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Tabor Foundation v. Regional Transportation District

Court of Appeals of Colorado, Second Division

June 30, 2016

TABOR Foundation, a Colorado non-profit corporation; and Penn Pfiffner, Plaintiffs-Appellants,
v.
Regional Transportation District; Bill James, Director of the Regional Transportation District; Barbara Deadwyler, Director of the Regional Transportation District; Angie Rivera Malpiede, Director of the Regional Transportation District; Jeff Walker, Director of the Regional Transportation District; Claudia Folska, Director of the Regional Transportation District; Tom Tobiassen, Director of the Regional Transportation District; Gary Lasater, Director of the Regional Transportation District; Kent Bagley, Director of the Regional Transportation District; Judy Lubow, Director of the Regional Transportation District; Larry Hoy, Director of the Regional Transportation District; Paul Daniel Solano, Director of the Regional Transportation District; Lorraine Anderson, Director of the Regional Transportation District; Natalie Menten, Director of the Regional Transportation District; Bruce Daly, Director of the Regional Transportation District; Charles Sisk, Director of the Regional Transportation District; Scientific and Cultural Facilities District; Kathryn Spuhler, Director of the Scientific and Cultural Facilities District; Kathy Kucsan, Director of the Scientific and Cultural Facilities District; Dan Hopkins, Director of the Scientific and Cultural Facilities District; Peggy Lehmann, Director of the Scientific and Cultural Facilities District; Joseph Arcese, Director of the Scientific and Cultural Facilities District; Damon Barry, Director of the Scientific and Cultural Facilities District; Robert Grant, Director of the Scientific and Cultural Facilities District; Rob Johnson, Director of the Scientific and Cultural Facilities District; Harold Logan, Jr., Director of the Scientific and Cultural Facilities District; Shepard Nevel, Director of the Scientific and Cultural Facilities District; Elaine Torres, Director of the Scientific and Cultural Facilities District; Marjorie Long, Director of the Scientific and Cultural Facilities District; Colorado Department of Revenue; and Barbara Brohl, Executive Director of the Colorado Department of Revenue, Defendants-Appellees.

         City and County of Denver District Court No. 13CV854 Honorable A. Bruce Jones, Judge

          Mountain States Legal Foundation, Jeffrey W. McCoy, Steven J. Lechner, Lakewood, Colorado, for Plaintiffs-Appellants

          Marla L. Lien, Mindy Marie Swaney, Denver, Colorado, for Defendant-Appellee Regional Transportation District

          Norton & Smith, P.C., Charles E. Norton, Denver, Colorado, for Defendant-Appellee Scientific and Cultural Facilities District

          Cynthia H. Coffman, Attorney General, Robert H. Dodd, Jr., Senior Assistant Attorney General, Terence C. Gill, Senior Assistant Attorney General, Alison K. Blair, Senior Assistant Attorney General, Denver, Colorado, for Defendant-Appellee Colorado Department of Revenue

          OPINION

          WEBB JUDGE

         ¶ 1 This case arose under the Taxpayer's Bill of Rights (TABOR), Colo. Const. art. X, § 20. Plaintiffs, TABOR Foundation and Penn Pfiffner (the Foundation), appeal the summary judgment, entered on stipulated facts, in favor of defendants, Regional Transportation District (RTD), Scientific and Cultural Facilities District (SCFD) (collectively, the Districts), and the Colorado Department of Revenue (DOR), holding House Bill (H.B.) 13-1272 constitutional.

         ¶ 2 To resolve the case, we must decide whether H.B. 13-1272 violates TABOR by failing to require that the Districts obtain voter approval before collecting sales tax on items or categories not previously taxed because those items or categories were subject to statutory exemptions that H.B. 13-1272 removed. We conclude that despite lacking an election requirement, because H.B. 13-1272 neither imposes a "new tax" nor constitutes a "tax policy change" within the meaning of TABOR, it is constitutional. Therefore, we affirm.

         I. Background

         A. TABOR

         ¶ 3 Colorado voters adopted TABOR in 1992. "TABOR limits the state's ability to levy new taxes or create new debts . . . ." Colo. Union of Taxpayers Found. v. City of Aspen, 2015 COA 162, ¶ 11. It requires advance voter approval before a district may collect "any new tax, tax rate increase, . . . or a tax policy change directly causing a net tax revenue gain to any district." Colo. Const. art. X, § 20(4)(a).

         B. Inconsistent State and District Taxation

         ¶ 4 RTD's and SCFD's enabling statutes grant them taxing power coterminous with that of the state. See Ch. 248, sec. 1, § 32-13-105(1)(a)-(c), 1987 Colo. Sess. Laws 1255-56 (SCFD's enabling statute); Ch. 285, sec. 2, § 89-20-18(2)(a), 1973 Colo. Sess. Laws 991-92 (granting RTD authority to tax); Ch. 231, sec. 1, § 89-20-18(1)(j), 1969 Colo. Sess. Laws 719 (RTD's enabling statute). But over time, as the General Assembly added and removed tax exemptions, the items or categories subject to taxation by the state and Districts became disparate.

         ¶ 5 As relevant here, the General Assembly removed the state sales tax exemption for cigarettes most recently in 2009, but the exemption remained in place for RTD and SCFD. See Ch. 354, sec. 1, § 39-26-706(1), 2009 Colo. Sess. Laws 1846 (temporarily removing the cigarette exemption); see also Ch. 304, sec. 1, § 39-26-706(1)(a)-(b), 2013 Colo. Sess. Laws 1615 (permanently removing the cigarette exemption). Thus, the state could collect taxes on cigarettes beginning in 2009, but RTD and SCFD could not.

         ¶ 6 Similarly, the General Assembly removed the exemptions for direct mail advertising materials, candy, soda, and food containers in 2010. See Ch. 5, sec. 1, § 39-26-102(15)(a)(I), 2010 Colo. Sess. Laws 38 (direct mail advertising materials); Ch. 7, sec. 2, § 39-26-707(2)(d)(I), 2010 Colo. Sess. Laws 46 (candy and soft drinks); Ch. 10, sec. 1, § 39-26-707(1)-(2), 2010 Colo. Sess. Laws 58-59 (food containers). Again, these exemptions remained in place for RTD and SCFD.

         C. H.B. 13-1272

         ¶ 7 To conform the disparate tax exemptions between the state and the Districts, the General Assembly enacted H.B. 13-1272 in 2013. It granted Districts "the power to levy uniformly throughout the district a sales tax at any rate that may be approved by the board, upon every transaction or other incident with respect to which a sales tax is now levied by the state[.]" § 32-9-119(2)(a), C.R.S. 2015 (applying to RTD); § 32-13-107(1)(a), C.R.S. 2015 (applying to SCFD). Specifically, H.B. 13-1272 removed the exemptions on candy, soft drinks, cigarettes, direct mail advertising materials, and food containers for RTD and SCFD. The Districts began collecting taxes on these categories of items in 2014. The following table summarizes the effects of H.B. 13-1272:

Item

Taxed by State pre-H.B. 13-1272?

Taxed by Districts pre-H.B. 13-1272?

Taxed by State post-H.B. 13-1272?

Taxed by Districts post-H.B. 13-1272?

Advertising Materials

Yes, most recently, as of 2010.

No

Yes

Yes

Candy

Yes, most recently, as of 2010

No

Yes

Yes

Cigarettes

Yes, most recently, as of 2009.

No

Yes

Yes

Food Containers

Yes, most recently, as of 2010.

No

Yes

Yes

Soft Drinks

Yes, most recently, as of 2010.

No

Yes

Yes

         ¶ 8 Neither RTD nor SCFD obtained voter approval after H.B. 13-1272 was enacted and before collecting taxes on these items or categories of items.

         D. This Action

         ¶ 9 The Foundation brought this action, alleging that the taxes collected by RTD and SCFD under H.B. 13-1272 are subject to TABOR's "voter approval in advance" requirement because they constitute a "new tax" and a "tax policy change directly causing a net tax revenue gain to any district." Colo. Const. art. X, § 20(4)(a).

         ¶ 10 The trial court disagreed, applied the unconstitutional beyond a reasonable doubt standard, and granted the Districts' motions for summary judgment. It ruled on two grounds.

         ¶ 11 First, H.B. 13-1272 did not constitute a "new tax" under TABOR. The court acknowledged that the General Assembly had granted the Districts the power to collect a sales tax on all items taxed by the state. Thus, while H.B. 13-1272 permitted the Districts to collect taxes on items or categories of items that had not been taxed before its enactment, "a change in the list of items that are subject to sales tax does not constitute the creation of a new tax. Rather, it is an adjustment - primarily of an administrative nature - to an existing tax."

         ¶ 12 Second, H.B. 13-1272 was not a "tax policy change." The court accorded "policy" its ordinary meaning: "a high level overall plan embracing the general goals and acceptable procedures especially of a governmental body." Then it held that "the administrative simplification contemplated by [H.B. 13-1272], on its face, is not a change in tax policy since it is not 'a high level overall plan.'"

         II. Summary Judgment Standard

         ¶ 13 An appellate court reviews de novo a trial court's order granting summary judgment. Colo. Union of Taxpayers Found., ¶ 7. Summary judgment is appropriate only when the pleadings, depositions, answers to interrogatories, affidavits, and admissions on file show there are no "genuine issue[s] as to any material fact and that the moving party is entitled to a judgment as a matter of law." C.R.C.P. 56(c). III. Whether the Trial Court Applied the Correct Legal Standard

         ¶ 14 The Foundation first contends that for three reasons, the trial court should not have applied the "beyond a reasonable doubt" standard to its claims. After examining each reason, we reject this contention.

          A. Law

         ¶ 15 An appellate court reviews de novo "whether the [trial] court applied the correct legal standard." Ledroit Law v. Kim, 2015 COA 114, ¶ 47.

         ¶ 16 Also, an appellate court examines the constitutionality of a statute de novo. Dean v. People, 2016 CO 14, ΒΆ 8. Generally, ...


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