Both RTD and the SCFD have taken a hit from the pot-tax gaffe.
Both RTD and the SCFD have taken a hit from the pot-tax gaffe.
Shutterstock.com/Flapas

Two Bills to Fix Pot-Tax Gaffe Have Very Different Support Levels

Two bills have been introduced in the Colorado Legislature that attempt to fix an error in the language of a 2017 measure that wound up eliminating millions of dollars in cannabis tax revenue for special districts across the state. And the two bills have very different levels of support.

SB 088, introduced by Republican senator Bob Gardner, has over fifty co-sponsors and public bipartisan support. HB 1062, which was introduced ten days earlier by a Democrat in the House, has zero co-sponsors from either party. That bill is being pushed by Representative Steve Lebsock, who was formally accused of sexual harassment for the third time on Tuesday, January 16.

Lebsock, who is currently running for state treasurer despite reports of dwindling campaign support, says he's been working to fix the tax gaffe since last October, but believes other state lawmakers, both Democrat and Republican, are trying to kill his bills because of the allegations. The other measure he's introduced this session, HB 1035, also has zero co-sponsors.

"I would hope that legislators would be able to rally around a solid bill that is good for special districts," Lebsock says. "It's a shame that some folks would want to bring dirty politics to the Capitol." But colleagues respond that they're not supporting HB 1062 because the bill doesn't offer the right solution to the mistake in the measure passed last session.

House Majority Leader K.C. Becker, a Democrat and prime sponsor of Gardner's bill, says she told Lebsock that she didn't think his bill was the right approach "months ago, before the allegations," adding that she's worked with other male legislators facing sexual-misconduct charges without letting those allegations affect her judgment of a bill that affects the people.

"On any bill, it's important to not make it personal. He's not the only one with sexual-harassment allegations," Becker points out. Although she didn't name those other colleagues, reports of sexual-harassment claims against state senators Randy Baumgardner and Jack Tate surfaced in November 2017, as did allegations against Representative Paul Rosenthal.

As House Majority Leader, Becker has received formal complaints of Lebsock's alleged misconduct from Representative Faith Winter and former legislative aide Cassie Tanner. Former lobbyist Holly Tarry has also accused Lebsock of inappropriate behavior. Lebsock has denied the claims, but Governor John Hickenlooper, House Speaker Crisanta Duran and Representative Matt Gray, all Democrats, have called for his resignation. An independent party is currently conducting an investigation into the allegations.

Despite the mounting pressure to end his campaign for treasurer and step down from his current office, Lebsock insists he's pushing forward with both bills, calling his Sales Tax on Retail Marijuana bill a "repeal" of the pot-tax mistake.

The mistake that both bills hope to fix was in a 2017 measure that raised the state marijuana tax from 10 percent to the maximum of 15 percent while exempting retail sales from a 2.9 percent state sales tax. However, exempting that revenue from the state sales tax unintentionally blocked nine special districts from receiving $4.4 million in the 2017-2018 fiscal year and could cut up to $8.6 million in the 2018-2019 fiscal year, according to an October fiscal note.

Both the Regional Transportation District and the Scientific and Cultural Facilities District, which helps fund institutions like the Denver Art Museum, the Denver Zoo, the Denver Botanic Gardens, the Denver Museum of Nature & Science and the Denver Center for the Performing Arts, are missing out on a substantial portion of anticipated tax revenue. According to a report by Westword's Nora Olabi, RTD has lost an estimated $560,000 a month since the change took effect in July 2017, while the SCFD has lost around $56,000 per month.

Gardner's bill reauthorizes retail pot for the 2.9 percent sales tax and doesn't take a position on whether the special districts should be required to take the funding or not; under the Taxpayer's Bill of Rights, requiring them to take the money would have required a vote of a district's constituents. By leaving it up to the special districts to decide whether to accept the funding, Gardner and Becker believe that the bill complies with TABOR.

Colorado House Majority Leader KC Becker.
Colorado House Majority Leader KC Becker.
Courtesy of Colorado House Democrats

Gardner's bill is similar to a proposal introduced during the failed special session in October, when Governor John Hickenlooper and the Democratic-led House hoped to fix the error, but Gardner says more lawmakers have been able to vet it this time. "I wasn't part of those discussions during the special sessions," he notes. "But now we've been able to talk about undoing what we unintentionally did."

Gardner says he doesn't believe Lebsock's bill has a chance of passing the House because it's not a realistic fix, adding that his bill already has written support from the majority of the Colorado Senate, and its thirty sponsors in the Colorado House are just four representatives away from a majority. "We have four or five more sponsors in the House that will be announced soon," he explains.

Becker believes that rewording the bill to say that the constitutional burden is on the special districts to choose to accept the funds is essential to its chances at getting approved. Lebsock's bill would reduce the new retail marijuana sales tax rate by 2.9 percent and repeal the general state sales-tax exemption for sales of retail marijuana, and "I just don't think that's the right solution," Becker says. "His reverses the 2.9 percent tax increase, which is what the gaffe-causing bill did initially. But it doesn't actually address the issue, which is that you can't assign that funding without a vote."

Lebsock disagrees, saying that because special districts have already approved accepting marijuana sales-tax revenue in the past, his bill would not require a vote of the people. The Colorado House Democrats declined to comment on either bill.

Both proposals will go before their respective finance committees next week: Gardner's in the Senate on Tuesday, January 23, and Lebsock's in the House on Wednesday, January 24.

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