It was a bad week for the Taxpayer’s Bill of Rights and it doesn’t look like it’s going to recover any time soon under the Colorado court system.
Two TABOR-based suits were rejected, one by the intermediate Court of Appeals and another by Denver District Judge A. Bruce Jones.
The Colorado Union of Taxpayers Foundation had sued the city of Aspen in 2012 on grounds that its city council imposed a 20-cent charge on disposable grocery bags instead of putting the issue to the voters.
“We believe that the focus of the panel was properly on the beneficiary of the assessment, which is Aspen and not the grocery shopper; thus the levy is a tax, not a fee,” said William Perry Pendley of the Mountain States Legal Foundation, which represented CUT.
But the argument was rejected by the Pitkin District Court and its decision was upheld by a three-judge appeals court panel last week. The court concluded the purpose of the fee was “related to the reduction of trash and waste” and to finance “education” about such matters. That’s good enough to make it a fee no matter how the city ultimately spent the money, said the judges.
The court’s dubious conclusion is based on a 2008 TABOR case, Barber v. Ritter, in which the state supreme court concluded that a major factor in determining tax vs. fee is the primary purpose for which the money is raised, not the manner in which it is spent. In that case, the supreme court justified the cash-strapped general assembly’s seizure of 41 cash funds which it deposited in the general fund. The cash funds were supposed to pay for regulating the various businesses. The seizure required a continuation of the fees businesses paid beyond what would have originally been necessary.
Pendley said he was disappointed in the Aspen decision “but we have long known it will take a ruling of the Colorado Supreme Court to properly affirm TABOR’s full intent. He said Wednesday it is “99 percent certain” that his client will file an appeal.
But the high court may not even agree to hear the case, let alone reverse it. When the TABOR Foundation appealed an adverse ruling in its suit against the Colorado Department of Transportation and its so-called Bridge Enterprise Fund, the high court declined to review it, citing precedent. The fund is the state enterprise created by lawmakers in 2009 and financed by additional registration “fees” of an average $41 per vehicle each year. The money is supposed to go to needed bridge repairs but almost half the counties in the state aren’t scheduled to get any such repairs even though their residents too must pay the extra costs.
Doesn’t matter, said the trial court and court of appeals. Those residents might drive over some of the affected bridges if they leave their own county and thus they are possible beneficiaries of the fee.
Pendley, however, maintains that his bag case and the bridge case are “totally different” cases and that the high court should at least hear his appeal.
In the other TABOR case, the National Federation of Independent Business sued the secretary of state last December on grounds that the fees it collects from businesses every year are used to pay not just the costs of registering them but the state’s election expenses as well. Elections are a general governmental obligation and should be financed the public at large, said the NFIB.
That argument was rejected last week by Judge Jones, who noted that the fact the legislature calls them “fees” is important. “While the General Assembly’s declaration that a charge is a fee does not automatically make it so, the stated legislative intent is a key element of the analysis.”
He also said the money is used, at least in part, to pay for business registration but then conceded the “vast majority” of the funds are used to fund services outside the business and licensing division — especially elections. That might have forced him to rule for the NFIB but he ducked that conclusion by arguing that the statute predates TABOR and thus controls.
Jason Dunn, attorney for the NFIB, said an appeal is “likely.” The point Jones missed, he maintained, is that the legislature can put whatever governmental costs it likes on the secretary of state, forcing it to impose ever higher fees.
But that hasn’t happened yet and an appeal is a long shot. This poses a problem for TABOR: The more cases you lose on appeal, the tougher it is to win future ones in lower courts.
Conservative groups and lawyers bring most TABOR cases, and so it is more than a little ironic that the only lawyer to win one recently is Mark Grueskin, who usually works for Democrats and their causes. He represented a couple of Aurora taxpayers who were apparently fronting for some Denver hotels unhappy with the proposed Gaylord Rockies Hotel. To be sure it was relatively easy case: Aurora had staged a bogus one-man election in 2011 in order to grant a Houston developer $86 million in tax increment financing subsidies for the project.
A Brighton district judge sided with the plaintiffs and the city didn’t even bother to appeal, suddenly finding other ways to finance the project.
Maybe hiring a Democrat is a better way to win a TABOR suit in Colorado.
Will TABOR’s enemies take advantage of the courts’ efforts to bend over backwards to justify legislative “fees”? For instance, highway backers might push a bill that would replace gasoline “tax” with “fee” in the statutes. After all, the money goes to a special fund and is used primarily to build and maintain roads. If it were a fee the legislature could raise the 22-cent per gallon gas tax without the trouble and expense of a popular vote.
Longtime Rocky Mountain News political columnist Peter Blake now writes twice a month for CompleteColorado.com. Contact him at firstname.lastname@example.org You may re-publish his work at no charge and without further permission; please give full credit to Peter Blake and www.CompleteColorado.com.