Colorado voters approve $2.6 billion in new state revenue

Colorado voters approved more than $2.6 billion in new state spending for the coming year on Tuesday, marking the largest shift in the state's fiscal policy since the Taxpayer's Bill of Rights, known as TABOR, was enacted in 1992. The passage of Proposition NN and Amendment 87 dismantles decades of legal restrictions on government growth and revenue collection.

The measures replace the state's flat 4.4% income tax with a graduated system that increases rates for individuals and businesses earning more than $500,000. Amendment 87 is projected to generate over $2 billion in its first year. This revenue is designated for healthcare, education, and childcare, which constitute the state's largest budgetary categories.

Proposition NN allows the state to retain tax revenue that would previously have been refunded to residents under TABOR. The retained funds will support K-12 schools and early childhood programs. In 2027, this provision is estimated to add roughly $500 million to school and childcare budgets.

Lawmakers previously faced a projected budget shortfall exceeding $1 billion. With the new measures, the state now possesses expanded spending authority. Rep. Lorena Garcia, an Adams County Democrat, described the change as transformational, stating that the previous tax policy was no longer working for the state's residents. She plans to introduce legislation early next year to implement the measures.

The new funding does not resolve all structural budget issues, particularly the rising cost of Medicaid. Sen. Judy Amabile, a Boulder Democrat, warned that without controlling Medicaid growth, the new revenue could be absorbed within three to four years. Lawmakers must determine how to allocate the funds while adhering to the specific spending categories outlined in the amendments.

Gov.-elect Phil Weiser, who supported Proposition NN but criticized Amendment 87 for a lack of clarity, said he would implement the measures effectively. Opponents, including the Colorado Chamber of Commerce, argued the tax increase would hinder business growth. CEO Loren Furman stated the measure penalizes small business owners for achieving financial success.

The vote serves as a referendum on TABOR, which has limited state government size for 34 years. While the core requirement for voter approval of tax increases remains, the era of strict austerity and mandatory taxpayer rebates has ended. The legislature now faces the task of establishing clear guidelines for spending to maintain public trust.