Proposition 117: Voter Approval Requirement For Creation Of Certain Fee-Based Enterprises, Explained

October 12, 2020

Voting yes for Proposition 117 would give voters the final decision-making authority when the state government wants to create certain new “enterprises,” which are funded by fees. Voting no would keep the system as it is, allowing lawmakers to create new fees and enterprises without direct voter approval.

Under Prop. 117, lawmakers would have to get voters’ permission before creating a new “enterprise” that collects more than $100 million in fees over its first five years. It would not affect existing enterprises, such as the state’s health care and transportation enterprises.

A simple majority is required for the proposition to pass. 

This measure is part of a bigger, decades-long fight over how to pay for government in Colorado. It would essentially broaden the power given to voters in the Taxpayer’s Bill of Rights. TABOR ensures that Colorado cannot raise taxes without the approval of voters. But it did not give them authority over fees.

Taxes and fees are fairly similar in Colorado. Both are payments that residents must make to the government to pay for services. The primary difference is that taxes are used to pay for the general expenses of the government. For example, income taxes flow into the general fund, where lawmakers can then spend on general government purposes. 

A fee is supposed to be used to cover a specific government purpose that is directly related to the payment of the fee, according to the Colorado Supreme Court. For example, if you pay a fee to use a toll road, that money goes to a transportation “enterprise” which is legally required to use that money on transportation projects

Fees have played an increasingly important role in how Colorado funds its government since TABOR passed in the 1990s. Today, fee-powered enterprises make up about 20 percent of the state’s budget.

Tax increases are very, very difficult to pass in Colorado. Voters have rejected the vast majority of tax proposals, whether it’s for schools or roads.

Lawmakers have turned to fees instead, and they go far beyond extra charges for a driver’s license. The state’s “hospital provider fee” collects hundreds of millions of dollars per year from hospitals based on the number of patients they serve. And state lawmakers considered funding a paid family leave bill by instituting a fee equal to a portion of people’s paychecks.

Fee-funded enterprises also don’t count toward government spending limits set by TABOR. In other words, paying for a program through fees leaves the government more room to spend money elsewhere.

Some conservatives see this shift to fees as an evasion of voters’ authority. But opponents of the measure say it would only make the situation worse. They argue that lawmakers have turned to fees because voters refuse to approve needed taxes. 

If TABOR had set similar rules when it was originally created in 1992, voters would have gotten the final say over programs that collected about $7.5 billion in fees last year, ranging from college tuition to lottery tickets and hunting licenses.

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