1 for the Money
Drive to Pagosa Springs, then south through the sloping ranchlands of south-central Colorado and across the Rio Blanco on Route 84, one of the few paved roads in Archuleta County. About five miles shy of the New Mexico border, you'll see the Chromo Mercantile, where Fitzhugh Havens has been the proprietor for the past half-century. "The speed limit is only fifty miles per hour," he growls. "So you can't miss it."
Besides, he points out, "there's nothing else here. Chromo is just a place. There's nothing but our little store and the post office, which is in the store. It's beginning to change. But not much."
For the past six months, the Chromo country store has been the unlikely headquarters of a tax battle with towering stakes, and lawyers throughout Colorado now know of Fitzhugh Havens. That's because the eighty-year-old former rancher has been trying very hard to solve a statewide brainteaser.
Four years ago Colorado voters passed a sweeping and vastly complicated law called the Taxpayer's Bill of Rights --the Tabor Amendment, also known as Amendment 1. Among other things, the constitutional amendment directs local governments to refund any extra money they collect from taxes over very specific limitations.
Since 1992, the year Amendment 1 passed, Colorado's economy has enjoyed an enduring boom. For Colorado's hundreds of municipalities, special districts and counties--including Archuleta County, where Chromo lies--that has translated into a windfall of millions of dollars in unanticipated money, largely from surging sales-tax collections.
So where, Fitzhugh Havens wanted to know, was his refund?
Two years ago Archuleta County did what many other local governments have done since Amendment 1 passed: Finding themselves with unexpected cash, officials asked local voters if, instead of refunding it, they could keep it, along with any extra funds they collect over the next few years. Archuleta County's voters agreed. Yet according to Havens's reading of the Tabor Amendment, in exchange for their vote, the county should have promised some sort of refund--either cash or a tax reduction--somewhere down the line.
Not everyone agrees with the Chromo interpretation of the new law--including its author. "Well," says Douglas Bruce, trying to follow the trail of Havens's reasoning through the document he wrote, "not exactly."
Yet Amendment 1 is no longer Bruce's alone to interpret. And living in Chromo gets a man accustomed to going his own way. So, drawing money from his retirement nest egg, Havens filed a lawsuit against Archuleta County.
After the legalese is boiled off, Havens's suit was simple: He wanted the reimbursement that he was certain he was owed under the law. To the consternation of many local government administrators and elected officials, this past spring Havens's lawsuit made its way to the Colorado Supreme Court.
The Colorado Municipal League, for one, was deeply concerned about Havens's personal legal project. The group noted that since the passage of Amendment 1, numerous municipalities and other governments have asked for, and received, voters' permission to keep unexpected revenue--yet they have not felt compelled to offer refunds. "If [Havens] were to prevail," the league's lawyer, David Broadwell, pointed out in a legal brief filed in support of Archuleta County, "then the validity of at least 173 popularly approved ballot issues may be called into question."
To the relief of Broadwell, the municipal league and dozens of local governments, on Monday the Supreme Court ruled against Havens. Yet his lawsuit is a reminder that the debate over the Taxpayer's Bill of Rights--what it means and who it really benefits--is just revving up.
Four years after it passed, the Tabor Amendment is causing as much confusion as ever. Although politicians warned that Amendment 1 would eviscerate Colorado's local governments, most people seem to have voted for what Bruce said was the intent of the measure--to cut down on government's growth by limiting the amount of money taxpayers put into its hands. The amendment imposed tight restrictions, based on the rate of inflation and population growth, on how much governments could increase their tax collections each year.
Yet as it has been reread, deconstructed and reinterpreted in the time since its passage, the law turns out to have been far more complex than many people initially understood it to be, and with far broader implications. Broadwell, whose sole job at the municipal league has become tracking Amendment 1 fallout, has counted sixteen separate issues that voters approved when they voted for Tabor, ranging from revenue limitations and intricate borrowing procedures to how and when elections are held. The result? "You ask ten people what this means," he says, "and you'll get ten separate answers."
A major reason for the perplexity surrounding the law is that, despite all the attention paid to Amendment 1, by most accounts Tabor is not a very clear document. "I've read it many, many times," says Archuleta County manager Dennis Hunt. "And I still can't understand it. I think it's very poorly written."
Adds Broadwell, "What it is and what it ain't is very unclear. And the stakes are very high."
They are so high that seeking ways to escape the shadow of Amendment 1 has become a complex legal pastime for local governments. Take, for example, the case of the E-470 Public Highway Authority, charged with building the road ringing the south metro area.
Three years ago a tiff between the E-470 authority and Arapahoe County resulted in a lawsuit over how the authority raised and spent money. The state Supreme Court eventually ruled that under the then-new Tabor Amendment, the authority would now have to ask voters for permission to sell hundreds of millions of dollars' worth of bonds to finish the highway project.
To E-470 executive director Steve Hogan, the implications of such a public referendum were mind-boggling. "This project is in four counties, parts of seven different cities and stretches 46 miles," he says. "Who would vote on whether to finish the project? What is our constituency?"
Such a vote could easily doom the project. For instance, Hogan notes that residents of Arapahoe County, whose segment of the road was completed in 1991, would have little incentive to vote in favor of borrowing more money to complete Adams County's portion of the road, many miles away.
Fortunately for the highway authority, when Bruce wrote the Taxpayer's Bill of Rights, he left an out for certain self-sustaining government agencies. After some legal wrangling, it became clear that the E-470 authority, which pays its own way through tolls, could qualify--but only if it agreed to the government equivalent of self-castration.
This past January the highway authority asked the state legislature to take away its power to tax. "It was maybe the first time a government has gone back to lawmakers to be stripped of its taxing powers," says Hogan. The payoff came three months ago, when an Arapahoe County judge declared E-470 exempt from Amendment 1. Hogan says he anticipates selling between $400 million and $1 billion worth of new bonds--without voter approval--within two years.
The most common way local governments try to step outside the boundaries of the Tabor Amendment's financial restrictions, however, is to ask voters for permission to keep their unexpected tax windfalls. "It's the heartbreak of excess revenue," says Broadwell. Despite their heartbreak, many elected officials have not been shy about making the request.
Local governments have asked voters for permission to keep their extra money 189 times during the past four years, according to the Colorado Municipal League. And, contrary to the loud anti-government-growth message delivered by the passage of Amendment 1, taxpayers have overwhelmingly--in 91 percent of the cases--agreed to let government keep it.
Broadwell describes the pattern as "a kind of collective shrug. People are saying that as long as you're not raising our taxes, go ahead and keep the windfall." But that doesn't explain why, during the same time period, voters have often agreed to higher or new taxes.
The apparent contradiction between the public's Tabor Amendment vote and the subsequent decisions to give local governments more money have analysts from the state Department of Local Affairs, the Colorado Municipal League and Colorado Counties, Inc., poring over election results like tea leaves, trying to make sense of what Amendment 1 meant. The big picture remains fuzzy, however.
"Voters will not approve having their taxes raised for new golf courses," offers Lucia Smead, a special districts elections officer with the state's local affairs department. She also says tax questions have a better chance of flaming out on the eastern plains than they do elsewhere in the state.
Beyond that, though, the analysts remain baffled. Why did voters in Colorado Springs permit the city to keep its extra money in 1994 but not in 1995? Why did the voters of Berthoud and Delta shoot down ballot measures requesting permission to keep excess revenue in 1994 but then approve almost identical measures the next year?
Some officials believe the answer is simple: Coloradans were bamboozled in 1992. "I don't think people understood what they passed when they voted for Amendment 1," says Hunt, the Archuleta County manager.
Another explanation is ballot fatigue. This theory holds that citizens are confused by the short, technical ballot descriptions that describe incredibly complex taxing and spending questions, resulting in erratic voting. "There are times when I read these ballot initiatives--and I do it for a living--and I have to put it down and say, 'What are they talking about?'" concedes Smead.
For his part, Douglas Bruce agrees that the high success rate for "de-Brucing" measures means voters are dazed. But he contends that local governments are deliberately creating that confusion. Most of the keep-the-excess-revenue measures have been in small towns, he points out, where voters are less savvy. "We don't have a person in Georgetown to remain vigilant," Bruce says. "There isn't anybody who has read Amendment 1 in Fruita.
"It takes people a while for people to understand they can vote for a tax refund," he adds. "And the government usually words the ballots with something innocuous like, 'We got some extra money--can we keep it?' without saying the second half, which is, 'Or would you like a refund instead?'"
Such initiatives place millions of dollars at stake, as well as local governments' ability to plan their finances. And whenever the stakes are this high, at least one thing is predictable: lawyers. In that sense, at least, the effect of Amendment 1 has been easy to forecast.
"Tabor," huffs Hunt, "has definitely been the legal profession's savior." Adds Broadwell, "There's a small army of Denver attorneys who specialize in Amendment 1."
One of the foot soldiers is Peter Whitmore. His Denver law firm, Grimshaw and Harring, publishes and distributes The Tabor Digest, which keeps tabs on the roiling legal waters surrounding Amendment 1.
According to Whitmore, no one has attempted to tabulate all the legal costs--private as well as taxpayer-funded--spawned by the litigation surrounding the initiative. Yet it almost certainly has run into the millions of dollars. "Think of all the money that has been spent on lawsuits just trying to figure out the damn thing," says Larry Holthus, Archuleta County's attorney. "That, to me, is an outrage."
The Tabor Amendment has certainly kept the courts hopping. Since 1992, assorted district courts have handed down nine final decisions concerning Tabor. (Three other cases were dismissed; another three are pending.) The state Court of Appeals, meanwhile, has written three opinions of its own on separate cases, with one more pending.
And the Colorado Supreme Court, which has expressed its desire to deal quickly with Tabor questions, has ruled on sixteen more Amendment 1 cases. Two additional cases are pending--one of which is Havens's. By Whitmore's count, more than three dozen cases in all have plowed their way through private and government attorneys, judges and courtrooms.
Much of the legal haggling has been unbelievably arcane and complex. Some has been comprehensible. For example, when a municipality asks to keep extra money, must it say how much, exactly, in dollars? No, the Supreme Court decided last year. (Bruce's interpretation differs. "The Supreme Court has its head up its collective butt on that one," he theorizes.)
A handful of the cases seem designed to waste time. One of the complaints included in a 1994 lawsuit was that the state didn't print ballot titles in capital letters. (The court ruled that it should.)
Several of the suits directed against local governments have been filed by Bruce himself (three in Colorado Springs, plus at least one other he funded in Wheat Ridge) or his public allies (Vern Bickel, of the Colorado Taxpayer's Union in Boulder). Yet the Tabor Amendment also has given local anti-tax curmudgeons unprecedented opportunity to vent and, possibly, to influence statewide taxing policy for years to come.
I begun to think that maybe we don't get our money's worth with our taxes," Fitzhugh Havens explains. "They've added a great deal to the overhead in the past ten years. Maybe it's necessary. But when you see the county road crews knock off at two o'clock to get back to the shop so they can quit at five, you gotta wonder."
Havens voted for Amendment 1 in 1992.
The Havens family has had a hand in Archuleta County affairs for more than a century. Fitzhugh Havens's grandfather homesteaded his ranch there in 1887. Fitzhugh moved to the area from Los Angeles in 1929, when he was twelve, to live with his uncle on the ranch. He graduated from the Pagosa Springs high school, class of '34, and went to work.
At first Havens stayed on the ranch, raising cattle and some sheep. But an argument with his uncle led him to look for new possibilities. An opportunity to fly on his own came in 1944, when Chromo's country store went up for sale.
Havens and his wife, a lifelong resident of the county, added on to the store and built the business. Spurred on by a temporary influx of workers for a river-diversion project, by the 1980s the Chromo Mercantile complex had grown to include a gas station, a restaurant and a motel with living quarters behind it. In 1987 it all burned down.
"We lost everything, everything we had," Havens says. "We still don't know how it started. We had no insurance--everything was paid for, and the insurance was so damned expensive." With the help of neighbors, the Havenses rebuilt the store.
Through it all, Fitzhugh Havens and his wife have raised five children. One of them, a son, still lives in Pagosa Springs. Another, a daughter, died at her parents' home this past February.
Although Havens is officially retired, he occasionally can be found still minding the store. Other than that, "I putter around the garden and read and so forth," he says. "I read nearly everything: the Wall Street Journal and Forbes, and I have for years. Occasionally I get a copy of a financial magazine of some sort. I don't take a daily newspaper; the mail rates are awfully high."
He also stays involved in local politics. "I been fighting for public things for a number of years--writing letters to the editor and so forth," he says. ("You can look back through our old papers twenty and thirty years, and anytime there was a school bond election, there's a letter to the editor from Fitz explaining why people should oppose it," confirms David Mitchell, editor of the Pagosa Springs Sun.)
Occasionally, Havens even ventured out to the stump: He ran for county commissioner twice and lost, and ran several times for the school board and won.
In 1994 it was a series of tax questions over the space of several months that raised Havens's ire. One was the extension of a 2 percent sales tax, which he campaigned against and which passed nonetheless by a mere two votes. Another was a hospital bond issue to build a new clinic, which also passed despite Havens's vocal opposition. The third was Archuleta County's request of its voters to keep sales-tax revenues above and beyond the limits set by the Tabor Amendment.
The county has found itself riding a mini-wave of prosperity. Most of it is propelled by tourism and hunters coming from as far away as Texas, Oklahoma, Arkansas and California. (During hunting season the county's population swells from about 7,000 to more than 25,000.) As a result, in 1994 county officials found themselves looking at the possibility that they'd collect more money than they could legally keep under Amendment 1. (Whether there actually has been such a surplus remains a point of some contention. Havens says yes; county officials suggest not.)
Although Amendment 1 requires that surplus money be returned to taxpayers, like many local governments, Archuleta County was reluctant to hand it over. Six years earlier, when Hunt was hired away from his New Mexico road-construction business to become county manager, he had to repair a boat that was leaking fast. "We were caught in a situation where we were living off our reserves," he recalls.
Hunt says he has since balanced the budget--Archuleta County's budget totals about $7.5 million this year--and has just begun building the county's reserve fund. The county may need it, Hunt adds; recently he's become concerned over preliminary signs of an economic slowdown. "Right now this is a very healthy county," he says. "But I've been watching the social service rolls real carefully these days."
Add to that the fact that the county's roads are in terrible shape--only 10 percent of them are paved, and a developer who'd agreed to build some new ones declared bankruptcy in 1990--and county officials decided they could use any extra money they could get. So in November 1994 the county asked voters if it could keep any excess sales tax it collects over the next four years. Archuleta County voters agreed by a margin of 2 to 1.
Havens voted against the measure.
Like many of Colorado's anti-tax activists, Havens has spent a lot of time reading Amendment 1. He agrees with most interpretations of the law regarding extra money: that when a government's revenue exceeds what the law allows, officials must provide a refund of some sort--referred to as an "offset" in the law.
A few Colorado governments actually have returned some excess money: Colorado Springs and the Scientific and Cultural Facilities District, which gave credits on local utility bills, are the two primary examples. Most governments, however, have not. Which is where Havens's reading of the Tabor Amendment takes a detour.
When Archuleta County residents voted to let their government keep its cash, Havens thought that officials still owed residents "an offset," such as a promise to lower taxes later. Even though voters had agreed to let the county keep any extra money, Havens reasoned that the vote was no more than a temporary courtesy--a loan that required repayment.
"I just thought the county was exploiting what they might have thought of as a loophole," he says. "But I didn't think it was a loophole. I'm a conservative, and I just didn't like the way the public gets gigged all the time on its taxes."
"When he brought it to me and I read it, I said, 'Yeah, you're right,'" says Bill Zimsky, the Durango lawyer who agreed to take Havens's case. "Everybody else thinks we're wrong. But that never stopped me before."
The two men filed the lawsuit in Archuleta County court in January 1995. Six months later the local judge ruled against them. "I expected that," says Havens. "My attorney told me, 'Don't file this if you're not prepared to take it to the Supreme Court.'" This past May, they did.
After sitting on the case for nearly half a year, the state's highest court ruled against Havens early this week. The justices concluded that his reading of Amendment 1 would have violated the spirit of Tabor by depriving voters of their right to decide their own financial fates. The decision lines up with the court's other Amendment 1 rulings, which generally have been decided in favor of local governments' interpretation of the law.
Havens paid his own way through the legal challenge. He says he wouldn't have done it any other way. "I didn't want to go through the trouble of trying to sell any idea to anybody else or asking for any money," he explains. In all, the experiment cost him $14,000.
"It was my retirement money. Then again, I can't take it with me. My cousin told the undertaker in Pagosa Springs that he was going to take his money with him when he died. And the undertaker told him, 'No, you're not. I go over your body first.' So I spent mine.
"I suppose that if I hadn't done this I would still have the money. But people spend money gambling or on wild women or some other damn fool thing. And this just happened to be my damn fool thing. I just thought it was something that ought to be tried, and I tried it. No regrets. I'd do it again."
In fact, says Havens, he's becoming particularly interested in Amendment 13, which would broaden the rights of citizens to contest the decisions of their local government. "I ain't got much money left," he says. "But I'm for sure going to donate some of it. Right now citizens aren't allowed to petition their government. And that's no damn good.
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