DENVER–A measure referred to Colorado’s November ballot by the legislature would allow the state to keep and spend over $850 million in just the first two budget cycles after passage, revenue that otherwise would be refunded back to taxpayers.
Majority Democrats passed Senate Bill 26-135 during the last legislative session, which placed Proposition NN on the ballot. The measure would allow the state to retain excess tax dollars collected over the current Taxpayer’s Bill of Rights (TABOR) revenue cap to spend on public education and cover homestead property tax exemption reimbursements.
According to a new report by the Common Sense Institute, Prop NN would increase state spending by $329.9 million in fiscal year (FY) 2027 and $521 million in FY 2028, totaling $850.9 million over the two years.
Those are funds that would otherwise be sent back to taxpayers under TABOR, the constitutional amendment that limits growth of a portion of the state budget to a formula of population growth plus inflation. TABOR also requires voter approval for tax increases, among other things.
Eliminating refunds
“To achieve these spending increases, Proposition NN would eliminate TABOR refunds for the foreseeable future,” CSI said in the report.
Under the measure, K-12 education would receive $241.5 million in FY 2027, and $234 million in FY 2028, while $206 million would go towards property tax reimbursements in 2028.
“Besides raising the revenue cap, Proposition NN would accelerate its growth over time,” CSI said. “As TABOR stands now, it permits state revenue to grow by annual rates equal to the sum of inflation and the rate of population change. Because the new allowable rate of increase would parallel K–12 spending growth, it is likely each year to surpass population-growth-plus-inflation, as the measure’s latest Blue Book draft affirms.”
Democratic lawmakers have in recent years referred other measures to the ballot that would have retained overcollected TABOR revenue in recent years, but failed at the ballot box. Voters rejected Proposition CC in 2019 and Proposition HH in 2023.
Weakening TABOR
Nash Herman, a fiscal policy analyst with Independence Institute, a free market think tank in Denver, said Proposition NN would be worse because it would “fundamentally change” TABOR more than the past proposals.
“Coloradans are used to rejecting similar efforts to weaken the Taxpayer’s Bill of Rights in the past,” he told Complete Colorado. “But Prop NN is actually even worse because it is not simply seeking a major (and permanent) tax hike and the end to taxpayer refunds, but it would fundamentally change the TABOR formula by giving the government more say in taxation at the expense of taxpayers.”
“Direct voter authorization of taxes is fundamental to Colorado-style democracy, and Prop NN would permanently weaken that right,” Herman added.
According to CSI’s economic modeling, Prop NN, if passed, would cost the state between 46 and 2,227 jobs and between $12 million to $120 million in lost gross domestic product. It would also cause between $34 million to $244 million in economic output losses.
CSI also questioned whether spending more on education will lead to better student achievement outcomes.
“Since 2013, real school-district spending per pupil has risen by 21% while test scores have fallen at benchmark elementary-school, middle-school, and high-school grade levels,” reads the report.
Colorado voters will decide Prop NN on November 3.
