(The Center Square) - Colorado taxpayers can expect to see an income tax reduction and a tax refund after officials announced this week that the state collected more than $454 million over the Taxpayer's Bill of Rights (TABOR) cap.
The Colorado Office of State Controller said in a report on tax revenue that the state collected 8.2% more in fiscal year 2021 compared to the prior fiscal year.
Under state law, the TABOR cap is calculated through a population growth and inflation formula.
"The allowable TABOR growth rate for Nonexempt Revenues is 3.1% for FY 2021," State Controller Robert Jaros wrote in a letter Wednesday. "The allowable growth rate includes a population growth rate of 1.2%, and an inflation rate of 1.9%."
The Governor's Office of State Planning and Budgeting estimates that single-earners in the state can expect a tax refund averaging $69 while joint-filers may see a refund near $166. The state's income tax rate will fall from 4.55% to 4.5% following the refunds.
Governor Jared Polis described the announcement as "a strong sign that Colorado's economy is roaring back."
"I'm excited that Coloradans will get another income tax cut and refund that Coloradans can put toward bouncing back from the pandemic, a night out, or groceries," he said in a statement.
TABOR also requires any tax increases to be voted on by the people. However, lawmakers have been able to skirt this requirement in recent years by creating "enterprise funds" or quasi-corporations that are controlled by the state and generate revenue through fees and service charges rather than taxes.
According to an estimate by the Bell Policy Center, a left-leaning think tank, enterprise funds brought in approximately $17.9 billion in fiscal year 2017.
Democrats in the General Assembly have reportedly been exploring ways to retain TABOR refunds in the future.
A recent economic analysis from the nonpartisan Legislative Council Staff showed that Colorado is expected to exceed its budget cap by $2 billion over the next three years, while the governor's budget staff published a more optimistic forecast saying the excess tax funds could reach $3 billion.