October 22, 2014

Colorado Court of Appeals: Colorado Bridge Enterprise Fee Not Subject to TABOR

The Colorado Court of Appeals issued its opinion in TABOR Foundation v. Colorado Bridge Enterprise on Thursday, August 14, 2014.

Tax—TABOR—Enterprise—Fee.

In 1992, Coloradans adopted the Taxpayer’s Bill of Rights (TABOR), which limits the power of the state, its subdivisions, and its districts to levy taxes or create debt. TABOR requires voter approval for any new tax and for the issuance of debt. Enterprises, as defined by TABOR, are exempt from TABOR’s voter approval requirements. In 2009, the General Assembly created the Colorado Bridge Enterprise (CBE). CRS § 43-4-805authorizes the CBE to impose a bridge safety surcharge to finance, repair, reconstruct, and replace any designated bridge in the Colorado highway system, without being subject to TABOR.

In 2012, the TABOR Foundation (Foundation) commenced this action, asserting that the CBE was subject to TABOR. The trial court held that the CBE did not levy a TABOR-prohibited tax when it imposed a bridge safety surcharge, but instead imposed a permissible fee. It further held that the CBE operates as a TABOR-exempt enterprise and did not violate TABOR by issuing bonds without submitting the matter to voters in a statewide election.

On appeal, the Foundation contended that the bridge safety surcharge is a tax because it is collected without regard to any services used by the vehicles for which the charge is imposed, and thus fails to meet the definition of a TABOR-exempt fee. The Court of Appeals disagreed. The General Assembly’s primary purpose was to create a charge that would finance a particular service. Further, the charge can be imposed only for the purpose of financing, repair, reconstruction, and replacement of designated bridges. The money raised by the surcharge could never be used for general government purposes. Further, it is not determinative that persons registering their vehicles might never use a CBE bridge. Therefore, the bridge safety surcharge is a fee, not a tax.

The Foundation also contended that the trial court erred in finding that the CBE is an enterprise exempt from TABOR requirements. CBE is a business because it pursues a benefit and generates revenue by collecting fees from service users. Also, CBE is authorized to issue its own revenue bonds and receives less than 10% of annual revenue in grants from all Colorado state and local governments combined. Therefore, it is an enterprise exempt from TABOR requirements. The judgment was affirmed.

Summary and full case available here, courtesy of The Colorado Lawyer.

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