State tax initiative postponed

Group wants to have 5 brackets, give Legislature more authority

DENVER – A state ballot initiative to raise taxes and create five income-tax brackets sustained a one-month delay Wednesday.

Initiative 7 has been flying under the radar since a progressive group filed it in June. A Wednesday hearing of the three-member Title Board was its first big test. But the board threw out the initiative before it conducted a hearing on its merits because the sponsors made late changes.

Carol Hedges of the Colorado Fiscal Policy Institute, which backs the initiative, said it is an attempt to give the Legislature more power over taxation.

“They need to have as many tools as possible to be able to adjust to changing economic conditions,” Hedges said.

The initiative would change Colorado’s single 4.63 percent income-tax bracket to a five-bracket system. The middle bracket would be 4 percent, the top would be at least 6 percent, and the Legislature could set the rest.

The initiative also would extend the sales tax to services such as auto repair and drop the rate to 2.7 percent.

Hedges was looking forward to the Title Board hearing to see if her initiative meets the state constitutional requirement for initiatives to have only one subject.

But the board never decided the question. Instead, it threw out Initiative 7 because Hedges’ group made a late change, switching the sales-tax rate from 2.0 percent to 2.7 percent.

Officers of the American Constitution Party and other opponents of Initiative 7 attended the hearing at the secretary of state’s office, but they never got a chance to testify because the board threw out the initiative.

All three members of the Title Board voted to throw out the initiative. Dan Domenico, who represents the attorney general on the board, said the initiative could let the Legislature raise taxes without a further vote of the people, as required by the Taxpayer’s Bill of Rights.

“It seems to be a one-year exemption from TABOR, as long as they follow these instructions,” Domenico said.

Domenico, along with lawyers for the Legislature and secretary of state’s office, serves on the Title Board. The board vets initiatives to make sure they follow state law before they are placed on the ballot.

Hedges said she will refile the initiative this week. Under the best-case scenario for her, the Title Board could hear the new initiative no earlier than Jan. 15.

If it passes the Title Board, Hedges expects opponents to challenge it at the state Supreme Court. If it clears that challenge, supporters would have to collect petition signatures to place it on the 2011 ballot.

For now, Hedges wants to generate discussion about tax rates and the Legislature’s power. Colorado Fiscal Policy Institute officials believe the state lacks the revenue to support its schools, roads and social-welfare programs.

Hedges is not sure whether her group will take the initiative all the way to the ballot in November 2011.

“Whether we go in ’11 is a question that will have to be decided by a group of people. There is no one group or no one person who can make that decision,” Hedges said.

jhanel@ durangoherald.com

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