House Finance Committee advances bill to define TABOR exceptions for damage awards and property sales

The Colorado House Finance Committee voted 8-5 to send Senate Bill 173 to the Appropriations Committee after a hearing in which sponsors and witnesses said the bill would clarify two exceptions to the Taxpayer’s Bill of Rights (TABOR) for budgeting purposes.

Representative Zokay, the bill sponsor, told the committee the measure adds statutory definitions of “damage awards” and “property sales” listed as exclusions in Article X, Section 20 of the Colorado Constitution so state revenues and expenditures are classified consistently for TABOR calculations. “All we are doing here is trying to add a little more definition to what those two terms in particular mean,” Zokay said, asking members for an I vote.

Caroline Nutter, legislative coordinator at the Colorado Fiscal Institute, supported the bill and told the committee the measure aligns the exclusions in TABOR with contemporary state practice. “This bill defines damage awards to include certain civil penalties, such as when a nursing facility violates federal regulations for participation in the Medicaid program,” Nutter said, and she added the bill would clarify which fines and penalties are exempt from the TABOR fiscal-year spending limit. Nutter urged the committee to vote yes on SB 173.

Megan Raines, director of government affairs for the Colorado Education Association, also testified in favor and framed the change as one step toward freeing up funding for public services. Raines said the proposal could generate about $16.9 million that would not count against the TABOR cap and could be used for priorities such as education. “This is a step in the right direction,” Raines said, while acknowledging the change would not resolve the broader funding gap identified in recent adequacy studies.

Committee members asked about precedent, the bill’s relation to the original intent of TABOR and whether the measure would alter voters’ authority over taxes. Representative DeGraff questioned why the sponsors had not consulted Doug Bruce (the TABOR proponent) or legislative history, saying he found it “hard to believe that the general assembly would ever overlook a point from which they could extract more taxes.” Representative Zokay and the witnesses said the bill simply defines exclusions that the constitution already lists, and that the bill does not change TABOR’s voter-approval requirements for tax increases.

Representatives who spoke during closing remarks signaled both support and concern. Representative Marshall said the “property” language in TABOR is broad and that the bill’s scope could be expansive, but he viewed the bill’s impacts as “incidental and de minimis” and supported advancement. Representative DeGraff said he would vote no, arguing the exemptions were intentionally placed in TABOR and that the committee should focus on spending discipline rather than increasing revenues.

The committee approved a motion by Representative Zokay, seconded by Representative Camacho, to refer SB 173 to the Appropriations Committee. The motion passed on a voice/roll call vote, recorded as 8-5 in favor. No amendments were offered during the hearing.

Why it matters: TABOR limits fiscal-year spending and specifies categories that do not count toward the cap; ambiguity in those exclusions can cause agencies and budget analysts to classify the same receipts differently, affecting available funds or triggering refunds. Sponsors and supporters said statutory definitions will reduce uncertainty in budgeting and ensure consistent application of the constitutional exceptions.

Votes at a glance: The committee referred Senate Bill 173 to the Appropriations Committee (motion by Representative Zokay; second by Representative Camacho). Tally: yes 8, no 5; outcome: approved and referred to Appropriations.

What the bill would do: According to sponsors and testimony, SB 173 narrows the application of two TABOR exclusions by: - Defining “damage awards” to include specified civil penalties and fines collected by state agencies (examples cited by sponsors and witnesses included civil penalties assessed by the Colorado Department of Public Health and Environment (CDPHE) and by other state regulatory bodies). - Identifying categories of “property sales” that qualify as exclusions, including sales at state historical museums, certain sales tied to agricultural inspection supplies, wildfire equipment repair sales, correctional education program sales, sales by the Wine Industry Development Board for promotional purposes, and nonconcessionary sales at the Colorado State Fair, among others.

Known fiscal impacts and context: Testimony and the fiscal note referenced more than one estimate. Megan Raines cited an estimate that the reclassification could result in about $16.9 million not counting against the cap; committee discussion referenced a fiscal-note estimate of approximately $15.4 million. Witnesses also placed the conversation in the broader context of an education funding shortfall identified by adequacy studies of roughly $4.1 billion annually.

Limitations: The bill does not change TABOR’s requirement that voters approve tax increases; witnesses stated SB 173 only provides statutory definitions for exclusions the constitution already lists. The committee did not adopt amendments during the hearing and did not finalize implementing language beyond what was presented.

The House Finance Committee sent SB 173 to the Appropriations Committee with an 8-5 vote. The bill will receive further review in Appropriations.