Bill to Resolve Pot Tax Error Heads to Hickenlooper's DeskEXPAND
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Bill to Resolve Pot Tax Error Heads to Hickenlooper's Desk

A bill designed to address a 2017 lawmaking error that inadvertently withheld marijuana tax revenue from special districts across the state has sped through the Colorado Legislature in less than a month, and is now headed to Governor John Hickenlooper's desk. SB 088, sponsored by Republican Senator Bob Gardner and Democratic Representative K.C. Becker, passed out of the legislature on February 13 after the Senate approved the version that the House had amended — but critics had their say along the way.

Introduced by Gardner, the bill aims to correct a gaffe in the language of SB 267, a 2017 measure that changed the status of the state’s hospital-provider fee in order to put around $30 million into rural school projects, pump nearly $2 billion into state transportation and provide breaks on personal property taxes for small businesses. The measure also raised the state marijuana tax from 10 percent to 15 percent and exempted retail pot sales from a 2.9 percent state sales tax, but accidentally blocked the revenue from state pot sales taxes that would go to special districts. According to a fiscal note put on the bill in October, the flub would have cost the Regional Transportation District, the Scientific and Cultural Facilities District and other special districts $8.6 million in the 2018-2019 fiscal year.

According to 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.

To resolve the error, Gardner's bill reauthorizes retail pot revenue for the state sales tax; it leaves it up to special districts whether or not they want to accept the funding. That way, the bill's sponsors said, it complies with the Taxpayer's Bill of Rights — but as with the fix proposed at Hickenlooper's unsuccessful special session, some Republican senators felt this proposal overstepped its bounds.

Senate President Pro Tem Jerry Sonnenberg, Senate Majority Leader Chris Holbert and Senator Kevin Lundberg were among the bill's critics, who argued that it violated TABOR by giving the sales tax revenue back to special districts without having the districts' constituents vote on it first.

Despite some objections in the Senate, the bill went on to the Democrat-controlled House relatively unchanged and was expected to pass through that body even faster — and it did, but not without some tweaks. Some representatives were concerned that the bill wasn't clear enough about whether the special districts would receive the funding that had already been lost since SB 267's implementation; amendments made it clear that those funds would remain lost.

During its final vote in the Senate, several senators were still worried that the bill wasn't clear enough, including Republican Senator Beth Martinez Humenik, who called for a brief recess to make sure that the words "retroactive" and "retrospective" didn't cause another language error that would require fixing next year.

"You collect sales tax from point of sale, and after point of sale, you can't go back and get them," Gardner said to assure his colleagues. "The bill is attempting to make this crystal-clear, as if anything is crystal-clear in all of this."

The bill passed its final reading in the Senate, 24 to 11, and has moved on to Hickenlooper, who's expected to sign it. The Governor had called a special session last fall that would've led to similar legislative results, but it was blocked because some lawmakers didn't feel like they were able to vet it. "I wasn't part of those discussions during the special sessions," Gardner told Westword in January. "But now we've been able to talk about undoing what we unintentionally did."

Despite the political back-and-fourth, Hickenlooper has been largely supportive of the bill, telling reporters in January that he learned "from failure" after the special session attempt and that he hoped the General Assembly would provide a solution as quickly as possible.

Now it looks like it has.

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