In Colorado, ‘fee’ is the new tax | Colorado Springs Gazette | Opinion

Tax collectors have been revived throughout the ages — from the publicans of the New Testament to the Beatles’ “Taxman” nearly 2,000 years later.

Yet, it’s unlikely anyone ever wrote a song denouncing the collection of fees. Perhaps someone should — because in Colorado, at least, taxes and fees have come to mean pretty much the same thing.

As we were reminded by a report in The Gazette this week, a dizzying array of fees — raking in a colossal amount of revenue for Colorado’s government — has been nudging aside taxes in a state governed by voter-imposed tax-limitation restrictions since 1992.

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The Taxpayer’s Bill of Rights, or TABOR, enacted into the state constitution, generally requires a vote of the people before government at any level can raise taxes. A vote is also needed before a state or local government can keep surplus revenue it has collected over the amount of growth plus inflation.

But state figures figured out years ago they don’t need voters’ permission to assess fees. So, they’ve gone on a fee spree.

As The Gazette reported, a new analysis released by Colorado’s Common Sense Institute tallies the toll. The creation of fee-collecting state “enterprises” that are exempt from TABOR has enabled government to shift ever more of its revenue sources from taxes to fees. Fees funded 46% of state spending in 1996 and since then have risen dramatically — to 71% of state spending in 2023. None of that change in state spending required voter approval.

And yet the impact on the average taxpayer — er, feepayer — is the same. As Kelly Caufield, Common Sense executive director, pointed out, “At the end of the day, it doesn’t matter if we call it a tax or a fee, these costs are driving the cost of living in our state.”

In theory, a fee is paid for a specific service that the payer opts to use. Meaning, it’s supposed to be voluntary, and it’s supposed to cover only the cost of the service provided.

But laws tested those limits long ago and, with the courts’ help, wound up stretching the definition of “fee” to cover a host of government activities that don’t necessarily serve particular users. They’re just pet projects of legislators. Or, the money is spent on basic government services such as transportation that, by rights, should be built into the state’s operating budget, funded by taxes — and subject to TABOR limits.

In the 28 years between 1992 and 2020, according to Common Sense, legislators created 24 enterprises, which together collected $20.9 billion in fees in 2020. By 2023, fee revenue had increased since 1992 by over 3,000%, far beyond population growth (62% ), to $23.3 billion, said the report.

Politicians have eluded attempts to rein in their freewheeling use of enterprises and fees.

Proposition 117, adopted by voters in 2020, required any new enterprise that collects more than $100 million in fee revenue to obtain voter approval. In response, lawmakers simply set up more enterprises to scatter new fees into more pots — keeping each under the threshold.

Let’s not give up on attempts to curb creeping fees and the enterprises they fund. It’ll take some creative thinking and perhaps another citizens initiative or two — since the Legislature isn’t about to restrain itself.

Colorado taxpayers had the good sense to embrace TABOR over 30 years ago. If given the chance, they’ll adopt a viable policy to limit fee abuse, as well.

Colorado Springs Gazette Editorial Board