TABOR Foundation, a Colorado non-profit corporation, Plaintiff-Appellant,
Colorado Bridge Enterprise; Colorado Transportation Commission; Trey Rodgers, Gary M. Reiff, Heather Barry, Kathy Gilliland, Kathy Connell, Douglas Aden, Steve Parker, Les Gruen, Gilbert Ortiz, and Edward J. Peterson, all in their official capacity as a member of the Colorado Transportation Commission, Defendants-Appellees
City and County of Denver District Court No. 12CV3113. Honorable Michael A. Martinez, Judge.
James M. Manley, Denver, Colorado; Steven J. Lechner, Lakewood, Colorado, for Plaintiff-Appellant.
John W. Suthers, Attorney General, Harry S. Morrow, Assistant Attorney General, Megan Paris Rundlet, Assistant Attorney General, Robert C. Huss, Assistant Attorney General, Denver, Colorado, for Defendant-Appellee Colorado Bridge Enterprise.
Recht Kornfeld, P.C., Mark G. Grueskin, Denver, Colorado, for Defendants-Appellees Colorado Transportation Commission, Trey Rodgers, Gary M. Reiff, Heather Barry, Kathy Gilliland, Kathy Connell, Douglas Aden, Steve Parker, Les Gruen, Gilbert Ortiz, and Edward J. Peterson.
Berger and Má rquez[*], JJ., concur.
[¶1] In this proceeding involving the Taxpayer's Bill of Rights (TABOR), Colo. Const. art. X, § 20, plaintiff, TABOR Foundation (Foundation), appeals the judgment denying its claims for injunctive relief and declaratory judgment against the Colorado Bridge Enterprise (CBE); the Colorado Transportation Commission (Commission); and the individual members of the Commission, Trey Rodgers, Gary M. Reiff, Heather Barry, Kathy Gilliland, Kathy Connell, Douglas Aden, Steve Parker, Les Gruen, Gilbert Ortiz, and Edward J. Peterson, all in their official capacities. The trial court held that the CBE did not levy a TABOR-prohibited tax when it imposed a bridge safety surcharge, but instead imposed a permissible fee. It further held that the CBE operates as a TABOR-exempt enterprise and did not violate TABOR by issuing bonds without submitting the matter to voters in a statewide election. We affirm.
I. Background and Procedural History
[¶2] In 1992, Coloradans adopted TABOR, which limits the power of the state, its subdivisions, and its districts to levy taxes or create debt. See id. TABOR requires voter approval for any new tax and for the issuance of debt. Id. at § 20(4)(a), (b). Enterprises, as defined by TABOR, are exempt from TABOR's voter approval requirements. See id. at § 20(2)(b), (4).
[¶3] In 2009, the General Assembly created the CBE through the " Funding Advancements for Surface Transportation and Economic Recovery Act" (FASTER). See § 43-4-805, C.R.S. 2013. The statute defines the CBE as a " government-owned business" within the Colorado Department of Transportation (CDOT), § 43-4-805(2)(a)(I), and authorizes the CBE to impose a bridge safety surcharge in order to finance, repair, reconstruct, and replace any designated bridge
in the Colorado highway system, without being subject to TABOR. See § 43-4-805(2)(b), (c). The General Assembly also declared the CBE to be an enterprise exempt from TABOR requirements. § 43-4-805(2)(c).
[¶4] The CBE's continuing exemption from TABOR depends on the source and amount of its revenue. Colo. Const. art. X, § 20(2)(d); § 43-4-805(2)(c). Essentially, so long as the CBE retains the authority to issue revenue bonds and receives less than ten percent of its total revenues in grants from all Colorado state and local governments combined, it is not subject to TABOR. See § 43-4-805(2)(c).
[¶5] Although the CBE is within CDOT, the two have separate financial accounting and reporting systems and maintain separate financial administration. Within the state treasury, there are separate funds for CDOT and the CBE. The General Assembly retained no authority to spend CBE funds; instead, all CBE revenues are spent under the exclusive authority of the CBE's Bridge Enterprise Board, composed of members of the Commission. See § 43-4-805(2)(a)(I).
[¶6] The General Assembly authorized the CBE to impose the bridge safety surcharge " at rates reasonably calculated to defray the costs of completing designated bridge projects and distribute the burden of defraying the costs in a manner based on the benefits received by persons paying the fees and using designated bridges." § 43-4-805(1)(b)(II). The General Assembly empowered the CBE to impose the surcharge on and after July 1, 2009, upon any vehicle for which a registration fee must be paid, and specified the amount of the charge, which depends upon the type and weight of the particular vehicle. § 43-4-805(5)(g)(I). The greater the weight, the greater is the charge, because heavier vehicles cause more significant impact and do more to shorten the lifespan of a bridge. The charge and the rate do not depend on a particular vehicle's actual use of a CBE bridge.
[¶7] Revenue generated from the bridge safety surcharge is credited to the CBE's treasury account, and the use of such revenue is restricted to the CBE's statutorily-defined purpose of financing, repairing, reconstructing, and replacing any designated Colorado highway bridge. See § 43-4-805(2)(b). None of the CBE's revenue is available for general expenses of the state, and none of the fee revenue is credited to the state's general fund.
[¶8] In addition to revenue from the bridge safety surcharge, the Commission authorized the CBE to receive up to $15 million in reimbursement from federal transportation funds that were allocated to Colorado in fiscal year 2011. To be eligible for this federal reimbursement, the CBE had to apply directly to the Federal Highway Administration (FHWA). The FHWA reviews applications, and, in its sole discretion, approves or denies the reimbursement requests. In fiscal year 2011, the CBE applied for and received $14.4 million from the FHWA for reimbursement for bridge projects. These reimbursement funds were credited directly to the CBE's treasury account and did not pass through CDOT's accounts.
[¶9] The CBE's treasury account also contains funds from bond proceeds. In fiscal year 2011, the CBE issued $300 million in bonds. No public vote was held to authorize the CBE to issue these bonds.
[¶10] In 2011, the CBE received revenue from the bridge safety surcharge, federal funding, and property transfers from CDOT. The CBE's total revenue for fiscal year 2011 was $78.5 million. Also in fiscal year 2011, CDOT transferred fifty-six deteriorated bridges and associated design work to the CBE. All of those bridges were in use at the time of transfer. They were valued under a depreciation method, and only two of the bridges were deemed to have value for TABOR purposes. The remaining fifty-four bridges each had a depreciated value under $500,000 and, under the state's accounting principles, were given a value of $0 for TABOR purposes. The CBE never calculated a fair market value for the bridges.
[¶11] In 2012, the Foundation commenced this action, asserting that defendants had violated the rights of the Foundation's members under TABOR to vote on new taxes and debt issuance. The Foundation contended
that (1) the CBE's bridge safety surcharge was a tax and the CBE levied it without first seeking voter approval; and (2) the CBE must have voter approval before issuing debt because it does not qualify as a TABOR-exempt enterprise, since it has the power to tax and it received more than ten percent of its 2011 revenue from state grants.
[¶12] At trial, the parties presented evidence that the state has approximately 3500 bridges in the state highway system. However, only 168 bridges have been identified as eligible for CBE funding. These bridges are located in thirty-seven of the sixty-four Colorado counties. Twenty-seven counties, including Grand County, do not have a CBE-designated bridge within their borders. At the time of trial, the CBE had no plans to budget a repair or replacement of a bridge in Grand County.
[¶13] The Foundation called two of its members from Grand County to testify at trial. They objected to paying the bridge safety surcharge on at least one of their vehicles because that vehicle was used only within Grand County and therefore never used a CBE-designated bridge. However, both witnesses testified that they did take or allow other vehicles to be taken out of the county and may have received the benefits of the bridge safety surcharge as to those vehicles.
[¶14] Both the Foundation and the CBE called expert witnesses in accounting. The Foundation's expert opined that the fifty-six transferred bridges should have been evaluated under a fair market value standard as opposed to a depreciation method. He further testified about the condition of the two valued bridges, opined that the CBE had undervalued them, and stated that the remaining fifty-four bridges had value for TABOR purposes.
[¶15] In contrast, the CBE's expert witness, a former State Controller, testified that in practice, the State Controller's Office makes TABOR calculations using general accepted accounting principles promulgated by the Governmental Accounting Standards Board because it must maintain a unified system of accounts. These standards required CDOT to use either the " modified" approach or the " depreciation" approach to valuation, and CDOT had used the latter. The expert further testified that had CDOT used a fair market value approach, the valuation would have been questioned by the State Auditor.
[¶16] At the conclusion of trial, the trial court made extensive findings of fact and found in favor of defendants on both claims. This appeal followed.
II. Is the Bridge Safety Surcharge a Tax?
[¶17] The Foundation contends that the surcharge is a tax because it is collected without regard to any services utilized by the vehicles for which the charge is imposed and thus fails to meet the definition of a TABOR-exempt fee. We disagree.
A. Standard of Review for TABOR Issues
[¶18] We review a trial court's factual findings under the clear error standard. DiCocco v. Nat'l Gen. Ins. Co., 140 P.3d 314, 316 (Colo.App. 2006). We review a trial court's legal conclusions concerning the interplay of TABOR and related statutes de novo. HCA-Healthone, LLC v. City of Lone Tree, 197 P.3d 236, 240 (Colo.App. 2008).
[¶19] Where multiple interpretations of TABOR are equally supported by the text, a court should choose that interpretation which it concludes would create the greatest restraint on the growth of government. Bickel v. City of Boulder, 885 P.2d 215, 229 (Colo. 1994) (citing Colo. Const. art. X, § 20(1)). The proponent of an interpretation has the burden of establishing that its proposed construction of TABOR would reasonably restrain the growth of government more ...