Scott Wasserman of the Bell Policy Center and Summit County Commissioner Tamara Pogue filed a lawsuit in Denver District Court arguing that the Colorado Secretary of State's office improperly certified Amendment 78 for the ballot. The plaintiffs asked the court to either remove the measure from the ballot or order that votes for the measure not be counted.
Amendment 78 would transfer the power to appropriate custodial funds (state revenue not generated through taxes) from the state treasurer to the state legislature.
Plaintiffs alleged that the amendment is not substantially related to Colorado's Taxpayer's Bill of Rights (TABOR) and therefore should not appear on the 2021 ballot. Measures that can go on the ballot during odd years in Colorado are limited to topics that concern taxes or state fiscal matters arising under TABOR. This requirement was added to state law in 1994. The Colorado Taxpayer's Bill of Rights (TABOR) requires voter approval for all new taxes, tax rate increases, extensions of expiring taxes, mill levy increases, valuation for property assessment increases, or tax policy changes resulting in increased tax revenue. TABOR limits the amount of money the state of Colorado can take in and spend. It ties the annual increase for some state revenue to inflation plus the percentage change in state population. Any money collected above this limit is refunded to taxpayers unless the voters allow the state to spend it.
Pogue said, "One of the reasons you can have a ballot initiative on an odd number year is if it is TABOR related. The framers of 78 have tried to make the claim that it is TABOR related, but I don't think that claim has any merit...They are mistaken, a lot of the funds that I'm concerned about are very separate and already exempt from TABOR."
Measure sponsor Michael Fields said, "Most of the time general fund money is inside of TABOR so what we're doing is taking this, putting it into a new fund and allowing the interest to go into the general fund. People in the executive branch, attorney general, and governor and secretary of state have these funds that they can spend how they want without going through the normal process where legislators weigh in from all over the state and there is a public hearing."
Examples of custodial funds that Amendment 78 would apply to include pension funds and court-approved settlement funds. The measure defines custodial money as money received by the state that (1) originated from a source other than the State of Colorado, (b) was awarded or provided to the state for a particular purpose, and (c) that the state is acting as a custodian or trustee to carry out the purpose for which the funds were provided. The initiative would create the Custodial Fund Transparency Account within the Department of the Treasury. The account would receive all custodial funds and the general assembly would be responsible for appropriating the funds for purposes as specified by law "on an equitable basis for the benefit of the state." Funds appropriated from the account would be appropriated in a public hearing with opportunities for public comment. Custodial funds, including interest revenue on the funds, would be retained and spent as a voter-approved revenue change and would be exempt from revenue and spending limitations under TABOR.
Amendment 78 is one of three citizen initiatives that were certified for the November 2 ballot in Colorado. Colorado is one of four states - along with Maine, Ohio, and Washington - that allow citizen initiatives in odd-numbered years. Besides the three Colorado initiatives, there is one other citizen initiative certified for the 2021 ballot, an initiative in Maine concerning electric transmission lines.
Since 1992 - when TABOR was adopted - through 2020, Colorado voters have decided on 22 statewide ballot measures that would have increased revenue for the state, which required voter approval under TABOR. Six (27%) of the 22 measures were approved, while 16 (73%) were defeated.