Jena Griswold, in her official capacity as Secretary of State; Colorado Department of State; and State of Colorado, Petitioners/Cross-Respondents
National Federation of Independent Business. Respondent/Cross-Petitioner
Certiorari to the Colorado Court of Appeals Court of Appeals
Case No. 15CA2017
Attorneys for Petitioners/Cross-Respondents: Phillip J.
Weiser, Attorney General Grant T. Sullivan, Assistant
Solicitor General Emily Buckley, Assistant Attorney General
Attorneys for Respondent/Cross-Petitioner: Brownstein Hyatt
Farber Schreck, LLP Christopher O. Murray Van Aaron Hughes
Emily R. Garnett Denver, Colorado.
Attorneys for Amici Curiae City and County of Denver and the
Colorado Municipal League: City and County of Denver Kristin
M. Bronson, Denver City Attorney David W. Broadwell Denver,
Attorneys for Amici Curiae Pacific Legal Foundation,
Goldwater Institute, TABOR Foundation, and Colorado Union of
Taxpayers Foundation: Pacific Legal Foundation James M.
Manley Phoenix, Arizona.
Pacific Legal Foundation Jeffrey W. McCoy Sacramento,
This case provides us another opportunity to examine the
implications of the Taxpayer's Bill of Rights
("TABOR"). At issue now is how Colorado's
Department of State ("the Department") charges for
some of its services-for example licensing businesses-to then
fund its general operations, which include overseeing
elections. It is this funding scheme that the National
Federation of Independent Business ("NFIB") argues
is unconstitutional under TABOR.
TABOR requires advance voter approval for any new tax, tax
rate increase, or tax policy change directly causing a net
tax revenue gain to any district. It applies prospectively.
Therefore, to establish that a charge violates TABOR, NFIB
must show: (1) that the charge is a tax; and (2) that the
charge post-TABOR constituted a new tax, tax rate increase,
or tax policy change.
Through this TABOR lens, we examine the statute in question.
Section 24-21-104(3)(b), C.R.S. (2019), directs the
Department to "adjust its fees so that the revenue
generated from the fees approximates [the Department's]
direct and indirect costs." This fluctuating scheme for
self-funding has been in place for nearly thirty years. So,
the scheme predates TABOR by nearly a decade, but there have
been adjustments to charges since TABOR's enactment.
NFIB contends that these adjustments violate TABOR. First,
NFIB argues that the charges are really taxes because there
is no reasonable relationship between the Department's
charges and the government functions funded by the charges.
Second, NFIB asserts that any increase in the charges after
TABOR's enactment in 1992 constitutes either a new tax,
an increase in a tax rate, or a tax policy change-all
requiring voter approval, which has never occurred.
Because we disagree with NFIB's second contention, we
need not address its first. Based on the stipulated facts, we
conclude that there was no evidence to establish that any
post-TABOR adjustments resulted in a new tax, tax rate
increase, or tax policy change directly causing a net revenue
gain. Thus, the trial court properly granted summary
judgment. Consequently, we need not, and therefore do not,
reach the issue of whether the charges authorized by section
24-21-104 are taxes under TABOR.
Facts and Procedural History
The Department and Section 24-21-104
Almost since statehood, the Department has been responsible
for many of the most vital administrative functions of the
government, including registering and licensing businesses.
For over fifty years, the Department has also been
responsible for overseeing state elections. Ch. 334, sec. 2,
§ 49-1-11, 1967 Colo. Sess. Laws 687, 687.
Since the Department's inception, the Secretary of State
("the Secretary") has collected charges for its
services. See Ch. 34, 1877 Colo. Gen. Laws 425, 427.
In 1877, the General Assembly directed the Secretary to
collect "fees" for military commissions, notary
public commissions, foreign commissions, any other commission
or appointment to which the state seal would be affixed,
official certificates, filing and recording certificates of
incorporation, and for any copies or transcripts of papers
and records. Id. The General Assembly also set the
amount the Secretary would charge and collect for these
services. See id. ("For each military
commission, two dollars and fifty cents; for each notary
public's commission, five dollars . . . ."). The
Secretary would then transfer the charges to the state
treasurer on a monthly basis. Id.
In the 1980s, the General Assembly began tinkering with the
Department's funding scheme. See, e.g., Ch. 76,
sec. 7, § 24-21-104, 1981 Colo. Sess. Laws 429,
430–31. Though the General Assembly continued to set
the amount of the Department's charges, it directed the
Department to "propose, as part of its annual budget
request, an adjustment in the amount of each fee which the
secretary . . . is authorized . . . to collect."
Id. at 431. The General Assembly also specified that
the budget request should "reflect [the] direct and
indirect costs" of the Department. Id.
In 1983, the General Assembly settled on a funding mechanism
for the Department-the same mechanism in effect today. Ch.
256, sec. 1, § 24-21-104, 1983 Colo. Sess. Laws 861,
861–62; see also § 24-21-104(3). As part
of the 1983 amendments, the General Assembly jettisoned the
set list of charges and directed the Department to
"adjust its fees . . . so that the revenue generated
from said fees approximates its direct and indirect
costs." See 1983 Colo. Sess. Laws at
861–62. The General Assembly also created the
Department of State Cash Fund. Id. All collected
charges must be credited to that fund and only used to
finance the Department. See id.
So, as it stands now, the Secretary has the discretion to
set, increase, decrease, or temporarily suspend the
Department's charges without legislative oversight.
See § 24-21-104(3)(b). That said, the Secretary
cannot set these charges at whatever level she wishes-they
must be adjusted "so that the revenue generated from the
fees approximates [the Department's] direct and indirect
costs." See id. But this is the only guiding
principle included in the statute. There is no statutory
formula, base rate, or adjustment factor to further constrain
In 1992, nine years after the legislature created the current
funding scheme for the Department, Colorado voters adopted
TABOR. See Colo. Const. art. X, § 20.
TABOR requires voter approval before the imposition of
"any new tax, tax rate increase, . . . or . . . tax
policy change directly causing a net tax revenue gain to any
district." Colo. Const. art. X, § 20(4)(a). A
charge is a "tax" if its "primary purpose is
to raise revenue for general governmental use."
Colo. Union of Taxpayers Found. v. City of
Aspen, 2018 CO 36, ¶ 26, 418 P.3d 506, 513. It
isn't a tax if it "is imposed as part of a
comprehensive regulatory scheme, and if [its] primary purpose
. . . is to defray the reasonable direct and indirect costs
of providing a service or regulating an activity under that
TABOR "also limits the growth of state revenues, usually
met by tax increases, by restricting the increase . . .
unless voter approval for an increase in spending is
obtained." In re Submission of Interrogatories on
Senate Bill 93-74, 852 P.2d 1, 4 (Colo. 1993) (citing
Colo. Const. art. X, § 20(7)(a)). "Its purpose is
to 'protect citizens from unwarranted tax increases'
and to allow citizens to approve or disapprove the imposition
of new tax burdens." Huber v. Colo. Mining
Ass'n, 264 P.3d 884, 890 (Colo. 2011) (quoting
Senate Bill 93-74, 852 P.2d at 4).
TABOR only applies prospectively to statutes imposing new
taxes, tax rate increases, or tax policy changes enacted
after November 4, 1992. See id. at 891. However, a
pre-TABOR statute can still violate TABOR if the statute
constitutes a new tax, tax ...