The Taxpayers Bill of Rights�twenty Years of Litigation
| Publication year | 2013 |
| Pages | 35 |
By Peter Whitmore
Articles Government Counsel
Government Counsel articles provide information to attorneys dealing with state and federal administrative agencies, as well as attorneys representing public or private clients in the areas of municipal, county, and school or special district law.
Coordinating Editor
David D. Smith, Glenwood Springs, of Garfield & Hecht, P.C.—(970) 947-1936, dsmith@garfieldhecht.com
About the Author
Peter J. Whitmore is a member of Sherman & Howard L.L.C. in Denver, where he practices pubic finance law. He represents bond underwriters; commercial banks; and local governments, such as municipalities, special districts, authorities, and school districts, in matters relating to the issuance of municipal bonds and loans. His practice includes state law, federal tax, and securities law issues. He is a member of the CBA and the Government Counsel Section.
Colorado appellate courts have decided dozens of cases interpreting the Taxpayers Bill of Rights since it went into effect twenty years ago. This article describes the leading cases and the guidance that has been provided by the courts.
On January 1, 1993, Amendment One became part of the Colorado Constitution.[1] Amendment One, known as the Taxpayers Bill of Rights (TABOR), was approved by Colorado voters on November 3, 1992. On its adoption, it was called the most significant local government reform legislation approved by Colorado voters since the approval of home rule power in 1902.[2] TABOR was predicted to be subject to interpretation and litigation for many years, and presented numerous questions for governmental entities and their counsel.[3]
Twenty years later, TABOR has lived up to the expectations, and its provisions have been debated and litigated ever since its passage. To date, TABOR has been interpreted in more than forty reported Colorado appellate court decisions, and has been at issue in numerous additional lawsuits that have settled or have not been appealed beyond the district court level. The pace of TABOR litigation reached its peak in the late 1990s, but appellate decisions have continued through the early 2000s, including consideration by the Colorado Court of Appeals in late 2012, [4] and by the Colorado Supreme Court in 2011.[5] This article highlights some of the decisions that have had the greatest impact on the interpretation and implementation of TABOR through its first twenty years.
The Compliance Standard Applicable to TABOR
TABOR imposed many stringent new limits on state and local government spending, borrowing, and taxing. Citizens are permitted to challenge governmental actions under TABOR. One of the most important initial questions asked about TABOR was what standard of conduct—strict compliance or something else—the courts would apply to TABOR enforcement cases, and whether honest mistakes made by well-intentioned government officials would constitute a TABOR violation.
In one of the earliest Colorado Supreme Court cases on TABOR, Bickel v. City of Boulder, [6]the Court rejected a strict compliance standard and held that the proper standard of review for TABOR election enforcement claims is whether the city "substantially complied" with TABOR.[7] The Court stated that in determining whether the city substantially complied, three factors are considered: (1) the extent of the city’s noncompliance; (2) the purpose of the provision violated and whether the purpose was nevertheless achieved; and (3) whether the city exercised good faith or had the intent to mislead the electorate.[8]
In Bickel, the Court held that a city’s ballot title seeking voter approval for a tax increase "in an amount sufficient to pay the principal of and interest" on certain bonds sought an open-ended tax increase and did not substantially comply with TABOR’s requirement that the dollar amount of a tax increase be disclosed to voters.[9] In the same case, however, the Court held that the TABOR notice for a different ballot question of the city did substantially comply with TABOR, even though the notice did not contain the overall percentage change in fiscal year spending over the five-year period, as required by Section 3(b)(ii).[10] The Court reasoned that the information necessary to allow taxpayers to calculate this percentage change was disclosed, and the failure to show the percentage change was a mere oversight by the city.[11]
The Bickel substantial compliance standard has been applied and upheld numerous times.[12] In City of Aurora v. Acosta, [13] for example, the Supreme Court held that the substantial compliance standard applies to TABOR election notices. The Court concluded that a ballot title that did not include an estimate of "full fiscal year dollar increase" in taxes nevertheless complied with TABOR where the notice of election was correct and was included in a mail ballot package for a mail ballot election.[14] However, the court of appeals has held that because the substantial compliance standard is intended to protect the voter franchise, the substantial compliance standard applies only to TABOR’s election requirements, and not to its overpayment refund requirements. Accordingly, a library district that owed its taxpayers a refund of $8, 430 was required to strictly comply with TABOR and make the refund to taxpayers.[15]
Interpretive Principles
Given the breadth, depth, and importance of TABOR, it likely is not surprising that courts have been required to apply various interpretive principles to TABOR’s provisions, depending on the context and substance of the question presented. The Colorado Supreme Court has held that interpretations of TABOR that limit the right of the electorate to vote on tax, spending, debt, or other proposals are not favored.[16] The court of appeals also has applied general rules of statutory construction when construing TABOR[17] and, except in cases of direct conflict, the Supreme Court has held that TABOR should be interpreted harmoniously with other sections of the constitution.[18] Finally, despite TABOR’s name, the Supreme Court has held that TABOR creates a series of procedural requirements, but does not create any fundamental rights .[19]
Regarding the legislative intent and meaning of TABOR, the Supreme Court has looked to the Legislative Council’s 1992 analysis of TABOR as relevant in understanding the intent of the voters who enacted TABOR.[20] The Supreme Court also has stated that although TABOR is a self-executing provision, the General Assembly may enact legislation that resolves ambiguities in TABOR.[21] The court of appeals twice has held, however, that the federal government’s definitions of governmental entities have no bearing on Colorado courts’ interpretation of TABOR.[22] The court of appeals has further held that TABOR addresses matters of statewide concern, and therefore prevails over a home rule city’s conflicting ordinances .[23]
Probably of most concern to the governments that apply TABOR regularly, the Supreme Court has declined to adopt a rigid interpretation of TABOR that would have the effect of working a reduction in government services.[24] Rather, the Court has held that TABOR should be construed in a way that provides workable parameters.[25] TABOR should not be construed in ways that would cripple or unreasonably curtail the everyday functions of government, [26] and should not be construed to produce absurd results.[27]
Standing to Bring TABOR Enforcement Actions
TABOR states that "[i]ndividual or class action enforcement suits may be filed and shall have the highest civil priority of resolution."[28] An early question facing practitioners representing governments was the question of who has standing to bring such actions. The Supreme Court has provided guidance on this question in at least two cases, and generally has applied a broad concept of standing to TABOR challenges.
In the E-470 Public Highway Authority case, the Court held that a Colorado taxpayer has standing to determine whether districts are subject to TABOR, even if the taxpayer was not directly harmed.[29] Similarly, in the Barber case, the Court held that taxpayers had standing to challenge the legislature’s use of certain fee revenues, even though the taxpayers had not personally paid the fees.[30]
This broad standing, however, does not extend to governmental entities acting as plaintiffs in enforcement actions. Thus, a special district does not have standing to file a declaratory judgment action against the state regarding whether tap fee revenues are subject to TABOR, [31] and a county does not have standing to bring a claim against a city as a representative of the taxpayers in the county. [32]
Governmental Entities Subject to TABOR
TABOR applies to "districts, " which are defined as "the state or any local government, excluding enterprises."[33] A preliminary question asked by practitioners was which types of governmental entities are "districts" for purposes of TABOR. Colorado law provides for dozens of types of local governments, many of which are clearly "local governments, " such as cities and school districts, and others that are quasi-public entities, such as some types of authorities. The appellate courts have decided two cases determining how TABOR applies to such entities. In Campbell v. Orchard Mesa Irrigation District, [34] the Supreme Court held that an irrigation district formed under CRS §§ 34-42-101 et seq. is not a district. Noting that the term "local government" is not defined in TABOR, the Supreme Court reasoned that TABOR was intended by voters to limit taxes and spending above certain limits. Contrary to most other types of governmental entities, irrigation districts "serve the interests of landowners within the district and not the general...
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