.
There are groups from the state that believe that the law should be followed and that all of the $60 million should be given back to the taxpayers as a tax break later this year. And while this may sound good for the taxpayers, it could possibly break down to every taxpayer receiving about $11 back from the state government. But these groups work from principle and believe that the money should be returned because of the voter-approved law.
“It should go back to the taxpayers,” claims Gregory Golyansky, the president of the Colorado Union of Taxpayers. “When government tries to keep the money that rightfully belongs to the taxpayers of Colorado, it is an enormous issue. There should be a tax refund.”
Democratic State Senator, Pat Steadman is working with a bipartisan group of lawmakers on writing a measure that will turn to the voters of Colorado for a solution to this delicate problem. Steadman explains that he wants to ensure with his measure that the tax revenue is being spent on “the things that the voters wanted marijuana tax spent on,” like schools and roads.
“I’m working on a ballot measure that would get voter approval to not make the refund, to allow the state to keep it,” Steadman said. “We’ve got a whole package of things we would like to do with this money and it would be a shame to have to refund it.”
Tim Hoover, a spokesman for the Colorado Fiscal Institute, places all of the blame for this situation on the Taxpayers Bill of Rights for the state. He explains that the bill is much like HAL 9000, the manipulative computer program from the famous film “2001: A Space Odyssey.”
“It has its own malevolent programming that is really hard to overdrive,” Hoover explained.
Despite the confusion of how this all came about and what the lawmakers of the state will do because of the situation, there exists another issue that could make things even more complicated.
If the voters come through and choose to vote to have all of the money refunded, the state of Colorado is required to give it back to those that they taxed it from. But since this tax came from the recreational marijuana sales from across the entire state, the question arises as to whom will receive the refunds. The consumers of the product? The dispensary owners? The growers or marijuana wholesale businesses?
“I swear, the more you work on it, the tougher it gets,” Sen. Steadman admits while attempting to find a utilitarian solution. “It’s really complicated.”
Despite all of the confusion with the state’s marijuana tax, the majority of those in the recreational industry are supportive of the tax. Without the large amount of income that the state is receiving from the tax, the school systems could be shortchanged in receiving funding for necessary repairs and construction projects and the local roads would go without repair as well.
Overall, the situation seems dire for Colorado; and when taking the state’s overwhelming anti-tax sentiments into account, it could be possible that they vote to have the money refunded. But no matter what goes on, the voters have a choice to make.
Should the money be refunded to the Colorado taxpayers or should the state government keep it? Let us know what you think in the comments.