Colorado needs to return hundreds of millions of dollars to its taxpayers, plus interest, because new “taxes” assessed over the past few years for bridge repairs never were approved by voters, as required by the state constitution, according to a new lawsuit.
The action was brought by the Mountain States Legal Foundation, a non-profit, public-interest legal organization dedicated to individual liberties, the free enterprise system, limited government and the right to own and use property.
“In clear violation of [the Taxpayer's Bill of Rights], the general assembly enacted and [the Colorado Department of Transportation] implemented a scheme to levy taxes and raise revenues without a vote of the people of Colorado,” said William Perry Pendley, a spokesman for the MSLF.
It was in 2009 when the state legislature passed Senate Bill 09-108, which was called the “FASTER” bill. It provided the creation of the Colorado Bridge Enterprise, a government-owned business chartered to repair and maintain bridges.
Previously, that work had been done directly by the state road department, which is run by an 11-member board. That same board now runs the “Bridge Enterprise.” In addition, CDOT’s executive director is the chief of the Bridge Enterprise, and the state agency’s chief financial officer is the CFO of the enterprise.
The law collects a “bridge safety surcharge” whenever a vehicle is registered anywhere in Colorado, the lawsuit explains.
But it’s actually a tax, since “almost half of Colorado’s 64 counties will receive no direct benefit from the Bridge Enterprise.” Nevertheless, residents still must pay the “same bridge tax as residents of the counties allegedly benefited by the tax,” the lawsuit explains.
Fees, the suit asserts, are linked somehow to the provision of a service or benefit, such as a fee for a college dorm room or a recreation center access or towel fee; and without that link, the charge only can be described as a tax.
“Government-owned enterprises, which are exempt from TABOR if 90 percent self-supporting and operating independently from state government, cannot levy taxes; they may only assess fees for their services,” the organization explains.
The violations are to the Colorado Constitution’s Taxpayer’s Bill of Rights, and the lawsuit names the Bridge Enterprise as well as the Colorado Transportation Commission as defendants.
The action seeks declaratory and injunctive relief and an “order requiring refund of all revenues collected, along with the payment of interest, as required by TABOR.”
Citizens who register vehicles have been paying about $40 per year per vehicle, including for rarely used trailers, since the lawmakers imposed the assessment. It has generated an estimated $200 million a year.
WND previously reported on the dispute, when the Democrat-controlled legislature, concerned that voters would not approve new taxes, created the “enterprise” and said it could charge “fees” for the same work that taxes previously had funded.
A think tank in Golden, Colo., subsequently published a series of commentaries from analysts who said it appeared to have been a maneuver to collect taxes while calling them fees.
Analyst Tom Ryan, whose critique was published recently by the Independence Institute, said the lawmakers relied “on distortions and deliberate misdirections to subvert Colorado’s Constitution and silence the voice of the people.”
The state Constitution’s TABOR amendment, adopted by voters in 1992, requires voter approval to either raise taxes or borrow money. And that is exactly what lawmakers did, said Ryan, a financial expert with Analyst Strategy Group.
Only they called it something else.
“The bill depends on continued silence for its provisions to move forward. Under FASTER (the disputed law) Colorado families are being forced to pay an unconstitutional tax of almost $100 million annually. This tax hits everyone who registers a vehicle in the state squarely in the pocketbook – a tax that was enacted directly by the legislature without a vote of the people.”
Joining him in criticism of the apparent snub to voters who approved the TABOR amendment was Richard Sokol, a business owner and member of the advisory board of the Leadership Program of the Rockies. He holds a degree in economics from Yale and an MBA from Harvard.
“The law allows an unelected group of bureaucrats to appoint an unelected administrator and together borrow whatever amounts of debt can be backed by FASTER funds. On December 1, 2010, they did just that. And now Colorado’s citizens are burdened with $300 million of newly issued debt – with the promise of more to come. … All this, and we weren’t asked!”
The law was signed by then-Gov. Bill Ritter, a Democrat.
Sokol explained the issue briefly: “The Taxpayer’s Bill of Rights … passed by voters in 1992 and thus enshrined in the state constitution mandates that the state ‘must have voter approval in advance for … creation of any debt.’ It does not prohibit the state or a district government from borrowing money; it only stipulates that citizens be asked first.”
The Taxpayers’ Bill of Rights also requires voter approval for tax increases. An exception was created for “enterprises,” so that a towel fee at a publicly owned recreation center could be raised without a vote, or a university dorm fee could be raised without an election.
Sokol noted other state “enterprises,” such as a state university or a nursing home system, “sell a good or service to customers, and they compete for those customers with other businesses.”
“Only willing buyers who actually use the service pay for it,” he said.
However, he said the “Bridge Enterprise” diverges from that plan in several ways.
Under its provisions, “every person who registers a car in Colorado pays on average an extra $18 a year that is designated for the Bridge Enterprise, in addition to an extra $23 per year for road safety.”
“The $41 annual payment is called a ‘fee’ rather than a ‘tax,’ which is nonsensical in itself. … Enterprises cannot be funded by taxes.”
He continued, “Now every Coloradan who registers a car is considered a ‘customer’ of the Bridge Enterprise. It does not matter whether the car is driven over one of the designated bridges or not. In fact, there are large areas of Colorado nowhere near one of the designated bridges.
“And out-of-state car owners don’t pay at all, even if they constantly use the bridges.”
Then came the decision by the “enterprise” – actually members of the state Transportation Commission who also run the state highway department – to borrow the hundreds of millions.
Observed Sokol, “The Bridge Enterprise and CDOT do the same work overseen by the same managers. The same people are board members, the same person is executive director and the chief financial officers for the two groups – the same person.”
That person, Ben Stein, confirmed to WND that of the “enterprise” purposes – the “financing, repair, reconstruction and replacement of bridges” – the only function that could not have been performed by the state agency itself was the financing.
A spokeswoman for the state agency, Mindy Crane, also confirmed to WND, “We have a fair amount of people on staff who are involved in it.”
“The state lottery allows someone to decide whether or not to buy a lottery ticket. The more lottery tickets he buys, the more he pays,” he said. “With the Bridge Enterprise, the government has decided that all Colorado car owners pay, even those who live and work nowhere near one of the 128 bridges. It does not matter whether the car crosses one of the bridges one time, a thousand times, or no times.”