Concerning the over-refund amount for state fiscal year 2024-25 of state revenues in excess of the state fiscal year spending limit under section 20 of article X of the state constitution, and, in connection therewith, making an appropriation.
Summary
HB26-1419 addresses how Colorado calculates and applies a TABOR over-refund for state fiscal year 2024-25. The bill is based on the premise that federal tax policy enacted in H.R. 1 of the 119th Congress reduced Colorado income tax revenue in a way that was not fully reflected in the state’s 2024-25 fiscal-year accounting because the federal law was signed after that fiscal year ended. The bill directs the state controller, working with the Office of State Planning and Budgeting and the Department of Revenue, to recalculate the 2024-25 over-refund amount to account for that revenue impact.
Under the bill, if the controller certifies in September 2026 that 2025-26 state revenues did not exceed the TABOR spending limit, the controller must determine the difference between the refund already certified for 2024-25 and the refund that would have been required if the H.R. 1 revenue reduction had been included in 2024-25. That recalculated amount becomes the adjusted over-refund amount for 2024-25. The bill also limits how that amount may be used to reduce future TABOR refunds: it applies only to fiscal years beginning on or after July 1, 2026, and no more than half of the amount may offset refunds in any single fiscal year.
The bill’s practical effect is to change how Colorado’s TABOR refund mechanism is administered for one prior fiscal year and to alter the timing and size of future refund offsets. It amends the state’s over-refund statute in Title 24 and requires a new accounting determination by the controller, while also appropriating $18,021 from the general fund to the legislative department for the state auditor to help implement the act. The measure does not change the constitutional TABOR limit itself, but it changes the statutory method for calculating and applying an over-refund tied to that limit.
The general sentiment reflected in the bill text is supportive of correcting what sponsors describe as an accounting mismatch caused by the timing of federal tax changes. The legislative declaration frames the bill as necessary to align state fiscal-year accounting with the actual revenue effect of H.R. 1 and to ensure Colorado’s TABOR refund calculations are accurate. The bill ultimately passed and was signed by the governor, suggesting it had sufficient support to move through the appropriations process.
The main point of contention is the bill’s premise that the 2024-25 TABOR refund should be recalculated to reflect a later federal tax change, rather than leaving the existing certified refund amount in place. That raises questions about retroactive fiscal accounting, the scope of the controller’s authority, and whether the General Assembly can direct a revised TABOR calculation for a prior year. The bill also limits future offsets to no more than half of the recalculated over-refund in any one fiscal year, which appears designed to soften the impact on future refunds and may reflect concern about how quickly the adjustment should be recovered.
Impact
HB26-1419 amends Colorado’s over-refund provisions in section 24-77-103.7 to create a special recalculation rule for the 2024-25 fiscal year. It requires the state controller to determine a revised over-refund amount by comparing the certified 2024-25 TABOR refund with the refund that would have been required if the revenue effects of H.R. 1 had been included in that fiscal year’s accounting. The bill also restricts the use of that amount to future fiscal years beginning on or after July 1, 2026, and caps the annual offset at one-half of the recalculated amount. In addition, it appropriates general fund money to the legislative department for the state auditor to implement the act.
Sentiment
The overall sentiment appears favorable and corrective rather than controversial in the bill’s framing. The legislative declaration presents the measure as a technical fix to align TABOR accounting with the actual revenue effects of a federal tax law enacted too late to be reflected in the prior fiscal year. The bill advanced through the appropriations process and was signed by the governor, indicating institutional support for the approach.
Contention
The key dispute is whether Colorado should retroactively adjust a certified TABOR over-refund for a prior fiscal year based on a federal tax change that was enacted after that fiscal year ended. Critics or skeptics could question the legal and accounting basis for revising a completed certification, while supporters argue the adjustment is necessary to avoid an inaccurate refund calculation. A secondary point of contention is the bill’s limit that no more than half of the recalculated over-refund may be used to reduce refunds in any single future fiscal year, which balances fiscal recovery against minimizing the impact on taxpayers.