DENVER – Colorado’s 100 state lawmakers will trudge up the capitol steps for at least three days of extra work in October—all because of a technical error in a bill they passed earlier this year.
The major political parties don’t agree on whether this is an emergency that warrants calling a special session—the next regular session in only months away in January—but they do at least agree on what the problem is.
Colorado Gov. John Hickenlooper signed an executive order Thursday, Sept. 14, calling for a special legislative session to correct a mistake that eliminated sales tax on retail marijuana, which helped fund RTD and the Scientific and Cultural Facilities District.
WHAT THE BILL MESSED UP
The mistake was written into Senate Bill 17-267, also called "Concerning the Sustainability of Rural Colorado," which passed near the end of the 2017 legislative session.
The bill consolidated two different taxes on retail marijuana sales into a single special tax.
Put simply— recreational marijuana used to be subject to the state’s regular 2.9 percent sales tax and a special marijuana tax of ten percent.
Lawmakers changed that. As of July 1, marijuana sales in Colorado are subject to only a 15 percent special tax, but not regular sales taxes.
And that’s what screwed things up for agencies like RTD.
By removing marijuana from the group of things subject to regular sales taxes, special districts and other limited purpose governmental entities could no longer collect sales tax on retail marijuana.
“Consequently, those entities have experienced, and will continue to experience, reductions in revenue that jeopardize their ability to provide services to their constituents… a correction is needed to ensure services are not unintentionally diminished,” said Hickenlooper in the executive order.
In the 59-page bill, an exception for "Special Districts" was left out, and the funding for those districts was cut off as a result.
“After hearing about the potential impact on citizens around the state, it is clear that this problem is best solved as soon as possible,” Hickenlooper said in a news release from the governor’s office. “This special session will be solely to address this one narrow correction.”
IMPLICATIONS OF THE MISTAKE
RTD, which provides bus and rail transit service to Denver, Boulder and surrounding cities, can charge 1 percent tax on anything subject to state sales taxes.
Now that marijuana is no longer included in the state’s sales tax, RTD is missing out on about $500,000 a month – which equates to around $2 million by the time the next legislative session comes around in January.
In the grand scheme of things, that $2 million equates to less than one-half of one percent of the overall RTD budget.
But this error isn’t happening in a vacuum.
“It impacts the services that people have come to expect from RTD,” Scott Reed, assistant general manager of communications with RTD, said.
Reed said sales taxes for RTD have been coming in below projections and so have fares. Combined with the mistake in state law, RTD has had to make changes.
“If we get this money restored and minimize the amount we are losing, it would potentially reduce the amount of service changes,” Reed said.
RTD is not the only entity being negatively impacted.
“Other special districts don’t have near the diversity in their funding sources,” Reed said.
The Scientific and Cultural Facilities District supports cultural facilities including the Denver Zoo, Denver Museum of Nature and Science, Denver Art Museum, Denver Botanic Gardens and Denver Center for the Performing Arts.
Due to the mistake, SCFD is missing out on about $50,000 a month.
Other entities affected include the following, according to state budget officials:
o Gunnison Valley
o Pikes Peak
o San Miguel Authority for Regional Transportation
o Summit Combined County Multi Housing Authority - a Multi Jurisdictional Housing Authority
- Metro Districts:
o Aspen Park
o Southwest Plaza
o Bachelor Gulch
o Two Rivers
- Montezuma Hospital District
Along with raising the retail marijuana tax to 15 percent, the controversial bill saved about $528 million in cuts to hospitals, by shifting the 'hospital provider fee' out of the general fund budget to its own enterprise fund. It also created funding for CDOT to start $1.8 billion in road projects.
The special session will begin on Oct. 2.
WHY SOME DISPUTE THE SPECIAL SESSION
The cost per day of holding the special session is $25,000, and it takes at least three days for the legislature to pass a bill in Colorado – totaling at least $75,000 of taxpayer money.
Thus, some Republican lawmakers argue calling the special session is not necessary.
They also have concerns about how a fix will comply to the Taxpayer’s Bill of Rights, which requires a vote of the people to approve new taxes—though Democrats claim to be able to get around this by simply ending the marijuana exemption, as opposed to passing an entirely new tax.