Legal, Local, TABOR, Taxes, Uncategorized

Martinez: Legal fight over doubling of water district taxes continues

The National Taxpayers Union Foundation (NTUF) continues to fight for residents in Northern Colorado. Back in March, in a major victory for taxpayers, a unanimous panel of the Colorado Court of Appeals agreed with us that a doubling of the property taxes in a few Northern Colorado counties violated the Taxpayer’s Bill of Rights (TABOR).  But the case continues, because the Lower South Platte Water Conservancy District has now sought review from the Colorado Supreme Court. We recently filed our brief in opposition.

The case, Aranci v. Lower South Platte Water Conservancy District, involves residents challenging a tax increase by the water district, arguing it violates TABOR. The controversy arose when the district doubled its mill levy in 2019 without seeking voter approval. The residents filed a class action lawsuit, asserting that this increase violated the TABOR requirement that governments must ask voter consent for any tax rate increases, as well as seeking a refund for what was illegally collected.

The district court initially ruled in favor of the water district, finding no violation of TABOR under a narrow exception articulated in Huber v. Colorado Mining Association, which was about a ministerial tax adjustment based on inflation. However, the court of appeals unanimously reversed that ruling, declaring the mill levy increase was not ministerial and holding for the residents on five independent grounds.

The appeals court ruling was based on several key points. First, it determined that TABOR mandates voter approval for any tax policy change resulting in a net tax revenue gain. Second, it found that the water district’s actions were not ministerial, as claimed, but involved discretionary decision-making. Third, the court concluded that any conflicts between the Water Conservation Act and TABOR must defer to the latter since TABOR is a constitutional provision. Fourth, it rejected the water district’s argument that Measure 4D authorized future tax hikes without voter approval, emphasizing that the measure explicitly required voter approval for any increase. Fifth, the court held that the district failed to show that requiring a TABOR vote would starve the government of necessary funds.

The water district has now petitioned for certiorari, seeking review from the Colorado Supreme Court. It reiterated the argument that Measure 4D, a 1996 TABOR spending limit waiver, provided adequate authorization for the tax increase. We pointed out in our brief that four judges – the trial judge and the unanimous court of appeals – have rejected this argument, and that the language of Measure 4D included a provision that explicitly stated no local tax rate or property mill levy should be increased without prior voter approval.

The water district also claims that the residents waived their right to dispute the discretionary nature of the budget-setting process. This spurious claim was already brought to the court of appeals, which rejected it easily. The question of discretion versus ministerial mandate was at the heart of the Huber analysis, and has been well litigated at each stage of this case.

Overall, the case centers on the interpretation of TABOR and Huber’s ministerial exception, with significant implications for taxpayer rights and governmental authority in Colorado. The appellate court’s decision underscores the necessity of voter approval for tax increases, reinforcing TABOR’s intent to give citizens control over tax policy changes.

At the petition stage, the case is Lower South Platte Water Conservancy District v. Aranci, Colo. Sup. Ct. No. 2024 SC 295.

Tyler Martinez graduated law school at the University of Colorado and is a senior attorney at NTUF.  A version of this article originally appeared at the NTUF website.


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