Coloradans may discover more cash in their wallets next year. The Treasury plans to distribute additional money from an extra $33.9 million in a recent state audit. This surplus stems from overcollection linked to the Taxpayer's Bill of Rights (TABOR), which limits revenue retention and spending by the state.
Residents of Colorado know the practice of TABOR refunds well, where excess revenue gets returned to taxpayers. This year, the refund amounts will likely increase due to a miscalculation found during the audit. This finding has prompted a recalibration of the distribution of taxpayer money, leading to unanticipated cash back in the pockets of many.
Surge in TABOR Refunds
TABOR aims to restrict government growth, stipulating refunds of revenue that exceeds set limits. This year's rebates promised to be substantial following a surge in state revenue. Still, the recent discovery from a February audit indicates that Colorado's Department of Revenue had previously erred. With the addition of $33.9 million earmarked for refunds, expectations for a lucrative rebate season are at an all-time high.
The origin of this miscalculation traces back to the Health Insurance Affordability Enterprise, established in 2020. It levies a fee on health insurance premiums to make health coverage more affordable statewide. However, contrary to previous beliefs that these collected taxes were exempt from TABOR limits, the audit and the attorney general have clarified that they count toward state revenue.
This adjustment has two consequences. First, it inflates the General Fund's obligation to return money to Colorado's inhabitants. Second, it lowers the funds available for other state needs. As a result, the future fiscal framework for Colorado will require careful balancing to accommodate these higher rebates.
Projected Increase in Taxpayer Refunds
The table the state's Joint Budget Committee provided lays down the increments in taxpayer rebates over the years. These range from a projection of $92 million for 2020-2021 to an upward of $173 million by 2024-2025, totaling an excess of $669 million for the duration. Of this, $33.9 million constitutes the direct over-collection that requires correction.
Residents should anticipate a redistribution of the unallocated funds rightfully belonging to them. These monies, previously gone unnoticed, now bolster the 2025 TABOR refunds. Taxpayers will see this reflected in their rebate amounts, though specific disbursement details remain under discussion.
Legislative Response to Audit Findings
Following this new information, the state has scrambled to address the oversight. The General Assembly, faced with these recent developments, needs to strategize. A proposed measure includes a cut in the General Fund reserve requirement to manage the financial realignment while retaining state economic stability.
Legislators are also considering a bill for the upcoming session to amend the insurance premium fee income disbursement, aiming to rectify the subsidy allocation starting in the fiscal year 2023-24. The timeline is tight, with the legislative session nearing its finale, leaving limited room for negotiations and decision-making.
Colorado residents await further details of how the state intends to cope with the newly discovered refund obligations. What remains clear is that with extra funds impending, the average taxpayer is on course for a more significant rebate.
Seeking Colorado Taxpayer Perspectives
Coloradans are keenly watching the developments as the state diligently works to correct the budgeting and refund trajectory. Many are already discussing the best uses for their unexpected cash return. Taxpayer feedback will prove critical, with concerns about the state's fiscal responsibilities and excitement for personal gain.
How do you feel about this unexpected change as we continue to follow the unfolding of Colorado's budget adjustments and increased TABOR refunds? Are there particular areas you believe the state should prioritize with the extra funds? We invite you to share your thoughts on this cash windfall and its potential impact on our state and its residents.
