Mar 17, 2022 - Business

Colorado must set aside $4.7 billion for taxpayer refunds

Reproduced from Colorado Legislative Council Staff; Chart: Axios Visuals

Colorado lawmakers typically learn each March how much money they can spend in the upcoming state budget.

Driving the news: This year, the focus is on how much they can't spend.

Colorado needs to set aside $4.7 billion for taxpayer refunds through the 2023-24 fiscal year, a new legislative budget analysis shows.

  • The first refunds — worth $526 million — will go to taxpayers this calendar year.
  • The largest rebates will come to residents in 2023 ($2 billion) and 2024 ($1.6 billion). Another $623 million will come the following calendar year.

Why it matters: The state's economy continues to recover and grow, spurring increased tax revenues.

  • But lawmakers can't use the additional money because the Taxpayer's Bill of Rights (TABOR) caps state spending with a formula that combines the rate of inflation and population growth.
  • Discretionary spending from the general fund is expected to reach $16 billion for the 2022-23 state budget, which lawmakers hope to finalize by the end of the month.

How it works: The majority of the TABOR refunds will come in checks to taxpayers as part of a sales tax rebates, which are based on income.

  • In addition, the state's income tax will temporarily fall to 4.5% from the current 4.55% through 2024 and local governments will get money for property tax exemptions.

Yes, but: A pair of new economic forecasts from nonpartisan legislative staff and the governor's office presented Thursday suggest the refund amounts are uncertain because of rising inflation and the conflict in Ukraine, which could constrain the state's economy in coming months.


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