Colorado bill redirecting $300M in TABOR refunds raises legal concerns, sparks budget committee dispute

Colorado lawmakers are weighing a bill that would reduce future TABOR refunds by about $300 million, but the proposal is drawing legal and accounting pushback as it moves through the legislature.

The measure, HB26-1419, is titled Over-Refund of Excess State Revenues. It passed the Colorado House on April 30 and was on the Senate Appropriations agenda on May 6, where the debate turned to whether the state can legally recapture what supporters describe as an over-refund.

The bill’s fiscal note says it would reduce TABOR refunds by $136.1 million in fiscal year 2026-27 and $153.0 million in fiscal year 2027-28 under the assumptions in the analysis.

Supporters say the bill addresses an excess refund tied to federal tax-law timing after the close of fiscal year 2024-25. Legislative Council and Joint Budget Committee materials say that timing affected how the TABOR surplus was calculated.

Critics, however, say the state already certified the refund and that reopening the books could create accounting problems and legal risk. Colorado Politics reported that the Senate hearing featured questions about whether the bill could trigger a lawsuit or affect the state’s clean opinion.

The bill now moves deeper into the Senate with its central question unresolved: whether lawmakers can use the over-refund theory to redirect money already set aside for taxpayers.

If the measure advances, the next fight is likely to be over the legal footing of the proposal and whether the final fiscal effect remains close to the current estimates.