Rising inflation is on a collision course with Colorado’s TABOR cap. And the state budget is in the middle.
The Taxpayer’s Bill of Rights cap on government growth and spending is determined by population growth and inflation. But there’s a lag that means Colorado’s fast-rising inflation rate isn’t reflected in the calculations.
The Colorado Sun
Olivia Sun/The Colorado Sun
COLORADO — The lawmakers who write Colorado’s budget are preparing to pare back some capital projects in the coming months as they contend with inflation straining a budget capped by the state’s Taxpayer’s Bill of Rights.
The TABOR cap, a key component of Colorado’s 1992 constitutional amendment limiting government growth and spending, is calculated by adding together the rates of inflation and population growth.
But the inflation rate used to determine the cap comes from the previous calendar year, or six months before the start of each fiscal year.
So for the 2022-23 fiscal year that began July 1 and ends June 30, 2023, the federal consumer price index inflation rate in the Denver-Aurora-Lakewood area used to calculate the TABOR cap was the 2021 rate of 3.5% and a 0.9% rate of population growth. Under that cap, more than $3 billion in excess tax revenue is expected to be refunded to taxpayers in the form of direct checks and tax breaks.
By the end of May, however, the inflation rate in the Denver metro area had shot up to 8.3%, sharply increasing the cost of governing and of state construction projects.
Read more at ColoradoSun.com.
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