Fees Are a Sneaky Form of Taxation without Representation

Say No to More Fees, Vote “YES” on Initiative 295

Remember the rallying cry of our country’s earliest patriots: No taxation without representation?

Well, some things never change. The big-spenders in the Colorado legislature want to pass more new fees on to you, the already overburdened taxpayer, without your approval.

Watch for Initiative #295, a measure designed to help rein in excessive state spending, which will likely be on the November ballot. On July 31, 2020, Michael Fields and Lindsey Sangers of Colorado Rising State Action submitted more than 196,000 signatures to qualify Initiative 295 for the ballot, according to Ballotpedia, and the signatures are currently being qualified (124,632 valid signatures are required).

Even though Colorado already has a constitutional amendment called The Taxpayer’s Bill of Rights (TABOR) that requires voter approval on tax increases, fees bypass this important checkpoint and can be increased by the state legislature without voter approval. That’s why voting “YES” on Initiative 295, also referred to as the “Vote on Fees” Initiative, is so important.

Three Main Revenue Sources for the State
The three main revenue sources for Colorado state spending are 1) state taxes, 2) state fees and enterprises, and 3) Federal spending distributed by the state. Enterprises are government-owned businesses that provide goods or services for a fee or surcharge that is paid for by the individuals, like you, or entities that are purchasing the goods or services. One could argue that fees are just another form of taxation.

State taxes are subject to TABOR which limits the amount of money the state of Colorado can take in and spend; the other two revenue sources are not.

“Over the years, legislators and the courts have eroded TABOR. Whether it was FASTER (increased car registration) fees, the hospital provider fee, or the recently passed Health Insurance Affordability Enterprise, the legislature has found creative ways to raise hundreds of millions of dollars in taxes without asking,” explains Michael Fields, executive director of Colorado Rising State Action and a sponsor of the “Vote on Fees” Initiative, in his July 7, 2020, article in Colorado Politics.

Initiative 295 requires statewide voter approval for new state enterprises that are exempt from TABOR if the enterprise’s projected or actual revenue from fees and surcharges is greater than $100 million within its first five fiscal years.

Fees Have Skyrocketed and Most Are Exempt from TABOR
Because TABOR requires lawmakers to ask voters for permission to raise taxes, imposing fees is a sneaky way to generate revenue while dodging the will of the voters. And enterprise revenue and fees in the state of Colorado have exploded in recent years.

The Common Sense Institute states that the “Colorado General Assembly has moved several revenue sources outside of the TABOR cap by designating them as state enterprises. The primary example is the exemption of most higher education tuition and fees in 2005. Yet even when enterprises related to higher education are removed, total remaining fees have grown from $97 per Coloradan in 2000 to $873 per Coloradan in 2018.”

In the fiscal year 1993-94, the first year TABOR was in effect, enterprise revenue was $724.3 million. In 2017-18, state enterprises received $17.9 billion in revenue. From 1993 to 2018, Colorado enterprises have received $150.17 billion in revenue. (Source: Colorado State Legislature, “May 2019 Memo regarding TABOR enterprises.)

According to the Common Sense Institute, 69% of total Colorado state spending in 2019 was exempt from TABOR, equating to $5,787 per Coloradan. That’s more than double what it was in 1993, the first year of TABOR limits, when only 46% of the total state spending was exempt, or $2,403 per Coloradan (in 2019 inflation-adjusted dollars).

Chart available: Colorado Revenue Subject to TABOR vs. Not Subject to TABOR, from the Common Sense Institute, Source: TABOR Schedule of Computation Office of the State Controller and Office of the State Auditor.

“Coloradans are sick of the Legislature using massive fees to get around a vote of the people, and the excitement around the ‘Vote on Fees’ initiative is proof of that,” says Fields in a Ballotpedia article.

TABOR was designed to impose fiscal discipline on government spending and help keep politicians accountable. With the Colorado state budget at approximately $32.5 billion for fiscal year 2019-20, our politicians have plenty of money to get the job done; they just need to live within their means like the rest of us.

Despite the already massive budget, the Colorado state legislature continues to pass bills that impose new fees, effectively flipping a middle finger to both TABOR and you, the taxpayer.

Now that legislators are again side-stepping TABOR to fund their public policy priorities without taxpayer consent, it’s imperative that we put the brakes on out-of-control state spending by voting “YES” on Initiative 295.

Contributor: Julia Freund