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.
[Copyrighted Material Omitted]
Certiorari to the Colorado Court of Appeals, Court
of Appeals Case No. 15CA2017.
for Petitioners/Cross-Respondents: Phillip J. Weiser,
Attorney General, Grant T. Sullivan, Assistant Solicitor
General, Emily Buckley, Assistant Attorney General, Denver,
for Respondent/Cross-Petitioner: Brownstein Hyatt Farber
Schreck, LLP, Christopher O. Murray, Van Aaron Hughes, Emily
R. Garnett, Denver, Colorado
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,
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,
This case provides us another opportunity to examine the
implications of the Taxpayers Bill of Rights
("TABOR"). At issue now is how Colorados
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 Departments]
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 TABORs 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 Departments
charges and the government functions funded by the charges.
Second, NFIB asserts that any increase in the charges after
TABORs 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 NFIBs 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.
I. Facts and Procedural History
The Department and Section
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 Departments 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
publics 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
Departments 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
Departments 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
Departments 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 Departments] 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 the Secretary.
In 1992, nine years after the legislature created the current
funding scheme for the Department, Colorado voters ...