- Associated Press - Monday, May 4, 2015

DENVER (AP) - Colorado House Democrats passed a plan Monday that would prevent future budget surpluses from being refunded to taxpayers, allowing the state to use the money instead for education and transportation.

Republicans who favor the refunds oppose the idea, which faces long odds in the GOP-led Senate.

The booming economy means Colorado is collecting more taxes than it’s allowed to keep under the voter-approved Taxpayer’s Bill of Rights, or TABOR. The constitutional mandate requires rebates when tax collections exceed the rate of inflation of population growth.

A bill approved by the House Monday would keep the state under that limit by reclassifying the hospital provider fee, a charge to facilities that the state uses to get a federal match to help with Medicaid costs. The change would mean the fee would not count toward the spending limit, stopping about $435 million refunds that would otherwise go to taxpayers in three years.

Lawmakers have agreed to budget for refunds for the next two tax years - nearly $70 million the first round and $117 million after that. But Gov. John Hickenlooper and fellow Democrats say refunds beyond that will be problematic because they’ll come at the expense of other budget areas.

That’s because currently the revenue collected from the hospital provider fee does not go into the general fund, which is comprised of taxes, but it still creates a refund liability that the general fund must cover.

Democratic House Speaker Dickey Lee Hullinghorst, the sponsor of the bill, warned lawmakers of tough budget years ahead and urged them to approve the fee reclassification.

“If we don’t do that, we’re going to be faced with a budget crisis,” she said before the bill passed on a 33-31 vote with every Republican voting no. That’s a bad indicator for the bill’s Senate prospects.

For the government to keep budget surpluses, TABOR requires voters’ permission. Republicans zeroed in on that when arguing against the bill.

“Let’s be clear. This bill will take away people’s refunds without their vote,” said Rep. Brian DelGrosso, the Republican House leader.

Hickenlooper called for the bill in a letter to lawmakers during the final weeks of the legislative session, which concludes Wednesday. Some lawmakers complained about the timing, saying such a substantial change merits more consideration.

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House Bill 1389: https://bit.ly/1E1dTzp

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