- Associated Press - Sunday, January 4, 2015

DENVER (AP) - Colorado lawmakers are preparing to debate tax refunds during what’s expected to be a packed legislative session where resolving complicated issues will be more challenging with each major party controlling a chamber of the Statehouse.

Democrats will again control the House, but Republicans have gained control of the Colorado Senate for the first time in 10 years. The dynamic could lead to great compromises, but it could also spark big fights.

The legislative split is a departure from the previous two years when Democrats controlled both chambers and could pass what they wanted with ease.

There will be other big issues to take on during the legislative session that gets started this week, including energy development and the medical marijuana industry. Also, Republicans want to roll back or repeal gun restrictions passed when the Democrats had full control.

The dynamics of the anticipated debate over tax refunds shows how tricky it all could be.

Under the state’s Taxpayer’s Bill of Rights, lawmakers have to authorize refunds in the form of tax credits during certain times of budget surpluses. Such refunds have been as politically volatile as anything in the state since votes approved the TABOR system more than 20 years ago.

Democrats generally say TABOR limits business investments and makes it harder to restore budget cuts prompted by recession. Republicans generally say the system is an important check that prevents government overspending.

Lawmakers were expecting to budget for refunds in the 2016 tax year, but a strong economic growth report from the governor’s office shows that reimbursements could be due as early as this spring.

The exact repayment figures and who would qualify remains unclear, but the anticipated 2016 refunds totaled about $137 million statewide, which could lead to a $16 sales tax credit for each taxpayer filing a return, according to the governor’s office. Some taxpayers would also receive an earned income tax credit of about $220.

If the revenue growth prediction is accurate, legislators will have to scramble to budget in the refunds or ask voters for permission to keep the money.

Republican leaders say the refunds should go out. Democratic leaders are discussing the idea of asking voters to keep the money in state departments and services, but that can’t happen without GOP support, making such plans a longshot.

“I would like very much to ask the voters of this state what they want to do,” Sen. Rollie Heath, the Democrats’ second-ranking member in the Senate, said. He added, however, “I don’t think there’s any chance” of Senate Republicans allowing it.

A campaign to allow government to keep the surplus revenue would have to originate outside the Legislature for it to have a shot at success, Heath said.

Republican Sen. Ellen Roberts, acting president of the chamber, favors the refunds, though she acknowledged difficult upcoming budget decisions will have to be made to pay for mandated public school funding increases and the expansion of Medicaid.

Colorado is “coming to a serious crossroads that we’re going to have to grapple with,” she said. But “we need to prove to the people of Colorado that we can handle the money better.”

Because of the TABOR system, lawmakers can’t approve tax increases without voter approval.

“I don’t blame TABOR for where we are today,” said Rep. Brian DelGrosso, the Republican leader in the House. “I blame the fact that we continue to increase our spending, and we continue to start new spending without actually taking care of our current obligations.”

At some point, compromise will be necessary to make significant changes. Democratic Rep. Dickey Lee Hullinghorst, the incoming House speaker, said some early bills have sponsors from both parties and split control provides “an opportunity to coordinate and pass some good legislation.”

Other key issues include:

- ENERGY DEVELOPMENT: Lawmakers will hear recommendations from a task force studying how to settle clashes among homeowners, local governments and energy companies over where to allow hydraulic fracturing.

- MEDICAL MARIJUANA: Regulations are up for renewal, meaning lawmakers could overhaul the system around growing pot. Among the discussions will be whether to increase taxes.

- GUN RESTRICTIONS: Republican leaders plan to revisit laws passed in 2013 when Democrats had control of both legislative chambers. At the top of the priority list is an attempt to undo a law limiting the size of ammunition magazines to 15 rounds. They have enough support to repeal it in the Senate, and leaders also think they can pass it through the House. Democratic opponents, however, could kill a repeal attempt in a House committee.

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