2023 Leg Session, Education, Featured, Gold Dome, Sherrie Peif, TABOR

Bill giving tax credits to public sector retirees scaled back after huge fiscal note

DENVER — A bill that would give $1,400 over the next two years in the form of a refundable tax credit to certain retired public sector employees made it through the House of Representatives’ finance committee, but not without an amendment that scales back by nearly half the number of qualified individuals.

The original version of House Bill 23-1016, sponsored by Shannon Bird, D-Westminster and Emily Sirota, D-Denver in the House and Chris Kolker, D-Littleton and Chris Hansen, D-Denver in the Senate, would have created an income tax credit for tax years 2023 and 2024 for Colorado residents who:

  • Are 55 or older at the end of 2023 and 2024;
  • Retired from a position that had a Colorado state public pension plan;
  • Or retired from a position that had a public pension plan administered by a local Colorado government.

However, the fiscal note on this bill predicted an impact to general fund revenue in the amount of nearly $240 million for approximately 4,000 qualified Coloradans, leading sponsors to amend the bill.

The language now:

  • Raises the age of the retiree to 65 or older (with the exception of Colorado state troopers);
  • And requires that the retiree must be drawing on his or her retirement benefits.

Under the new language between 2,300-2,400 Coloradans will now qualify, and state troopers were exempted from the age requirement because of their average age of retirement, Bird said.

“Many state troopers retire at an earlier age due to the physical demands of their job, this is an attempt to honor that and make sure they, too, will get the benefit,” Bird said.

Bird and Sirota justified the bill by saying Public Employee Retirement Account (PERA)retirees face a large burden from the raising costs of living and blamed previous legislatures for passing policies that contributed to the problem.

“As inflation has risen over the years, the value of the dollar has not kept pace with that,” Bird said, adding that PERA retirees did not receive a COLA adjustment to their pensions in either 2018 or 2019, and likewise received only small adjustments since. “Cost of living adjustments for retirees have not kept pace. … This is an attempt to create a refundable tax credit.”

TABOR refunds on the table

Bird called the cost to the state “forgone revenue,” but then when questioned about its impact on Taxpayer’s Bill of Rights (TABOR) refunds, called it “money that just stays in the hands of taxpayers.”

Michael Fields, however, said it’s money that stays only in the hands of the taxpayers that Democrats have deemed are worthy of keeping it.

“They want to take a chunk of TABOR refund money that would go to everyone and instead just give it to retired public employees,” Fields said.

Fields, who is the president of Advance Colorado Institute, was referring to the dynamics of how TABOR works.

TABOR is a constitutional amendment that, among other things, regulates the growth of government spending to a reasonable annual rate.  Excess revenue must be returned to taxpayers unless voters give permission to exceed those limits.

Historically, TABOR refunds are given based on the amount of taxes paid into the state. The more taxes paid, the bigger the refund. Last year, Gov. Jared Polis marketed the constitutionally mandated refunds as a $750 gift to every Coloradan who filed an income tax return.

Neither Bird or Sirota would directly address the TABOR impact when questioned by Republican members of the committee.

Sirota referred to it simply as less money coming in.

“This is our attempt to bring relief to our PERA beneficiaries who are struggling with their ability to keep up with the cost of living that has been a real challenge with these extreme inflation pressures over the last couple of years,” Sirota added.

Rep. Bob Marshall a Democrat out of Douglas County pointed out that according to PERA’s records, about 20 percent of the retirees will be getting much more in the form of the tax credit than inflation has cost them.

For at least one-out-of-six, more likely one-out-of-five, it would be equal to or greater than the rate of inflation in the last year,” Marshall said.

Bird said that $700 per year is not adequate compensation to make up for the long-term impact of inflation felt by PERA retirees.

Fields disagreed.

“PERA is already a very generous pension program,” Fields said. “This is another example of legislators trying to use the tax system to pick winners and losers.”

The bill with a new fiscal note, which has not been released yet, will now go to the appropriations committee. There is not a date set for that hearing yet.


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