District in hot water over doubled mill levy sans vote
In Colorado, the Taxpayers Bill of Rights (TABOR) does a number of things, perhaps most notably, it requires a vote of the people prior to a tax increase. As a matter of the Constitution, the remedy for an increase without a vote of the people and their filing of action against the district that levied the tax, and the treasurers that collected the tax. In northeastern Colorado, residents in four counties have filed a class action lawsuit against the Lower South Platte Water Conservation District alleging an unconstitutional doubling of the district’s mill levy.
In 2019, the appointed board of the LSPWCD, which includes portions of Logan, Morgan, Sedgwick, and Washington counties in northeastern Colorado, voted to double their mill levy from 0.5 mill. The problem, according to Dan Burrows, the legal director of the Public Trust Institute, the firm representing the filers, is the absence of a vote of the people.
A special district’s taxation must be approved by the commissioners of the county that will be collecting the taxes, thereby authorizing that county’s treasurer to collect those taxes on behalf of the district. Burrows said the LSPWCD submitted their taxation at the doubled rate and the county commissioners, as he understands it, approved it. This is common, he said, and even carries some precedence prior to TABOR when the state Supreme Court referred to such approvals as “administrative,” the checking of a proverbial box.
In 2020, he said, some taxpayers questioned the increased taxation rate being collected for the special district. The board produced a letter from their counsel stating that the increase had in fact been voted on in 1996. That vote, he said, was known as “debrucing” under TABOR. According to the Bell Policy Center, “debrucing,” named for Douglas Bruce, the author of TABOR and a fierce proponent for reducing taxes, is the act of eliminating the revenue cap at a governmental level to allow a government to retain and spend all of the revenue it collects.
Burrows said the letter claimed that the 1996 debrucing vote also authorized the board to raise taxes. However, the referendum specifically stated that the revenue retention was conditioned on the fact “that no local tax rate or property mill levy shall be increased at any time, nor shall any new tax be imposed, without the prior approval of the voters” of the district.
When county commissioners across the special district received complaints about the increase, Burrows said “they didn’t buy” the district’s argument and, in turn, refused to certify the tax rate. State law dictates that the question then goes to the Department of Local Affairs. That department said, given the dispute, the district should charge what it charged the previous year. However, Burrows said that rate was the disputed doubled rate, allowing the district to win in perpetuity, unless a suit was filed.
VOTE OF THE PEOPLE
The higher taxes were collected by the four counties within the special district in 2020 and 2021. This, according to plaintiff Jim Aranci, a Logan County resident, is the error that the special district has refused to admit or reverse, taking the increase question to a vote of the people.
“If the water district believes it needs a tax increase, then it must come to us voters and ask for it,” Aranci said. “That’s the clearest requirement in TABOR, and their action shows a blatant disrespect for the taxpayers they are supposed to serve.”
Burrows said the plaintiffs aren’t debating whether or not the increase is a good idea, but they are united in the belief that the ignoring the constitution sets a disastrous precedence.
“Politicians don’t like to have anyone tell them what to do,” he said. “That’s fundamental, regardless which party controls the government. We have seen in Colorado that, by book or by crook, the legislature will do everything they possibly can to avoid asking the people to raise taxes.”
This, he said, isn’t out of fear that the increase will be voted down, as TABOR votes pass with great frequency. It is, rather, out of fear that voters will tell them to be disciplined with the money they already have if they are without a solid argument for increasing taxes.
“The implications of what they have done are monumental if allowed to infect other governmental bodies,” he said.
The principle, he said, is vitally important and, if allowed to stand, TABOR no longer exists.
“You can bet when that becomes clear, the legislature and every city council and county commission from Sedgwick to Cortez will seize on that,” he said.
Former Fort Morgan mayor Jack Darnell, who with Chuck Miller, Bill Lauck, and Curt Werner comprise the plaintiffs, said the district pointing to a 25-year-old vote “as a fig leaf” while the referendum itself clearly states that taxes will not be increased without a vote is a “shame.”
Burrows said he’s hopeful the court will deal with this in a relatively expeditious manner. The complaint requests that the incorrectly collected taxes be refunded, with interest.
Board directors are Allen Coyne, Dan Kendrick, Ken Fritzler, Brian Kembel, Terry Linker, Gene Manuello, Bob Mari, Jack McClary, Joe Patterson, Bryan Ruf, Carson Smart, Brad Stromberger, and Don Schneider. There is a special meeting scheduled for Dec. 3, with an executive session on the agenda.
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