Senate Bill 135, legislation that could permanently end the refund of overcollected tax dollars, as well as radically raise revenue limits under Colorado’s Taxpayer’s Bill of Rights (TABOR) amendment, just received a new fiscal note predicting an even bigger blank check for the legislature than before.
This follows the updated revenue forecast presented to the Joint Budget Committee (JBC).
Let’s see what changed.
Budget hole gets bigger
Legislative analysts predict that this year’s “budget shortfall” will be approximately $1.5 billion, based on the March 2026 Economic and Revenue Forecast.
While that means a haircut to General Fund spending to fill the budget hole, some bills, including SB-135, are now seeing improved fiscal expectations (at least from the legislature’s point of view).
For example, SB-135’s new fiscal note now projects $1.1 billion in retained revenue for FY2027-28, $283 million more than previously expected.
And while the bill is supposedly necessary for education funding, only a little over $200 million of the $1.1 billion would actually be required to go towards K-12 spending.
After first funding homestead exemption reimbursements and the education funding mandate, the rest ($685.9 million), as before, is allowed for “any other purpose.”
Budget band-aid
To put this into some perspective, the JBC appropriated nearly $17 billion to the General Fund in FY2025-26. So,if the new fiscal note is correct, the legislature would receive a meritless 4 percent bonus to the General Fund in FY2027-28, to spend on whatever lawmakers desire.
That is money that would otherwise be returned to taxpayers.
Coloradans actually have a history of being quite generous with revenue changes at the ballot box, and many voters might be willing to give an extra $200 million to fund education.
But why does the legislature also demand an extra $685.9 million and the permanent alteration of TABOR?
As I have previously explained, Colorado’s legislators are trying everything they can to deflect from their reckless overspending, largely driven by perverse healthcare incentives and mismanagement.
Clearly, SB-135 is not so much an education bill as a temporary healthcare relief bill.
The problem is that more money going to “any other purpose” does not magically fix the unsustainable cost-drivers for the state budget, nor does it hold our politicians accountable for their spending.
If legislators simply want more money for education and were to make a make a sound case, in all likelihood voters would oblige.
But using K-12 education as a cover to fool voters into bailing out the state’s unsustainable healthcare spending is a step too far.
Nash Herman is a fiscal policy analyst at Independence Institute, a free market think tank in Denver
