DISTRICT COURT, DENVER COUNTY

STATE OF COLORADO
1437 Bannock Street, Room 256
Denver, Colorado 80202
TABOR FOUNDATION, a Colorado non-profit corporation; and
PENN PFIFFNER,
Plaintiffs,
v.
REGIONAL TRANSPORTATION DISTRICT, et al.,
Defendants.
Jeffrey W. McCoy (Atty. Reg. No. 43562)
Steven J. Lechner (Atty. Reg. No. 19853)
MOUNTAIN STATES LEGAL FOUNDATION
2596 S. Lewis Way
Lakewood, Colorado 80227
(303) 292-2021
(303) 292-1980 (facsimile)
jmccoy@mountainstateslegal.com
lechner@mountainstateslegal.com

COURT USE ONLY

Case No.: 13CV854
Division: 424

Attorneys for Plaintiffs

PLAINTIFFS REPLY IN SUPPORT OF THEIR CROSS-MOTION FOR SUMMARY
JUDGMENT

TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .....................................................................................

INTRODUCTION

................................................................................................

ARGUMENT

................................................................................................

THE FOUNDATION IS CHALLENGING THE DISTRICTS

DISCRETIONARY DECISION TO LEVY TAXES ON THE ITEMS
IN HB13-1272 ...............................................................................................

BY LEVYING SALES AND USE TAXES ON THE ITEMS IN

HB13-1272, THE DISTRICTS ARE LEVYING NEW TAXES IN
VIOLATION OF TABOR .............................................................................

I.

II.

A.
B.

The Levying Of Taxes On The Items In HB13-1272 Is A

Change In The Status Quo .................................................................

Under The Plain Language Of Previously Approved Ballot

Measures, The Districts Do Not Have The Authority To Levy
Taxes On The Items In HB13-1272 ...................................................

1.

The Previous Ballot Measures do not Authorize RTD to

Levy Taxes on the Items in HB13-1272 ................................
a.

The 1973 election did not authorize RTD to levy

taxes on cigarettes and advertising materials .............

In 1980, the voters revoked RTDs authority to

levy sales taxes on food and food containers .............

11

The Previous Ballot Measures do not Authorize SCFD

to Levy Taxes on the Items in HB13-1272 ............................

12

BY LEVYING SALES AND USE TAXES ON THE ITEMS IN

HB13-1272, THE DISTRICTS INSTITUTED A TAX POLICY
CHANGE THAT DIRECTLY CAUSES A NET TAX REVENUE
GAIN FOR THE DISTRICTS .......................................................................

13

A.

13

b.
2.
III.

The Districts Have Implemented A Tax Policy Change ....................

ii

B.

The Tax Policy Change Directly Caused A Net Tax Revenue

Gain ................................................................................................

15

THIS COURT SHOULD NOT APPLY ANY JUDICIALLY

CREATED EXCEPTIONS TO TABOR .......................................................

19

CONCLUSION ..........................................................................................................

20

CERTIFICATE OF SERVICE ..................................................................................

22

IV.

iii

EXHIBITS1
Exhibit I, 1963 Colorado Revised Statutes (relevant portions)
Exhibit J, 1973 Colorado Revised Statutes (relevant portions)
Exhibit K, 1973 Colorado Revised Statutes, 1979 Cumulative Supplement (relevant
portions)
Exhibit L, 1973 Colorado Revised Statutes, 1982 Replacement Volume (relevant
portions)
Exhibit M, Colorado Secretary of State, Quarterly Business & Economic Report, First
Quarter 2014

The letters assigned to the exhibits continue from the exhibits filed with the Foundations
motion for summary judgment.
iv

TABLE OF AUTHORITIES
Page
Cases
Barber v. Ritter,
196 P.3d 238 (Colo. 2008) ...................................................................................

Bickel v. City of Boulder,

885 P.2d 215 (Colo. 1994) ...................................................................................

4, 5, 6, 7

Bolt v. Arapahoe Cnty. Sch. Dist. No. 6,

898 P.2d 525 (Colo. 1995) ...................................................................................

10, 15

Bruce v. City of Colorado Springs,

129 P.3d 988 (Colo. 2006) ...................................................................................

6, 7

Bruce v. Pikes Peak Library Dist.,

155 P.3d 630 (Colo. App. 2007) ..........................................................................

15

Celotex Corp. v. Catrett,

477 U.S. 317 (1986) .............................................................................................

18

Fabec v. Beck,
922 P.2d 330 (Colo. 1996) ...................................................................................

HCA-Healthone, LLC v. City of Lone Tree,

197 P.3d 236 (Colo. Ct. App. 2008) ....................................................................

6, 7

Howard Elec. & Mech., Inc. v. Dept of Revenue of State of Colo.,

771 P.2d 475 (Colo. 1989) ...................................................................................

10

Huber v. Colorado Mining Ass'n,

264 P.3d 884 (Colo. 2011) ...................................................................................

4, 5, 12, 15

McKinney v. Cadleway Properties, Inc.,

548 F.3d 496 (7th Cir. 2008) ...............................................................................

18

Mesa Cnty. Bd. of Cnty. Comm'rs v. State,

203 P.3d 519 (Colo. 2009) ...................................................................................

passim

Mt. Emmons Min. Co. v. Town of Crested Butte,

690 P.2d 231 (Colo. 1984) ...................................................................................

18

Nicholl v. E470 Pub. Highway Auth.,

896 P.2d 859 (Colo. 1995) ...................................................................................

15

Patterson Recall Comm., Inc. v. Patterson,

209 P.3d 1210 (Colo. App. 2009) ........................................................................

16

In re Submission of Interrogatories on House Bill 99-1325,

979 P.2d 549 (Colo. 1999) ...................................................................................

20

TABOR Found. v. Colorado Bridge Enter., P.3d. , 2014 COA 106, 2014
WL 3955600 (Colo. App. 2014) ................................................................................

45

Constitutional Provisions
Colo. Const. art. X, 20 ............................................................................................

Colo. Const. art. X, 20(1)........................................................................................

Colo. Const. art. X, 20(4)........................................................................................

Colo. Const. art. X, 20(4)(a) ...................................................................................

6, 14

Statutes
C.R.S. 32-9-119(2)(a) .............................................................................................

C.R.S. 32-9-119.3 ...................................................................................................

C.R.S. 32-13-105 ....................................................................................................

C.R.S. 32-13-107(1)(a) ...........................................................................................

C.R.S. 39-26-104(1)(a) (1973)................................................................................

9, 14

C.R.S. 39-26-114(1)(a)(XVI) (1979 Cumulative Supplement) ..............................

11, 14

C.R.S. 39-26-114(1)(a)(XVII) (1982 Replacement Volume) .................................

12

C.R.S. 39-26-114(1)(a)(XX) (1979 Cumulative Supplement) ...............................

11, 14

C.R.S. 39-26-114(1)(a)(XX) (1982 Replacement Volume) ...................................

12

C.R.S. 39-26-114(1)(d) (1973) ...............................................................................

vi

C.R.S. 39-26-707(1)(e) (2014)................................................................................

11

C.R.S. 39-26-707(2)(d) (2014) ...............................................................................

11

C.R.S. 138-5-4(1)(b) (1963) ...................................................................................

9, 14

C.R.S. 138-5-14(1)(e) (1963)..................................................................................

Other Authorities
Blacks Law Dictionary (7th Ed. 1999) .....................................................................

6, 9

Colorado Legislative Drafting Manual ......................................................................

14

Colorado Secretary of State, Quarterly Business & Economic Report, First

Quarter 2014,
http://www.sos.state.co.us/pubs/business/quarterlyReports/2014-Q1.pdf (last
visited November 21, 2014) .......................................................................................

17

Daniel D. Domenico, The Constitutional Feedback Loop: Why No State

Institution Typically Resolves Whether A Law Is Constitutional and What, If
Anything, Should Be Done About It, 89 Denv. U. L. Rev. 161 (2011) ......................

Op. Atty Gen. No. 93-03 (Apr. 6, 1993) ..................................................................

14

Op. Atty Gen. No. 96-01 (Feb. 27, 1996).................................................................

14

Submission of Interrogatories on Senate Bill 93-74, 852 P.2d 1 (Colo. 1993) .........

Websters II New College Dictionary (1999) ............................................................

6, 9

vii

INTRODUCTION
Plaintiffs TABOR Foundation and Penn Pfiffner (collectively the Foundation) bring
this case to ensure that the Regional Transportation District (RTD) and the Science and
Cultural Facilities District (SCFD) comply with the requirements of the Colorado Constitution.
Contrary to Defendants personal attacks on the Foundation, this case is not about whether
levying taxes on candy, soda, food containers, cigarettes, and advertising materials would be
good or bad for Colorado. The Foundation only seeks to ensure that it is the voters, and not the
districts, that ultimately decide that question.
As demonstrated previously, and further demonstrated below, the levying of taxes on the
items in HB13-1272 is levying of new taxes without voter approval in violation of the
Taxpayers Bill of Rights (TABOR), Colo. Const. art. X, 20. The previous ballot measures
related to the districts taxing authority limited the taxing authority of the districts. Under the
plain language of the previous voter-approved ballot measures, the districts do not have voter
approval to levy taxes on the items in HB13-1272.
In addition, the districts should be enjoined from levying taxes on the items in HB131272 because they have implemented a tax policy change that has resulted in a net tax revenue
gain for the districts in violation of TABOR. Before the passage of HB13-1272, the districts
knew that a decision to levy taxes on those items would result in a net tax revenue gain. Despite
this, Defendants attempt to circumvent the requirements of the Colorado Constitution by arguing
that their poor recordkeeping allows them to implement tax policy changes without consequence.
This is an unreasonable interpretation of TABOR and should not be adopted. Furthermore, even
under Defendants unreasonable interpretation, the districts should be enjoined from levying any

further taxes on the items in HB13-1272 because the record demonstrates that the districts
realized a net tax revenue gain as a result of the tax policy change.
ARGUMENT
I.

THE FOUNDATION IS CHALLENGING THE DISTRICTS DISCRETIONARY

DECISION TO LEVY TAXES ON THE ITEMS IN HB13-1272.
Defendants incorrectly argue that the nature of the Foundations challenge is irrelevant to

the standard of review this Court should apply in this case. The nature of the case determines the
standard of review because the Foundation is not asking this Court to set aside any statute.
Barber v. Ritter, 196 P.3d 238, 247 (Colo. 2008) (stating that the beyond a reasonable doubt
standard of review applies to challenges of a statutes constitutionality because of the
presumption of constitutionality enjoyed by the statutes . . . . (emphasis added)). If this Court
grants the relief requested by the Foundation, HB13-1272 will remain in place. See First
Amended Complaint Prayer for Relief B. The districts, RTD and SCFD, however, will be
prevented from levying taxes on the items in HB13-1272 unless and until they receive voter
approval. Id.
The General Assembly did not impose the challenged taxes. Instead, the General
Assembly merely granted the districts the statutory authority to levy the challenged taxes.2
C.R.S. 32-9-119(2)(a) (RTD has the power to levy sales taxes); C.R.S. 32-13-107(1)(a)
2

Contrary to the Department of Revenues (DOR) suggestion, by mentioning the districts

statutory authority, the Foundation does not misunderstand the fundamental purpose of
TABOR. See DOR Response/Reply at 8. In this case, prior to 2014, there were two separate and
distinct restrictions on the districts ability to levy taxes on candy, soda, food containers,
cigarettes, and advertising materials. Prior to HB13-1272, the districts were statutorily barred
from levying taxes on the items in the bill. In addition, because the voters have not given the
districts authority to tax the items in HB13-1272, the districts were constitutionally barred from
levying taxes on those items. HB13-1272 removed the statutory limit on the levying of taxes,
but only the voters can remove the constitutional limit. Colo. Const. art. X, 20(4).
2

(SCFD has the power to levy sales taxes); HB13-1272 (reproduced at Exhibit 21-J). Because
HB13-1272 did not mandate the levying of the challenged taxes, the General Assembly left it up
to the districts whether to levy the challenged taxes.3 In fact, DOR concedes this fact. DOR
Response/Reply at 5 (Under this legislation, it is the districts themselves that, in their discretion,
determine whether to impose a sales tax and to what extent.). As a result, the constitutionality
of HB-13-1272 is not at issue. The only issue is whether the district can levy the challenged
taxes without seeking and receiving voter approval, as required by TABOR.
TABOR limits when and how the districts can levy taxes on the items in HB13-1272.
Although HB13-1272 removed the statutory exemption to taxing the items in the bill, the
General Assembly did not, and could not, remove the constitutional limit on taxing the items in
HB13-1272. Colo. Const. art. X, 20(1) (All provisions are self-executing and severable and
supersede conflicting state constitutional, state statutory, charter, or other state or local
provisions.). It was up to the districts to comply with TABOR, and hold an election before
levying the taxes set forth in HB13-1272.4 Nothing in the bill suggests that the General
Assembly intended for the districts to violate TABOR. Therefore, HB13-1272 is not
unconstitutional, but the districts decision to levy taxes without voter approval is
unconstitutional.
Defendant RTD argues that it had no discretion regarding whether to levy taxes on the
items in HB13-1272 because it has no authority to hold elections, and HB13-1272 did not
3

HB13-1272 changed the language from each district shall have the power to levy taxes to
each district has the power to levy taxes. Exhibit 21-J. Although both the old and the new
language indicates discretion, the removal of the word shall clearly indicates that the General
Assembly did not intend to force the districts to levy taxes.
4
As stated previously, the Foundation recognizes that TABOR only requires a district-wide vote,
not a statewide vote. The Department of Revenue is a defendant in this case because it is
collecting sales taxes on behalf of the districts.
3

include an election provision. RTD Response/Reply at 6. HB13-1272 did not need to include an
election provision because RTD and SCFD already have statutory authority to hold elections in
order to comply with TABOR. C.R.S. 32-9-119.3 (RTD); C.R.S. 32-13-105 (SCFD).
Therefore, the decision to not hold an election prior to levying taxes on the items in HB13-1272
was solely that of the districts. That decision and the subsequent levying of the challenged taxes
by the districts without a vote of the people is the sole action challenged by the Foundation.
Therefore, this Court does not need to decide the constitutionality of HB13-1272.
DOR cites two cases for the proposition that the beyond a reasonable doubt standard of
review applies in all TABOR cases . . . .. DOR Response/Reply at 4; but see Bickel v. City of
Boulder, 885 P.2d 215, 227 (Colo. 1994) (applying a substantial compliance standard of
review). In the two cases cited by DOR, however, the Court made clear that the challenge was to
the facial constitutionality of the statute itself, not to any government action purporting to
implement the statute. Huber v. Colorado Mining Ass'n, 264 P.3d 884, 887 (Colo. 2011)
(challenge to a non-discretionary increase in tax rates under a statute that provided that the tax
rate . . . shall be increased or decreased one percent. (emphasis added)); Mesa Cnty. Bd. of
Cnty. Comm'rs v. State, 203 P.3d 519, 52526 (Colo. 2009) (challenging a statute that provided
that [e]very district shall levy the number of mills determined . . . . (emphasis added)). When
a plaintiff challenges a districts discretionary implementation of a tax, the beyond a reasonable
doubt standard of review simply does not apply.5 See TABOR Found. v. Colorado Bridge
5

This assumes, of course, that the beyond a reasonable doubt standard is even a viable
standard of review when reviewing purely legal questions. See Foundation Memo at 79. The
beyond a reasonable doubt standard is an evidentiary standard, and its use as a legal standard
of review is archaic and undefined. See id.; see also Daniel D. Domenico, The Constitutional
Feedback Loop: Why No State Institution Typically Resolves Whether A Law Is Constitutional
and What, If Anything, Should Be Done About It, 89 Denv. U. L. Rev. 161, 16768 (2011)
4

Enter.,

P.3d.

, 2014 COA 106, 2014 WL 3955600 at *3 (Colo. App. 2014) (Court refusing

to apply the beyond a reasonable doubt standard of review to a challenge that the levying of a
surcharge was a fee rather than a tax.).
Instead, this Court should apply the substantial compliance standard set forth in Bickel.
885 P.2d at 227. This standard requires the districts to prove that they substantially complied
with TABORs requirements. Fabec v. Beck, 922 P.2d 330, 343 (Colo. 1996) (it is the
proponents, and not the protestors in this case, that bear the burden of showing that substantial
compliance occurred). Finally, when determining whether the districts substantially complied
with TABOR, this Court must apply the canon of construction for TABOR that [w]here
multiple interpretations of TABOR are equally supported by the text, a court should choose that
interpretation which it concludes would create the greatest restraint on the growth of
government. Bickel, 885 P.2d at 229.
II.

BY LEVYING SALES AND USE TAXES ON THE ITEMS IN HB13-1272, THE

DISTRICTS ARE LEVYING NEW TAXES IN VIOLATION OF TABOR.
A.

The Levying Of Taxes On The Items In HB13-1272 Is A Change In The

Status Quo.

The fundamental purpose of TABOR is to prevent governments from increasing the tax
burdens of citizens without their knowledge and approval. See Submission of Interrogatories on
Senate Bill 93-74, 852 P.2d 1, 4 (Colo. 1993) ([T]he principal purpose of TABOR . . . is to
require that the voters decide for themselves the necessity for the imposition of new tax burdens .
. . .); Huber, 264 P.3d at 891 (TABOR altered who ultimately must approve imposition of new
taxes, tax rate increases, and tax policy changes . . . .). The key issue in this case is whether the

(Stating that there is a dispute about the scope of the beyond a reasonable doubt standard and
whether it should be applied at all.)
5

districts decisions to levy taxes on the items in HB13-1272 changed the status quo. See Bruce v.
City of Colorado Springs, 129 P.3d 988, 995 (Colo. 2006) (noting the difference between
continuing the status quo and making a change that will impose a greater cost on the
taxpayer.). As previously demonstrated, prior to January 1, 2014, the districts did not levy sales
and use taxes on many of the items in HB13-1272. Foundation Memo. at 912. For example,
prior to 2014, RTD had never levied taxes on cigarettes and advertising materials, and had not
levied sales and use taxes on food, drinks, and food containers since 1980.6 Prior to 2014, SCFD
had never levied sales and use taxes on the items in HB13-1272.
TABOR requires voter approval for any new tax, or tax rate increase. Colo. Const.
art. X, 20(4)(a). By definition, a tax that has never been implemented before, or a tax that has
not been levied in three decades, is a new tax. Blacks Law Dictionary 1063 (7th ed. 1999)
(defining new as recently come into being, changed from the former state,); Websters II
New College Dictionary 736 (1999) (defining new as [h]aving existed or been made for only
a short time). This is the interpretation the Colorado Court of Appeals adopted in HCAHealthone, where it held that an expansion of items subject to sales and use taxes constitutes new
taxes that require voter approval under TABOR. HCA-Healthone, LLC v. City of Lone Tree, 197
P.3d 236, 242 (Colo. Ct. App. 2008). Accordingly, the districts have levied new taxes and this
Court should enjoin the districts from levying taxes on the items in HB13-1272 until they receive
voter approval. Colo. Const. art. X, 20(4)(a); see also Bickel, 885 P.2d at 229 (Where
multiple interpretations of TABOR are equally supported by the text, a court should choose that
interpretation which it concludes would create the greatest restraint on the growth of
government.).
6

The voters adopted TABOR in 1992. Mesa Cnty., 203 P.3d at 524.
6

B.

Under The Plain Language Of Previously Approved Ballot Measures, The

Districts Do Not Have The Authority To Levy Taxes On The Items In HB131272.

Defendants attempt to get around HCA-Healthone, and the plain meaning of new, by
arguing that the voters previously approved levying taxes on the items in HB13-1272.
Defendants interpretations of the previous ballot measures ignore the limited taxing authority
the voters granted to the districts. As a result, just like in HCA-Healthone, the expansion of the
districts sales taxes to items not previously approved constitutes a new tax for the purposes of
TABOR.7
The ballot measures must be given their plain meaning, and understood in the context of
a typical voters understanding. Bruce, 129 P.3d at 996 (Interpreting the ballot measure based on
how a typical voter would interpret it). The purposes of TABOR are to notify voters of, and
give them ultimate authority over, potential tax increases. Bickel, 885 P.2d at 23637 ([T]he
purpose of such a disclosure requirement is to permit the voters to make informed choices at the
ballot. In our view, that purpose was not substantially achieved . . . because the ballot title failed
to give any indication of the potential magnitude of that tax increase.). Therefore, previous
ballot measures can only give the districts the authority to levy taxes on the items in HB13-1272
if such a purpose was clear from the language of those previous ballot measures. As
demonstrated below, the districts ballot measures did not clearly give the districts that authority
and, in fact, the ballot measures expressly limited the items the districts could levy taxes on.
7

DOR also mistakenly relies on Mesa County to argue that requiring an additional election
would be redundant. DOR Response/Reply at 10. As demonstrated previously, and further
demonstrated below, levying of taxes on the items in HB13-1272 does not fall within the taxing
limits previously approved by a districts voters because the ballot measures did not authorize
the districts to levy taxes on the items in HB13-1272. See Foundation Memo at 1318.
Therefore, requiring voter approval for the new taxes is not redundant.
7

The districts voters have not authorized the districts to levy sales and use taxes on the items in
HB13-1272 and, therefore, this Court must enjoin the districts from levying taxes on those items
until the districts receive voter approval.8
1.

The Previous Ballot Measures do not Authorize RTD to Levy Taxes

on the Items in HB13-1272.

RTD has held several elections regarding its taxing authority since its inception in 1973.
This Court must look at all of those elections, not just the 1973 election as Defendants contend,
to determine the scope of the taxing authority given by voters to RTD. In 1973, the voters
authorized RTD to levy sales taxes only on the items the state levied sales taxes on at that time.
In 1973, the state did not levy sales taxes on cigarettes and advertising materials. Therefore,
even under Defendants argument that 1973 is the only relevant election, RTD does not have
voter approval to levy sales taxes on cigarettes and advertising materials. The 1973 election is
not the only relevant election, however, because in 1980 the voters expressly revoked RTDs
authority to levy sales taxes on food, including candy and soda, and food containers. Therefore,
after looking at all relevant ballot measures, this Court should hold that RTD must receive voter
approval before it can levy sales and use taxes on the items in HB13-1272.

As DOR has stated, the relevant taxing authority in this case is determined at a district level.
DOR Response/Reply at 56 ([T]he issue of whether the districts sales taxes imposed on
January 1, 2014 violated TABOR must be addressed at the district level.); DOR Memo at 9
(Under TABOR, the focus must be on the authority and approval for the tax at the district
level.). As a result, a statewide election authorizing the state to levy new taxes does not provide
the districts the necessary authority to levy new taxes. The districts must obtain their own
distinct approval from the voters in their district before they may levy new taxes. Colo. Const.
art. X, 20(4) (Providing that districts must have voter approval in advance for any new tax.).
8

a.

The 1973 election did not authorize RTD to levy taxes on

cigarettes and advertising materials.

In 1973, RTD voters approved a ballot measure authorizing the issuing of bonds to be
paid from A DISTRICTWIDE SALES TAX LEVIED AT A RATE OF ONE-HALF OF ONE
PERCENT UPON EVERY TAXABLE TRANSACTION.9 Ex. 3-J. The law in effect in 1973
defines what constituted a taxable transaction. In 1973, the state levied sales taxes on the
purchase price paid or charged upon all sales and purchases of tangible personal property and
retail. C.R.S. 138-5-4(1)(b) (1963), recodified at C.R.S. 39-26-104(1)(a) (1973).10 The sale
of cigarettes, however, were exempted from sales and use taxes and was therefore not a taxable
transaction in 1973. C.R.S. 138-5-14(1)(e) (1963); C.R.S. 39-26-114(1)(d) (1973).
Furthermore, in 1973, the sale or use of direct advertising material was not a taxable transaction
because it was not included in the definition of tangible personal property at the time. See
Exhibit 20-J at 38 (2010 law changing the definition of tangible personal property to include
DIRECT MAIL ADVERTISING MATERIALS . . . .).
The 1973 enabling statute confirms the meaning of the ballot measure and provides that
RTD, after an election, has the authority to levy uniformly throughout the district a sales tax at
the rate of one-half of one percent upon every transaction or other incident with respect to which
a sales tax is now levied by the state, pursuant to the provision of Article 26 of Title 39, C.R.S.
1963. Ex. 2-J at 99192 (all emphasis added). The use of the present tense term now levied,
indicates that RTD only has the authority to levy sales and use taxes on items taxed at the time of
9

The 1973 ballot measure also provides that the bonds issues in conjunction with the ballot
measure will MATURE WITHIN THIRTY YEARS AFTER THE DATE OR RESPECTIVE
DATES OF THE BONDS. Therefore, RTDs authority under the 1973 election expired when
the bonds matured in 2003.
10
The relevant portions of the 1963 and 1973 statutes are attached hereto as exhibits I and J.
9

the bill. Websters II New College Dictionary 749 (1999) (defining now as [a]t the present
time); Blacks Law Dictionary 919 (7th Ed. 1999) (Defining levy as [t]o impose or assess (a
fine or a tax) by legal authority . . . .). More importantly, the statute expressly incorporates the
law in effect in 1973, clearly demonstrating that RTDs authority is limited by the law in effect at
the time. Therefore, the 1973 election does not authorize RTD to levy sales and use taxes on
cigarettes or advertising materials because the state did not levy sales and use taxes on those
items in 1973.
This interpretation is consistent with the Courts interpretation of RTDs enabling statute
in Howard Elec. & Mech., Inc. v. Dept of Revenue of State of Colo., 771 P.2d 475 (Colo. 1989).
RTD argues that Howard Electric stands for the proposition that RTD received unlimited
authority to levy a sales and use tax. RTD Response/Reply at 7. Although the Court did
determine that RTD could levy a use tax despite no express provision authorizing a use tax, it
reached that conclusion because the language of RTDs enabling statute expressly incorporates
the entire sales and use tax provisions of the Colorado Revised Statutes. Id. at 479. This
incorporation, however, also limits the items RTD can levy a tax on to those items listed as
taxable in Article 26 of Title 39 of the Colorado Revised Statutes. Ex. 2-J at 99192.
Therefore, unlike in Bolt v. Arapahoe Cnty. Sch. Dist. No. 6, 898 P.2d 525, 535 (Colo.
1995), the language of the ballot measure at issue here is not open-ended. It provides specific
language about the items RTD can tax and in what capacity, and the enabling statute expressly
incorporates the sales and use tax law in effect at the time. These provisions are clear
provisions to the contrary of Defendants interpretation and, as a result, Defendants openended interpretation must be rejected. Mesa Cnty. Bd. of Cnty. Commrs v. State, 203 P.3d 519,
533 (Colo. 2009) (internal quotations omitted). The 1973 ballot measure clearly limit[s] the
10

approved sales taxes to particular statutory authority, frozen in time. DOR Response/Reply at
7. Accordingly, even accepting Defendants arguments that the 1973 election is the only election
that limits their taxing authority, RTD would still need voter approval to levy sales and use taxes
on cigarettes and advertising materials.
b.

In 1980, the voters revoked RTDs authority to levy sales taxes

on food and food containers.

The 1973 election is not the only election that limits RTDs taxing authority, however,
because in 1980, the state exempted food and food containers from sales and use taxes. C.R.S.
39-26-114(1)(a)(XVI), 39-26-114(1)(a)(XX) (1973, 1979 Cumulative Supplement);11 See
also C.R.S. 39-26-707(1)(e) (2014); 39-26-707(2)(d) (2014). In 1980, the General Assembly
submitted to the voters the question of eliminating the authority of the district . . . to levy a sales
tax on food. Exhibit 5-J at 682; see also id. at 681 (discussing compensation of RTD for the
elimination of the authority to levy a sales tax on food). Therefore, the voters expressly revoked
RTDs ability to levy a sales tax on food, and RTD must obtain voter approval before it can levy
sales taxes on food for the first time in over 30 years. In 1992, the voters confirmed RTDs
limited taxing authority by authorizing RTD to levy uniformly throughout the district a sales tax
at the rate of six-tenths of one percent upon every transaction or other incident with respect to
which a sales tax is now levied by the state, pursuant to the provisions of article 26 of title 39,
C.R.S. RTD Exhibit 5 (emphasis added). Accordingly, the voters have made it clear that RTD
does not have the authority to levy sales and use taxes on the items in HB13-1272 and RTD must
seek voter approval before it may levy taxes on those items.12
11

The relevant portions of the 1979 statutes are attached hereto as exhibit K.
As demonstrated previously, RTDs 1999 and 2004 elections are irrelevant because they
concerned subsection (7) waivers, not subsection (4)(a) waivers. Foundation Memo at 1316;
12

11

2.

The Previous Ballot Measures do not Authorize SCFD to Levy Taxes

on the Items in HB13-1272.

Like RTD, SCFDs ballot measures do not grant the district the authority to levy sales
and use taxes on the items in HB13-1272. SCFDs ballot measures also expressly incorporate
the law in effect at the time, and SCFD cannot broaden its taxing authority without voter
approval.
The 1988 ballot measure authorizes SCFD to RECEIVE PROCEEDS FROM A ONETENTH OF A CENT SALES TAX TO BE DISTRIBUTED ACCORDING TO LAW . . . .
Exhibit 7-J at 185. The language according to law indicates that the sales tax will be
distributed based on the law in effect at the time. SCFDs enabling statute sets forth the law
incorporated in the ballot measure and provides that SCFD has the authority to levy [a] uniform
sales tax . . . upon every transaction or other incident with respect to which a sales tax is levied
by the state, pursuant to the provision of article 26 of title 39, C.R.S., except such sales tax shall
be levied on purchases of machinery or machine tools which are otherwise exempt . . . . Exhibit
6-J at 5 (all emphasis added). As with RTD, the statute uses the present tense is levied and
expressly incorporates the Colorado Revised Statutes in effect at the time. In 1988, the State of
Colorado did not levy sales taxes on candy, soda, direct advertising materials, cigarettes, or food
containers. C.R.S. 39-26-114(1)(a)(XVII), C.R.S. 39-26-114(1)(a)(XX) (1973, 1982
Replacement Volume).13 Therefore, even considering only the 1988 ballot measure, SCFD does
not have the authority to levy taxes on the items in HB13-1272.

Huber, 264 P.3d at 892 n.6 (The collection of increased revenue amounts is addressed by the
spending limit and refund provisions of subsection (7) of article X, section 20, not the voter
approval requirement in subsection (4)(a).).
13
The relevant portions of the 1982 statutes are attached hereto as exhibit L.
12

The 1988 ballot measure is irrelevant, however, because, by law, the authority was set to
expire in 1993. Exhibit 6-J at 13. All subsequent elections also had an expiration date on
SCFDs taxing authority. Exhibit 9-J at 143 (1994 ballot measure providing for an extension of
SCFDs sales tax until 2006). Therefore, SCFDs taxing authority comes from the most recent
ballot measure authorizing SCFD to levy sales and use taxes. In 2004, the voters approved a
ballot measure that extended THE AGGREGATE 0.1 PERCENT SALES AND USE TAXES
CURRENTLY LEVIED AND COLLECTED by SCFD.14 Exhibit 18-J. This language is in the
present tense, and clearly means that the voters granted SCFD the authority to levy sales and
use taxes on only those items that SCFD actually taxed at the time of the measure. Websters II
New College Dictionary 276 (1999) (defining current as [b]elonging to the present time).
As demonstrated above, in 2004 SCFD did not levy sales and use taxes on the items in HB131272. See also Foundation Memo at 1718. Therefore, it is not the Foundation that is ignoring
the will of the voters, it is the districts because their argument completely ignores the plain
language of the previously approved ballot measures. Accordingly, this Court should enjoin
SCFD from levying taxes on the items in HB13-1272 until it receives voter approval.
III.

BY LEVYING SALES AND USE TAXES ON THE ITEMS IN HB13-1272, THE

DISTRICTS INSTITUTED A TAX POLICY CHANGE THAT DIRECTLY
CAUSES A NET TAX REVENUE GAIN FOR THE DISTRICTS.
A.

The Districts Have Implemented A Tax Policy Change.

In addition to being a new tax, the levying and collecting of taxes on the items in HB131272 constitutes a tax policy change directly causing a net tax revenue gain to the districts and
14

Even if this ballot measure extended the original taxing authority granted in 1988, as SCFD
contends, it still does not authorize SCFD to levy taxes on the items in HB13-1272. SCFD
Response/Reply at 14. As demonstrated above, the 1988 ballot measure limited the scope of
SCFDs taxing authority, and did not include the authority to tax the items in HB13-1272.
13

must be approved by the voters. Colo. Const. art. X, 20(4)(a). Prior to 2014, the districts
policies were to not levy sales taxes on the items in HB13-1272.15 Now, in 2014, the districts
have adopted a new policy, and they have chosen to levy taxes on the items in HB13-1272. The
obvious interpretation is that the districts have implemented a tax policy change, and that
interpretation is the one adopted by the Attorney General:
Of course, a change in the structure itselfthe addition or deletion of a statutory
variable, a change in the method by which rates are computed, or any increase in
the standard or computed rates in the tax tableswould trigger the need for
advance voter approval, assuming a resultant net revenue gain.
Op. Atty Gen. No. 93-03 (Apr. 6, 1993); See also Colorado Legislative Drafting Manual at 9-9
(The repeal of a sales tax exemption appears to require voter approval since such repeal would
result in increased revenues.). The Attorney General reiterated this conclusion three years later:
A change in tax policy occurs when a statutory modification is made to the
standards or rules governing the imposition of a specific tax. For example, a
modification might be made to the subject of a tax, the timing of a tax, or the
determination of liability under a tax. If a change does not modify the standards
or rules regarding the imposition of a tax, no tax policy is being changed.
Op. Atty Gen. No. 96-01 (Feb. 27, 1996).
This interpretation is also consistent with the purpose of TABOR, which is to keep
taxpayers informed of when they will pay more taxes, by seeking their approval prior to a change
in the tax structure.16 The history of the districts sales and use taxes makes the districts policies
15

Granted, RTD may have taxed food between 1973 and 1980. C.R.S. 138-5-4(1)(b) (1963);
C.R.S. 39-26-104(1)(a) (1973). However, since 1980, it was RTDs policy to not levy a sales
tax on food and food containers. C.R.S. 39-26-114(1)(a)(XVI), 39-26-114(1)(a)(XX) (1973,
1979 Cumulative Supplement).
16
As demonstrated above, the voters have not authorized the districts to levy taxes on the items
in HB13-1272. However, any argument that a pre-TABOR vote could authorize a tax policy
change in 2014 is not supported by the case law. Courts have limited the situations in which
they found a pre-TABOR election sufficient to meet TABORs voter approval requirement, and
no court has found that a pre-TABOR election authorizes a post-TABOR tax policy change. See
14

clear: the districts have never levied a sales and use tax on cigarettes and advertising materials,
SCFD has never levied a sales tax on food and food containers, and RTD has not levied a sales
tax on food and food containers in over 34 years. Therefore, the levying of sales taxes on these
items constitutes a tax policy change that must be approved by voters.
B.

The Tax Policy Change Directly Caused A Net Tax Revenue Gain.

Defendants argue that, even if the levying of taxes on the items in HB13-1272 is a tax
policy change, the policy change did not directly cause a net tax revenue gain for the districts.
Defendants make two arguments in an attempt to circumvent TABOR, but neither of them are
convincing.
First, DOR relies on inapposite dicta in Mesa County to argue that the levying of taxes on
items in HB13-1272 should not be subject to voter approval because the revenue gain does not
exceed TABORs subsection (7) revenue limits. DOR points to this language in Mesa County:
When read together, it becomes apparent that a tax policy change directly
causing a net tax revenue gain to any district only requires advance voter
approval when the gain exceeds one of the subsection (7) revenue limits.
Otherwise, the inclusion of the specific revenue limits would be unnecessary and
redundant.
203 P.3d at 529; DOR Response/Reply at 15. DOR takes this language out of context. The
Court used this language in a context where an election pursuant to subsection (4)(a) would have
been redundant. Mesa County, 203 P.3d at 529; see also Huber, 264 P.3d at 892 n.6 (The
collection of increased revenue amounts is addressed by the spending limit and refund provisions
of subsection (7) of article X, section 20, not the voter approval requirement in subsection
Bruce v. Pikes Peak Library Dist., 155 P.3d 630, 632 (Colo. App. 2007) (citing Bolt, 898 P.2d
525 (A pre-TABOR election can serve as voter approval in advance for a post-TABOR mill
levy increase); and Nicholl v. E470 Pub. Highway Auth., 896 P.2d 859, 873 (Colo. 1995)
(finding that a voter approved [subsection (7)] revenue change prior to TABOR need not be
approved again after TABORs passage).
15

(4)(a).). That is not the situation in the instant case. Here, the voters have only granted the
districts authority to levy sales and use taxes on certain items. See Part II, supra. If the districts
want to levy taxes on other items, and spend revenue from the collection of those taxes, then they
must have an additional subsection (4)(a) election. Such an election would not be redundant, but
necessary. Therefore, the Mesa County language is inapplicable in this case.
Secondly, Defendants argue that the Foundation must prove that the districts actually
realized a net tax revenue gain in order for this Court to hold that the districts violated TABOR.
Although the districts supported the passage of HB13-1272 because it was clear that levying
taxes on the items in HB13-1272 would result in a net tax revenue gain, they shamelessly argue
that the result of their own actions is unclear. See Foundation Memo. at 2125 (demonstrating
that the districts supported HB13-1272 because of the anticipated revenue gain if they levied
taxes on the items in the bill); Exhibit 28-J (RTD resolution supporting HB13-1271 and
providing that receipt of additional revenue will accelerate RTDs funding of these designated
projects . . . .); Exhibit 27-J (Minutes of meeting noting that SCFD was advised that levying
taxes on the items in HB13-1272 would result in increased revenues.). Defendants essentially
ask for this Court to find all tax policy changes unreviewable under TABOR unless a plaintiff
can produce evidence the districts will not collect or provide. Under their argument, it does not
matter if a district knows that a tax policy change will result in a revenue gain, so long as the
district can avoid collecting enough data to prevent a challenge.
Defendants interpretation does not keep taxpayers informed and, in fact, does the exact
opposite. It allows governments to circumvent TABOR without notice to the taxpayers by
refusing to keep adequate records. An interpretation of TABOR that gives it no force should not
be adopted by this Court. Patterson Recall Comm., Inc. v. Patterson, 209 P.3d 1210, 1215
16

(Colo. App. 2009) (A court should avoid an unreasonable interpretation [of a constitutional
amendment] or one that produces an absurd result.).
Furthermore, even if this Court adopts Defendants interpretation of TABOR, the record
demonstrates that the districts realized a net tax revenue gain as a result of levying taxes on the
items in HB13-1272. Defendants concede that the districts have taken in more money this year,
but they argue that there are too many variables too consider. See DOR Response/Reply at 15.
By looking at and isolating the variables, however, one can determine whether the levying of
sales taxes on items in HB13-1272 resulted in a net tax revenue gain for the districts.
The Leeds report provides that RTDs levying of taxes on the items in HB13-1272 would
generate a net increase of $2.7 million in 2012 dollars, or 6% of 2012 RTD total revenue.
Exhibit 31-J at 3. The Report lists the other possible variables it considered when it calculated
the approximate impact of levying sales tax on the items in HB13-1272. The Report provides
that Colorado retail trade is projected to grow 7.3% and 7.8% in 2014 and 2015, respectively.
Continued growth is supported by expected increases in personal income and employment that is
anticipated to exceed the national average. Exhibit 31-J at 4. Defendants respond that
everything in the Leeds Report is an approximation. Those approximations, however, are
confirmed by recent data collected by the state. The Colorado Secretary of States quarterly
report for the first quarter provides that [r]etail sales improved 1.8% in the last quarter and were
up 4.8% annually. Colorado Secretary of State, Quarterly Business & Economic Report, First
Quarter 2014 at 5, http://www.sos.state.co.us/pubs/business/quarterlyReports/2014-Q1.pdf (last
visited November 21, 2014).17 Therefore, if anything, the Leeds Report overestimated the retail
17

A copy of the Report is attached hereto as Exhibit M. The Report is produced by the Leeds
School of Business on behalf of the Colorado Secretary of State.
17

trade growth and, as a result, underestimated the potential impact of levying taxes on the items in
HB13-1272.18
The rate increase in sales and use tax returns far exceed even the liberal projections in the
Leeds Report. As demonstrated previously, RTD received a 10.24% increase in revenue and
SCFD received a 9.29% increase in revenue during the first four months of 2014. Foundation
Memo at 23, 25. Therefore, the districts received more revenue than can be attributed to retail
growth alone. Accordingly, the districts tax policy changes resulted in a net tax revenue gain
and must be enjoined until the districts receive voter approval.19

18

The Leeds Report also provided that the districts revenue would increase as a result of retail
marijuana sales, but these additional sales cannot solely account for the districts increase in
revenue. Exhibit 31-J at 3 (As a result, RTD sales tax revenues from marijuana sales increased
by $99,000 in January. The new revenue stream will increase as more RTD tax districts allow
the operation of retail marijuana shops. As part of a separate study, the BRD research team
found that marijuana tax revenues increased approximately 18% in Denver County after retail
sales were allowed.).
19
Cross-motions for summary judgment are treated separately under the standards applicable to
each. See McKinney v. Cadleway Properties, Inc., 548 F.3d 496, 504 n.4 (7th Cir. 2008). The
Foundation has produced enough evidence to support its motion for summary judgment and shift
the burden of persuasion to Defendants. See Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)
(a party seeking summary judgment always bears the initial responsibility of informing the
district court of the basis for its motion.). Defendants have not attempted to refute this evidence
and, as a result, this Court should grant the Foundations motion for summary judgment. Id.
([A] complete failure of proof concerning an essential element of the nonmoving party's case
necessarily renders all other facts immaterial.). Furthermore, by providing evidence that the
districts realized a net tax revenue gain, the Foundation has met its burden to defeat Defendants
motions for summary judgment. At the very least, Defendants motions should be denied
because the Foundation has produced enough evidence to demonstrate that a reasonable trier of
fact could find that RTD and SCFD realized a net tax revenue gain as a result of levying taxes on
the items in HB13-1272. Mt. Emmons Min. Co. v. Town of Crested Butte, 690 P.2d 231, 239
(Colo. 1984) ([A]s long as a reasonable trier of fact nevertheless could draw divergent
inferences from the application of the legal criteria to the facts, summary judgment should be
denied.).
18

IV.

THIS COURT SHOULD NOT APPLY ANY JUDICIALLY CREATED

EXCEPTIONS TO TABOR.
Defendants argue that, even if this Court finds that Defendants actions violate TABOR,

that it should not grant the Foundations motion for summary judgment because of two purported
judicial exceptions to TABOR. Defendants argue that any revenue gained from levying taxes on
HB13-1272 is de minimis, and that enjoining the districts from levying those taxes would curtail
the everyday functions of the districts. As demonstrated previously, the burden is on Defendants
to prove any purported judicial exception to TABOR. Foundation Memo at 2627. Because
Defendants have failed to meet their burden this Court should not apply any purported judicially
created exception.
As demonstrated previously, the only support for a judicially created de minimis
exception comes from dicta in Mesa County which stated that tax policy changes that have a
de minimis impact may not violate TABOR. Mesa County, 203 P.3d at 529. The de minimis
exception is not included in the text of the Colorado Constitution and, as a result, this Court
should not apply a judicially created exception referenced in dicta. See Foundation Memo at 26
27. Even if this Court applies the exception, the only definition of de minimis offered by the
Colorado Supreme Court is where the cost of the election could exceed the additional revenue
obtained. Mesa County, 203 P.3d at 529. Defendants have not attempted to demonstrate that
the perpetual increase in revenue from levying taxes on the items in HB13-1272 would be less
than the one-time cost of an election. Accordingly, this Court should not excuse Defendants
TABOR violations for being de minimis.20
20

Furthermore, adopting the de minimis exception would set a precedent to allow government
districts to make several de minimis tax policy changes in order to get around TABORs
limitation.
19

Defendants have also failed to demonstrate how preventing the districts from levying
taxes on the items in HB13-1272 until voters approve the taxes will prevent the districts from
operating. SCFD argues that H.B. 13-1272 did significantly aid SCFD in its everyday activity of
levying and collecting sales taxes . . . .. SCFD Response/Reply at 15. Where complying with the

Constitution would, at most, result in a mere inconvenience for a governmental entity, the
cripple the everyday workings of government exception does not apply. See In re Submission
of Interrogatories on House Bill 99-1325, 979 P.2d 549, 557 (Colo. 1999) (Stating, as an
example, that TABOR could not be interpreted so literally that it would prevent a local
government from entering into a multiple year lease-purchase agreement for equipment, like
copy machines or computers.). If enjoined from levying taxes on the items in HB13-1272, the
districts will still be able to operate without limitation, and they will still be able to provide their
services. Accordingly, the districts are not at risk of being crippled by complying with the
Constitution, and this Court should not use any exception to excuse the districts TABOR
violations.
CONCLUSION
For the foregoing reasons, this Court should grant Plaintiffs Cross-Motion for Summary
Judgment, deny Defendants Motions for Summary Judgment, and grant the relief requested in
Plaintiffs First Amended Complaint.
DATED this 21st day of November 2014.
E-filed in accordance with C.R.C.P. 121, 1-26.
Respectfully submitted,
/s/ Jeffrey W. McCoy
Jeffrey W. McCoy
Steven J. Lechner
20

Mountain States Legal Foundation

2596 South Lewis Way
Lakewood, Colorado 80227
(303) 292-2021
jmccoy@mountainstateslegal.com
lechner@mountainstateslegal.com
Attorneys for Plaintiffs

21

CERTIFICATE OF SERVICE
I certify that on the 21st day of November 2014, the foregoing document was filed with
the Court and true and accurate copies of same were served on counsel of record via the
Integrated Colorado Courts E-Filing System.
/s/ Jeffrey W. McCoy
Jeffrey W. McCoy