Taxpayers in Colorado are set to receive $67 million more than expected in Taxpayer's Bill of Rights (TABOR) refunds as the result of a major accounting error by the local Health Insurance Affordability Enterprise.
The mistake stems from the fact that the company, which was created in 2020 to make health insurance more affordable for Coloradans, treated the money it received as exempt from the state's revenue limits set by TABOR, as revealed by a recent audit of the enterprise which was first covered by CBS Colorado. That money was not, in fact, exempt—and the state of Colorado will now have to make up for it.
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Newsweek contacted Health Insurance Affordability Enterprise for comment.
News of the enterprise's mistake comes as Colorado Gov. Jared Polis, a Democrat, signed the $40.6 billion state budget for the fiscal year 2024-2025 into law on Monday. The budget includes $526 million for funding education, $58 million for building more housing and $30 million for public safety initiatives.
Polis' office was contacted by phone but Newsweek didn't receive an immediate response.
TABOR was introduced in 1992 as an amendment to the Colorado constitution after receiving voters' green light. It prohibits tax increases without voter approval and it limits the amount of revenue that governments in the state—including state, counties, cities, schools and special districts—can keep and spend. The amendment requires that excess revenues be refunded to taxpayers, among other measures.
Health Insurance Affordability Enterprise is funded with a two percent tax that every resident of Colorado with a state-regulated insurance plan pays on their premiums. While it wasn't clear whether the money received by the enterprise should count toward the TABOR limit, state budget director Mark Ferrandino told CBS Colorado, the Attorney General's Office decided last month that it definitely does.
Under TABOR, the enterprise's accounting error creates a shortfall of $67 million in Colorado's budget. Sen. Barbara Kirkmeyer, a Republican part of the Joint Budget Committee, is introducing a bill that would use money that would have gone to the enterprise in 2024 and 2025 to cover about $33 million of that refund, according to CBS Colorado.
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An option being considered to cover the remaining $34 million is to raise taxes on health care premiums or use the state's reserves. Colorado Republican Sen. Jim Smallwood, who represents Douglas County, told CBS journalist Shaun Boyd that the idea of raising the tax on health insurance premiums was "ludicrous," adding that he hoped the governor and his office weren't seriously considering that as an option.
"When the government makes an error, particularly when that error may affect taxpayer refunds, I feel like it is up to those in power to find the necessary cuts from 'pet projects' to make up the difference," Smallwood told Newsweek. "The thought of increasing taxes further or raiding the reserve fund seems like a lazy way to craft fiscal policy that was broken in the first place."
Newsweek contacted the offices of Kirkmeyer for comment by email on Tuesday morning.
Update 5/1/24, 4:05 a.m. ET: This article was updated to include a comment from Sen. Smallwood.
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
About the writer
Giulia Carbonaro is a Newsweek Reporter based in London, U.K. Her focus is on U.S. and European politics, global affairs ... Read more
