A sales tax complexity lesson for the State

One of the crowning achievements of the 2017 legislative session was the grand compromise that ensured that hospitals around the state would not be penalized by the now repealed requirement that counted the hospital provider fee against the state TABOR revenue limit. The fee program is now an enterprise, and hospitals are now receiving all of what they are due from the state and the federal match.

That was the main goal of the bill. However, bipartisan support for fully restoring the hospital provider fee was only achievable because of a complicated array of related agreements. State highways will get about 10 percent of what they actually need, albeit more than they were going to get barring SB 267. (Local roads were not included). Schools will get some support.

A critical part of the deal was an increase in marijuana taxes that will fund other portions of the deal, such as a business personal property tax credit. However, the decision to exempt marijuana from the state’s base sales tax and increase the special sales tax rate was made on the fly. The resulting fallout has become a cautionary tale for many in the state that blame local sales taxes for being complicated but fail to look at state policies that muddy the waters.

 A “drafting error”?

While not the first to report on the issue, the Denver Post was the first take a stab at how the increase in the retail marijuana tax is hitting certain special districts that receive sales tax revenue right in the pocketbook. Understanding the problem requires understanding the short but complicated history of the state’s retail marijuana tax policy.

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  • With the legalized sale of retail marijuana starting in 2014, the state began collecting sales tax revenue from the state’s 2.9% base sales tax. The revenue is subject to TABOR and counts against the state’s revenue limit.
  • The state also began to collect sales tax revenue from the state’s 10% special sales tax authorized by voters in 2013 (Proposition AA). The measure established the initial 10% rate, debruced the proceeds of the tax, and allows the legislature to increase the tax to a rate no higher than 15% without additional voter approval.
  • Previous legislation would have reduced the special sales tax to 8% this past July 1, but proposals for increasing the tax and using the revenue for various non-marijuana related programs began last fall.
  • As part of the SB 267 compromise, the legislature agreed to increase the special sales tax to the maximum 15% allowed and eliminate the state’s base sales tax on retail marijuana by exempting it. (This last piece is what started all the trouble). The net result was to increase the total state tax on retail marijuana from 12.9% to 15% – all exempted from TABOR.

As a general rule, changes in the state sales tax base automatically apply to statutory entities – statutory municipalities, counties, and special districts. With over 80 different state sale tax exemptions on the books and legislation every session that propose more, the Colorado Municipal League is perennially busy ensuring that the state’s decision to exempt something from its own base does not automatically exempt it in statutory municipalities. (Home rule municipalities are thankfully unaffected by state exemptions, and such decisions on exemptions are purely local)

The process was no different for SB 267. Prior to the compromise language being adopted, CML Legislative Counsel Dianne Criswell worked with the sponsors and drafter to make sure it didn’t impact statutory municipalities, and CML’s language also gave counties the same cover. Amazingly, no one thought of sales tax collecting special districts like RTD and the Scientific and Cultural Facilities District (SCFD), and the oversight was referred to as a “drafting error.”  But was it a drafting error or rather an error anticipating consequences? Those districts have always followed the state’s tax base. In fact, the League is not aware of any special language exempting special districts in any prior sessions, but there likely was not as much revenue at stake as there is now.

A complex State of affairs

Retail marijuana is now exempted from the state’s base sales tax, while it will continue to be taxed at the local level in municipalities that approve sales. In the upcoming legislative session, it is guaranteed legislation will be introduced to eliminate the state base exemption for RTD and SCFD. Such legislation may even include reparations for the “error.”

Proposals at the statehouse for sales tax exemptions are often more about politics than fiscal policy, and state exemptions chip away at the state’s base. There may be value in the state examining the over 80 other sales tax exemptions it has given, which no doubt create numerous challenges to businesses trying to determine what is taxable and what is not. In fact, there were at least five bills in the 2017 session, in addition to SB 17-267, that would have created new exemptions. One of them was signed into law by Gov. Hickenlooper.

As the discussion unfolds, the League is hopeful state leaders pause and take notice of the state’s own contribution to sales tax complexity in Colorado – and it actually has a chance to do so.  Over the interim this year, the Sales and Use Tax Simplification Task Force – created by 2017 legislation – is charged with studying simplification “between the state and local governments, including home rule municipalities, to identify opportunities and challenges within existing fiscal frameworks to adopt innovative revenue-neutral solutions that do not require constitutional amendments or voter approval.”  CML has appreciated the opportunity to show legislators all of the hard work and progress at the local level, in cooperation with the business community, that is going into reducing complexity for the businesses that collect and remit sales and use tax.

Colorado’s 70 home rule municipalities that self-collect their local sales tax have been diligently working on a process to standardize definitions among all 70. The state was concerned enough about this to pass a resolution encouraging the standardization, and it was a key talking point in the legislation creating the interim task force.  In addition to looking at the impacts of all the state’s sales tax exemptions, one key move the task force could make to demonstrate a commitment to simplification is to propose the State of Colorado go about adopting the standardized definitions package itself.

After all, what’s good for the goose…

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2017 Legislative Session in Retrospect

When the 120-day legislative session concluded on May 10, a lot of legislators and lobbyists wrote their “session in review” blogs to declare whether or not the session was an overall success. In reality, the legislative session often is not officially over until the governor takes action on the last bill, which can come thirty days after the session ends – as it did this year on June 9.

The League was pleased to report to our 269 member municipalities that, as of May 10, 61 percent of the bills CML supported passed and expected to be signed into law.  Now, on June 21, we can look to the entirety of the session and the impacts of the actions taken by Gov. John Hickenlooper between May 10 and June 9.

By the numbers

During the 2017 session of the Colorado General Assembly, CML tracked 257 of the 684 bills and concurrent resolutions introduced. Of the 41 bills that CML supported, nearly 61 percent passed. Of the 29 bills CML opposed, 93 percent either were defeated or were amended such that the League dropped its opposition.

Those numbers remained unchanged after May 10, but the League was hoping for the defeat of one oppose bill, HB 17-1313, via the governor’s veto pen. We were extraordinarily disappointed that didn’t happen.  More on that below.

CML’s advocacy team places our primary emphasis on defeating legislation that harms municipal operations or contradicts municipal priorities.  We strive for 100% and are disappointed with anything less than that. Legislation supported by CML is important, but it is always harder to pass a bill than to defeat one. The team is very proud of the 61% success rate in the 2017 session.

How did municipalities fare?

Prior to the commencement of the session, the League published its “2017 Legislative Priorities of Colorado Cities and Towns.” The League was largely successful in meeting the goals established by these priorities.

  1. Affordable Housing: CML supported the preservation of the Affordable Housing Grants and Loans line items within the Division of Housing in the Department of Local Affairs. Outcome: The division received $8 million in the upcoming fiscal year beginning July 1. 
  2. Broadband: CML supported legislation that would have repealed the unnecessary hurdle of the election required by SB 05-152, given 68 consecutive successful municipal elections by voters wanting fast, reliable broadband service. Outcome: The bill was defeated, primarily due to opposition from broadband providers, many of which later proposed legislation that would have made it more difficult for local governments to meet the needs of their communities. CML’s opposition helped prevent that legislation from ever being introduced. 
  3. Construction defects: CML supported legislation to provide a statewide solution for the issue of construction defects promote the construction of owner-occupied attached housing, while maintaining the local control of municipalities that have adopted their own ordinances. Outcome: Out of the various legislative proposals, one bill passed that met these goals. More progress is needed in this area, but this outcome was a major success for Colorado municipalities.

  4. Marijuana: The League initiated legislation to establish a statewide minimum definition of “open & public consumption” to effectively address the failure of the state to clarify where marijuana consumption can occur and where it is prohibited. CML advocated for maximum local control of medical and recreational marijuana issues, and argued for additional state resources and personnel are needed to mitigate the impact on local law enforcement of gray and black market marijuana activity. Outcome: Defining a standard “open and public consumption” continues to be elusive. The limits of “private” consumption divided the legislature and CML’s bill died on the last day of the session. The League was successful in defending local control and supporting additional resources and changes intended reduce gray and black market activity. 
  5. Municipal courts: In order to force the state to back up the unfunded mandate it created by enacting HB 16-1309, CML advocated for a program for municipalities to utilize the state public defender at local discretion. The League also supported state assistance for municipal courts to expand their use of restorative justice. Outcome: For a variety of reasons, collaborating with the state public defender would be problematic, and the League changed course to support a delay of HB 16-1309 to 2018 so that a plan to directly reimburse municipal courts for the cost of the mandate can be developed. Municipal courts are now part of the state restorative justice council and can apply for grants for local programs. 
  6. Oil & gas: CML advocates for the legislature to resist preemptions upon traditional municipal authority – and where such authority may need clarification, advocating for the state to work collaboratively with municipalities. Outcome: The League supported legislation that would have increased setbacks from schools. Other issues arose during the session, particularly after the explosion in Firestone, and the League maintained its position that any legislation should respect traditional municipal authority. 
  7. Public safety: CML supported retention of the Wildfire Risk Reduction Grant Program, as well as defended traditional municipal authority in local public safety issues. Outcome: The state used $2.5 million of its share of severance tax dollars to continue the grant program. Other than the setback of enactment of HB 17-1313, municipal authority over public safety issues was successfully defended.

  8. Severance tax and federal mineral lease (FML): CML opposed the governor’s proposed transfer of severance tax to backfill the General Fund or finance state programs and administrative costs of state government. Outcome: The Joint Budget Committee proposed a balanced budget that did not include reductions in local government severance tax revenue available to local governments.

  9. Tax authority: CML advocated against state sales tax exemptions that negatively impact statutory municipalities. CML advocated for legislative restraint in simplification efforts, reminding the legislature that efforts to simplify local sales tax cannot be addressed by state legislation and cannot undermine constitutionally granted municipal home rule authority. CML opposed business personal property tax reductions/exemptions that did not backfill reductions to municipalities. Outcome: An interim committee created to study simplification efforts will have local government representation and its members are fully aware of limitations on the state to interfere with home rule authority. Business personal property tax legislation negatively impacting municipalities was defeated. 
  10. Transportation: CML supported the concept of increased state transportation and transit funding that includes the return of an equitable portion of new revenue to cities, towns, and counties – and including a statewide solution with funding for all public roads, not just state highways. Outcome: Legislation that would have allowed voters to decide on a statewide sales tax increase that would have fairly distributed revenue was defeated, and the state continues without a comprehensive statewide solution to address the billions of dollars of need. 
  11. Urban renewal and downtown development: CML supported repair of ambiguous 2015 legislation impairing urban renewal. CML opposed legislation that would similarly do damage to the ability of downtown development authorities to function properly. Outcome: Collaboration led to passage of a bill that addresses urban renewal statutory problems. The League opposed and defeated legislation that would have violated the will of voters directing their property taxes be used for downtown development authorities. 
  12. Workers’ Compensation: CML supported reasonable reform to the workers compensation statutes to address issues of post-traumatic stress disorder (PTSD) in public safety employees. CML supported the notion of development of a statewide employee assistance program (EAP) for public safety employees that do not otherwise have access to one. Outcome: Legislation that creates uniform definitions of “psychologically traumatic event” universally applicable passed overwhelmingly. A second bill creates a grant program law enforcement agencies may use for mental health assistance for personnel.

The last bill

The last legislative action of the 2017 session was the enactment of HB 17-1313 concerning civil asset forfeiture. CML – joined by a coalition of counties, sheriffs, police chiefs, and law enforcement organizations – requested Gov. John Hickenlooper’s veto of the bill.  HB 1313 was a haphazard bill pitched as consensus by proponents that agreed with themselves and with no basis in fact in Colorado. The gist of the bill is that it is intended to reform the manner in which law enforcement agencies seize assets related to criminal enterprises and use those assets to backfill the cost of complicated and costly enforcement efforts. Proponents argued – without offering any proof – that the assets of innocent people were seized…that local law enforcement was violating the rights of honest citizens.

The arguments against the bill are clear and well-founded – the arguments for it much less so. However, the final vote of the session was cast by the governor, who chose to sign the bill, and the League and our members must now grapple its impacts and also with a task force that will be created that appears to be charged with a potential expansion of the legislation.

While it is always disappointing to lose the last bill of the session, municipalities fared very well in the 2017 session. It is a continued point of pride to defeat detrimental legislation (or keep it from being introduced at all), as well as passing legislation that will help municipal officials govern locally.  Despite the battles that are often fought in the Statehouse, we continue to view the General Assembly as an essential partner for good state-local governance.

And on January 10, 2018, we will roll up our sleeves and do it all over again.

Sustaining rural Colorado

Keeping rural Colorado sustainable should include protecting local government severance taxes

Senate President Pro Tem Jerry Sonnenberg, R-Sterling, and Minority Leader Lucia Guzman, D-Denver, deserve credit for forcing a slightly different conversation to occur in the statehouse.  If next year’s budget is going to take money away from hospitals and schools to make things balance, then what are people willing to give up to keep that from happening.

SB 17-267 starts that conversation – and if it makes it past the Senate, then House Majority Leader KC Becker, D-Boulder, and Rep. Jon Becker, R-Fort Morgan, are the House sponsors that will take it from there. SB 17-267 is complicated legislation with many moving parts under the title “Concerning the sustainability of rural Colorado.” The main focus of the bill is the willingness of some Republicans to relent on allowing the hospital provider fee (HPF) program to operate as an enterprise without saying it is illegal unless approved by voters. Currently, the fee revenue counts toward the state fiscal year revenue limit. In the next fiscal year, the hospital provider fee collections will be reduced by 50% in order to prevent a TABOR refund. Since those fees are matched by federal dollars, the impact to Colorado hospitals is doubled and rural hospitals get hit the hardest. As an apparent trade-off for this refined perspective on the HPF, the bill includes other significant policy elements:

  • Requirement that all state departments present budget requests in FY 2018-2019 representing a 2% overall reduction from FY 2017-2018.
  • Authorizes lease-purchase agreements on state buildings to generate $1.35 billion, costing no more than $100 million to lease back the buildings over 20 years. $1.2 billion is designated for state highway projects, and $150 million is designated for capital construction needs. 25% of the transportation revenue must be allocated for projects within counties with under 50,000 people.
  • Transfers from the general fund to state highway projects (SB 228 money) is eliminated and revenue is instead directed to rural schools.
  • The annual state revenue limit, as adjusted by Referendum C (the “Ref C cap”), is reduced by an amount that appears to be a calculation slightly less than the HPF contribution to the current TABOR base.

The bill is likely a trial balloon to gauge reactions to various elements and to show that there is a willingness to fund rural hospitals under certain conditions. Yet, there is one key piece missing, if the goal is to take a complete approach to sustaining rural Colorado.

Severance tax authorized in 1978

Colorado municipalities that are either in the middle of or the shadow of energy extraction activities in the state are mostly rural in nature. They often have the highest needs and the lowest locally generated revenue to address them. Recognizing this, the Colorado General Assembly – in a simpler, pre-TABOR time – adopted a statewide severance tax.

In part, the severance tax was established to compensate the state and political subdivisions for the lost wealth of energy extraction. Colorado law refers the severance tax as “a potential source of revenue,” for which a “portion be made available to local governments to offset the impacts” created by energy extraction.

There have been significant boom and bust cycles, many of which have mirrored the state’s overall economy. However, both the Department of Natural Resources (DNR) and Department of Local Affairs (DOLA) have been able to build programs that have fulfilled statutory intent of the severance tax. DOLA, in particular, was able to smooth some of the peaks and valleys by not expending every last dollar in the Energy Mineral Impact Fund, the grant fund where 70% of DOLA’s half of severance tax revenues are deposited.  Instead, the fund carried a balance to ensure funds were available in down years.

Keeping the General Fund sustainable comes at a cost to rural Colorado

More recently, one of the ways the state preserved existing programs during the recession years was to backfill the state General Fund with revenues, almost exclusively from the Energy Impact Fund (which also included federal mineral lease revenue). In total, nearly $400 million dollars has been diverted from energy impacted communities. If kept in the fund, those dollars would have been matched approximately 3:1, meaning the lost economic impact (i.e. wages, jobs, materials) to mostly rural areas was over $1 billion.  This occurred when those areas suffered some of the highest unemployment in the state.

In 2015, additional severance tax revenue was proposed to backfill the state General Fund in order to supply revenue for TABOR refunds. Exceptionally high severance tax revenue collections the prior year were blamed for driving the state to have to issue TABOR refunds – just like the hospital provider fee has been blamed the past two years.

The bottom line is still that severance tax revenues are being used as a resource for purposes much different than the legislature declared 39 years ago.  A different approach is needed.

Debruce severance taxes to protect, respect legislative intent

The General Assembly should take action this session to allow Colorado voters the option to decide if prior legislative intent for severance tax purpose and use should be respected and upheld. This should be done as an amendment to SB 267.

The General Assembly can and should consider referring a question on severance taxes to voters that would allow the state to retain the revenue and exempt it from TABOR calculations – known as “debrucing” – and couple it with language that would remove the debruced status of the revenue if the state ever used it for purposes other than those already in statute.

For local governments currently and historically impacted by energy extraction, this would ensure that revenues would continue to be available to mitigate the impacts and help communities continue to survive as Colorado’s natural resources extraction declines and even disappears from some areas.  For the state (and also to the benefit of municipalities, counties, and their citizens), vital water infrastructure programs in DNR, as well as Tier I and Tier II programs, would be able to have better certainty of annual funding as prioritized by the General Assembly.

Debrucing impacts on the state budget

Outside of the direct beneficiaries of severance tax revenue, there are also impacts on the state budget worth consideration.  The debruced revenue would mean reductions in state revenue equivalent to the amount of severance tax collections, not including interest and earnings, each year. That creates a subsequent and equal reduction in the TABOR refund obligation in years that such obligation exists. Therefore, General Fund revenue would be freed up to address other needs.

With the volatile severance tax revenue no longer calculated in the state’s revenue limit, the General Assembly would likely be able to expect more predictability of the state’s overall budget picture and perhaps have existing revenue to appropriate for education, transportation, and other critical issues that face the state without a tax increase.

A conversation starter

Protecting the sustainability of rural Colorado should include a conversation about protecting severance taxes. Additional issues and interested parties would need to be considered and consulted, but the choice is clear – either there is an interest in ensuring that revenue collected to assist impacted communities and fund state water and environmental programs is sustained or we are comfortable with using those revenues to backfill the state budget every time the going gets tough.

CML will work with the sponsors of SB 267 to ensure that any legislation promoting the sustainability of rural Colorado includes asking voters to protect the one source of revenue specifically designed for that purpose.

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The Colorado General Assembly “municipal caucus”

When the Colorado Municipal League asks members of the General Assembly to “keep local control local and home rule at home,” cities and towns can rest assured there are at least twelve legislators that know exactly what it means.

Former municipal elected officials make up over ten percent of the 71st General Assembly, with several holding key leadership positions and committee chairs. CML already noted the significance of the selection by his peers of former Cañon City councilmember Kevin Grantham to lead the Senate as its president.  It has been 96 years since the Senate President has been a former municipal elected official!

Also in the Senate, Sen. Leroy Garcia, D-Pueblo, was a councilmember in Pueblo, Colorado before coming to the statehouse. His caucus peers in the Senate selected him as assistant minority leader to back up Minority Leader Lucia Guzman, D-Denver. Sen. Dominick Moreno, D-Commerce City, also picked up a key committee assignment in his freshman year by being appointed to the powerful Joint Budget Committee.

In the House of Representatives, two significant leadership positions are occupied by former municipal elected officials.  House Majority Leader KC Becker, D-Boulder, was a councilwoman in Boulder prior to being elected to the General Assembly, and her district includes many rural mountain towns. House Minority Caucus Chair Lori Saine, R-Dacono, was a councilmember in Dacono.

Finally, the chairs of the House and Senate Local Government Committees are former city councilmembers…both from the City of Thornton! Sen. Beth Martinez Humenik, R-Thornton, and Rep. Steve Lebsock, D-Thornton, are both prime sponsors of legislation supported by CML and are key allies on municipal issues.

Individually and as a group, the twelve former municipal elected officials are critical connections in the General Assembly for Colorado municipalities. While the League could not reasonably expect them all to vote with CML 100% of the time, we do believe that our advocacy team and municipal officials will be understood when we speak to them about impacts of legislation on municipalities. These twelve have talked the talk and walked the walk.

CML encourages our members to reach out to each of these members, regardless of whether or not their districts happen to cover a member municipality. The senators and representatives are, unofficially, a “municipal caucus” that cities and towns should keep updated on municipal issues, trends, requests, concerns, and celebrations. They understand the jobs that municipal elected officials have, and they want to hear what you are doing in your community.

In the future, perhaps CML can organize an official “Municipal Caucus of the General Assembly” with the cooperation of those that have previously served in a local elected office. The League is grateful to have them in the statehouse and thanks them all for their service.


Former municipal officials in the Colorado Senate

  1. President Kevin Grantham, R-Cañon City
  2. Sen. Kerry Donovan, D-Vail
  3. Asst. Minority Leader Leroy Garcia, D-Pueblo
  4. Sen. Beth Martinez Humenik, R-Thornton
  5. Sen. Dominick Moreno, D-Commerce City
  6. Sen. Rachel Zenzinger, D-Arvada

Former municipal officials in the Colorado House of Representatives

  1. Majority Leader KC Becker, D-Boulder
  2. Rep. Lois Landgraf, R-Fountain
  3. Rep. Steve Lebsock, D-Thornton
  4. Rep. Hugh McKean, R-Loveland
  5. Rep. Lori Saine, R-Dacono
  6. Rep. Faith Winter, D-Westminster

Who understands severance tax?

Hint: It’s not the Denver Post

Who understands severance tax? Municipalities around the state understand severance tax.

The Denver Post – based on the editorial in this past Sunday’s newspaper – most definitely does not understand severance tax, as evidenced by its promotion of a dangerous proposal for the state to eliminate energy impact grants to municipalities and counties.

Many communities around the state, whether they have active drilling or mining occurring within or around them at this moment, have experienced the impacts of natural resource extraction from within or around their borders. They understand that even when the truck traffic thins out, the employees leave the restaurants and community centers, and the wells are shut in that the impacts do not go away. They know that communities suffer and some all but disappear.

Municipal leaders understand energy impacts. Municipal leaders understand state statutes that express legislative intent that the state be compensated for the depletion of natural resources from Colorado, and that impacted communities should receive a designated portion of that money to help mitigate the impacts. They understand that roads, bridges, water and wastewater infrastructure, public safety, and economic development potential are all part of the impacts.

In fact, the Post only suggests that money be diverted away from energy impacted communities and toward the General Assembly to “set aside for infrastructure,” even while acknowledging the fact that the state has diverted nearly $400 million in severance tax for local governments to backfill the state’s own budget and never to be seen again. Those diverted local government severance tax dollars were transferred from a fund that is actually set aside for infrastructure. Had the legislature left those dollars alone, the impact of the money would have been over $1 billion in infrastructure projects and accompanying wages right in the midst of the Great Recession.

It is as if the Denver Post thinks that mayors sit in town hall waiting for a golden goose from Denver to deliver a wad of cash so that they can “snip the ribbons on new recreation centers.” It will no doubt be quite a party in Salida when the water treatment upgrades are finished, just like the blowout they will have in Rangely when the wastewater treatment plant work is complete. Every project gets significant scrutiny from the Energy Impact Advisory Committee and, ultimately, Department of Local Affairs (DOLA) Director Irv Halter. Matching requirements ensure every applicant has skin in the game. I encourage the Denver Post – or anyone who wants to see how DOLA’s impressive program is administered – to get more details from DOLA’s website.

Sadly, the Post misses the point entirely. Colorado Oil & Gas Association President & CEO Dan Haley actually said it best in a recent blog that the problem lies in the collective unwillingness at the Statehouse to “take on the complex Gordian knot of amendments such as TABOR, Gallagher and 23, that have tied up the state’s budget and stressed out lawmakers for decades.” The League wholeheartedly agrees. Regardless of who one agrees with at the capitol on what is to blame, the State of Colorado and its leaders must get the state’s fiscal house in order. The myopic, year-to-year approach to adopting a balanced budget creates a new bogeyman every year. (Two years ago – severance tax. Last year – hospital provider fee. This year – the Gallagher Amendment) Like some sort of modern-day Sisyphus, we will do it all again this year, as even more of the severance tax is proposed to backfill the state’s general fund.

The state’s budget constraints are a far larger matter. Regarding severance taxes, the right thing to do is to protect them and ensure they continue to be used for statewide infrastructure, just like the Post calls for. For now, the Colorado Municipal League will work with House and Senate leaders on a better approach – one that ensures that severance taxes reach their intended recipients (which, by the way, also include critical state water and environmental programs in the Department of Natural Resources.)

Legislators from rural Colorado, where most of the impacts occurred or are still occurring, will be asked to be part of the solution to protect communities that support and rely on a healthy, well-balanced economy. Legislators from more populated areas of the state will be asked to do their part to ensure that the needs of all Colorado’s communities are met and that we do not abandon those towns that help contribute so much to Colorado’s  diverse economy and rich history.

central-city

2017 Legislative session: Snapshot of key municipal issues

As the First Regular Session of the 71st Colorado General Assembly prepares to get to work starting on January 11, 2017, the Colorado Municipal League is preparing to ensure that legislators – new and returning – understand key municipal issues that may be impacted by their decisions. While CML is planning to initiate some legislation, the League generally responds to legislation that is encouraged by others. In some cases, the state budget drives the discussion. Below is a brief description of some of the key issues that CML will be following on behalf of our 269 member cities and towns.

Transportation

Colorado’s state transportation funding revenues have not kept pace with the demands to maintain, improve, or expand infrastructure. The most recent state tax increase was the FASTER fee legislation in 2009.

In recent years, there have been various groups that have tried to find viable statewide funding or financing solutions – both through proposed initiatives and legislative proposals. Bonding proposals face the challenge of finding the resources within the state budget to pay the debt service. One approach would be to pay for debt service out of CDOT’s HUTF budget. However, his would result in reduction in the resources to maintain or operate state highways. Further, since there are not sufficient resources from the fuel tax to make the minimum annual debt service payments of $250 million for one particular proposal, the State General Fund would have to be used as well.

Because of the current constraints on the state’s General Fund, debt service payments would have to be offset by reducing spending in the state’s General Fund programs, unless there are new voter approved taxes or legislatively approved fees. CML believes additional revenue is needed to meet the burgeoning demand for transportation and transit infrastructure, in addition to the current need to bring road and bridge structures up to safe standards. The League will continue advocate for a statewide solution to address the transportation and transit needs of all municipalities in partnership with the state.

Municipal Courts

After the adoption of HB 16-1309, which mandated defense counsel at first appearance in certain municipal cases, CML worked with the governor’s office to fund the state mandate through the Office of the State Public Defender. CML will support a program for municipalities to utilize the state public defender at local discretion. In addition, restorative justice has proven to be an important tool to reduce recidivism in the state criminal justice system. CML supports state assistance for municipal courts to expand their use of restorative justice.

Sales and Use Tax

On average, more than 70 percent of municipal tax revenues are derived from sales and use taxes. CML discourages state sales tax exemptions that negatively impact statutory municipalities and cities without any local input. CML supports the state as a partner with the business community and municipalities that self-collect their sales and use taxes, but efforts to simplify local sales tax cannot be addressed by state legislation and cannot undermine constitutionally granted municipal home rule authority.

Marijuana

Private clubs and on-premise consumption

The ambiguity of the legal status of private clubs is an issue that is essential to clarify and local control should dictate whether or not they are ultimately allowed in any jurisdiction. The legislature fumbled the ball in 2013 when it eliminated consensus language from SB 13-283 that provided a definition of “open and public” to give meaning to the prohibition of open and public consumption in Amendment 64. CML will help initiate legislation creating an opt-in provision for private marijuana clubs and creating a statewide minimum definition of “open & public consumption.”

Black and gray markets

CML always supports maximum local control of medical and recreational marijuana issues. CML has argued that significant additional state resources and personnel are needed to mitigate the impact on local law enforcement of gray and black market marijuana activity. However, the League will support legislation that provides some revenue to local law enforcement to combat this illegal activity while noting that it may only make a small dent in this growing problem.

Maintaining prior agreements on taxation

A delicately forged compromise with counties on special excise taxes – an agreement that prevents double-taxation – was enacted in 2015. A similar proposal to give counties authority for special sales authority failed to advance because counties refused to agree to similar langauge prohibiting double taxation. Recently, the Court of Appeals affirmed that counties lack any authority to enact a special sales tax, and one county would like to change the terms of the 2015 deal special excise taxes. CML will oppose any legislation that changes compromises on local special excise taxation and supports barring counties from collecting a special sales tax from within a municipality without consultation and an intergovernmental agreement.

Severance Tax & Federal Mineral Lease

Declining extraction activity has reduced the revenue available to local governments to address ongoing impacts through direct distribution and grants from the Energy Impact Assistance Fund. Prior raids by the General Assembly from 2008-2013 siphoned off around $300 million to balance the state’s general fund – revenue that is sorely needed now to address ongoing issues. CML opposes reductions of severance tax and federal mineral lease revenue to municipalities and opposes the appropriation of local governments’ energy impact or direct distribution revenue to finance state programs and administrative costs of state government.

Telecommunications & Broadband

With voters in 65 municipalities and 27 counties having overwhelmingly voted to exempt themselves from the requirements of SB 05-152, CML would support repealing this unnecessary hurdle to bringing fast, reliable broadband to areas of the state where the private sector has not made it available. In addition, wireless companies are looking at proposals to amend statutes governing placement of telecommunications facilities in public rights of way, known as SB 10, to address “small cells.”  It is not clear that the language is needed, and initial proposed langauge included substantive changes that would further impair municipal authority. Discussions continue, but CML would oppose the legislation if introduced in its most recent form.

Urban Renewal & Downtown Development

Prior legislation impacting the effective and efficient use of urban renewal to remediate blight and restore prosperity to core areas of municipalities was somewhat improved with substantive cleanup legislation in the 2016 session. However, the statute is still replete with ambiguities that have placed a chilling effect on urban renewal plans that were already in place. CML supports continued repair to ambiguous language added to urban renewal statutes. Unfortunately, two counties that have issues with their local downtown development authority (DDA) wish to apply this same flawed language to DDA’s, which are similar but also distinctly different from their URA cousins. CML will oppose any legislation that would damage the ability of downtown development authorities to function properly.

As the legislative session unfolds, this site will continue to highlight details of key issues. For a snapshot of all the bills CML is tracking, links to the CML Statehouse Report (updated weekly), and a box score of legislation CML supports and opposes, please go to and bookmark this link to the current legislative session.

A brief summary of CML’s 2017 legislative priorities is available here, and the more detailed 2016-2017 CML Annual Policy Statement is available here. Each of these documents provide the foundation for CML’s established positions and guide CML’s deliberations on legislation that will soon be introduced in 2017.

Rarified air

Rarified air

Former city council member will lead the Colorado Senate

It only took 96 years!

The recent selection of Sen. Kevin Grantham, R-Cañon City, as the next President of the Colorado Senate signified a rather historic event that will likely go unnoticed by most people.  But not those of us in the municipal world that first knew Sen. Grantham as a city council member in Cañon City from 2007-2010!

President-designee Grantham will be the first Senate President that was also a former municipal elected official since Sen. George Stephan, R-Delta, who led the Senate from 1919-1920. Prior to that, there were only two other Senate Presidents with roots as local municipal elected officials:

  1. Erastus R. Harper, Jr., R-Denver, (President, 1907-1908) served as a council member for and mayor of Akron Ohio from 1893 – 1897. 
  2. Moses E. Lewis, R-Florence,(President, 1915-1916) was a Florence council member from 1899-1901.

Of additional significance, Sen. Grantham will be the first rural Senate President since John Vanderhoof from, R-Glenwood Springs, who served in that capacity from 1971-1973. A link to full, updated biographies of Colorado’s past Senate Presidents and Speakers of the House can be found on the General Assembly’s website.

It is not rare to have former municipal elected officials in leadership positions in the Statehouse.  In the House, the Majority Leader-designee is Rep. KC Becker, D-Boulder, a former Boulder city council member. Rep. Lori Saine, R-Dacono, is the Majority Caucus Chair-designee and served on the Dacono city council. In the Senate, Sen. Leroy Garcia, D-Pueblo, is the Assistant Minority Leader-designee and was a member of the Pueblo city council. In a future post, CML will profile these and other former municipal officials that will serve in the 2017 General Assembly.

Congratulations, again, to President-designee and former Cañon City council member, Kevin Grantham!