Capitol Updates: March 21, 2024: A Budget Paradox

Written by: Children's Campaign
Date Posted: March 21, 2024

Last week, Colorado’s legislature got a pair of updates about the state’s budget for the upcoming year. Colorado has more revenue than anticipated. But state legislators have less to work with than anticipated and must make tough choices about priorities they intended to fund, including many that could improve kids’ and families’ lives. 

How can this be? 

According to the latest economic and revenue forecast, Colorado has about $2 billion in revenue that must be refunded to taxpayers because of the Taxpayers Bill of Rights, or TABORThat’s $300 million more than had been projected.

At the same time, the legislature’s Joint Budget Committee, which ultimately sets the state’s budget, has tens of millions less to spend than it anticipated when the year began – which means it now must look for ways to make cuts and revisit programs it approved for funding earlier this year. Lawmakers are in the process of sorting out what that will look like this week.

So, even though the state has billions of dollars in revenue – more than they had expected – policymakers will likely not be able to maximize their efforts to make meaningful investments to address challenges facing Colorado kids and families.

TABOR is an only-in-Colorado policy that, among other things, requires the state to return money it collects above a certain cap directly to taxpayers. In practice, it has meant that Colorado often struggles to fully fund critical programs even in years when the economy is doing well. Kids are directly affected by this struggle: Colorado failed to fully fund its public schools for nearly 14 years partly due to TABOR-related funding shortfalls, and other services and programs that serve families are also limited by the cap on spending.

Meanwhile, an initiative that will appear on Colorado ballots this fall, Initiative 50, could put our state in an even worse position. It would cap statewide property tax revenue growth at 4% a year – significantly below the average rate in recent years – and would require a complex system for refunding money over that limit, as property taxes are local. Property taxes are a critical source of revenue for public schools as well as other public services in communities across the state. This year’s budget dilemma makes clear: We can’t afford another confusing law that will limit our ability to serve Colorado’s kids and families. 

Colorado does have an opportunity to make sure that some of that $2 billion is targeted to the Coloradans who need it most. A new proposal to create a Family Affordability Tax Credit (HB24-1311) would place money back in the pockets of Coloradans with children. This tax credit has the potential to cut child poverty in Colorado in half and would be a powerful use of these refunds.  

Another proposal (HB24-1312) would place money back in the pockets of child care providers, home health workers, personal care aides, and certified nursing assistants through a tax credit to support the care economy. This credit would support the financial security of essential care workers, most of whom are women, and who contribute to the economy by providing care so that families can work. 

Providing direct cash to families who need it, including through tax credits, is one of the most impactful ways to support financial prosperity. This is especially critical during a time in which many families are struggling to make ends meet in the face of inflation and the rising cost of living in our state.

However, the current state budget highlights how TABOR is preventing policymakers from fully investing in Colorado kids and families. And it is a reminder that our state needs policies that allow us to thoughtfully devote resources to schools, health systems, higher education, and the other systems that support Coloradans and our future. 

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About Children's Campaign

The Colorado Children’s Campaign is a nonprofit, nonpartisan advocacy organization committed since 1985 to realizing every chance for every child in Colorado. We advocate for the development and implementation of data-driven public policies that improve child wellbeing in health, education and early childhood. We do this by providing Coloradans with trusted data and research on child wellbeing and organizing an extensive state-wide network of dedicated child advocates. For more information, please visit www.coloradokids.org.