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

Colorado lawmakers moved a bill forward this week that would reduce future TABOR refunds by about $300 million, but the measure remains mired in legal and accounting disputes.

The Senate Appropriations Committee advanced HB26-1419 on a 4-3 vote on May 6 after a tense debate over whether the state can legally use the bill to reduce refunds. The House had already passed the measure 41-21 on April 30.

The bill would require the state controller to determine the amount of any over-refund for fiscal 2024-25 and then reduce future TABOR refunds. Legislative staff projects the measure would cut refunds by $136.1 million in fiscal 2026-27 and $153.0 million in fiscal 2027-28.

Lawmakers also amended the bill so it would not take effect unless the state collects a TABOR surplus in fiscal 2025-26. Even with that change, concerns remain about accounting rules, clean-opinion risk and the possibility of lawsuits.

The core dispute is whether the state’s earlier refund certification was wrong or whether the proposed correction itself would create new legal problems. Supporters say the measure corrects an over-refund tied to federal tax-law changes, while opponents argue the refund was properly certified and should not be revisited.

The bill now heads to the full Senate, where the legal fight may matter as much as the budget numbers.