brief in support of plaintiff’s motion for preliminary injunction

7/27/2019 BRIEF IN SUPPORT OF PLAINTIFFS MOTION FOR PRELIMINARY INJUNCTION

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DISTRICT COURT, JEFFERSON COUNTYSTATE OF COLORADO

100 Jefferson County ParkwayGolden, Colorado 80401

TABOR FOUNDATION, a Colorado non-profit corporation,

Plaintiff,

v.

REGIONAL TRANSPORTATION DISTRICT, et al.,

Defendants.COURT USE ONLY

James M. Manley (Reg. No. 40327)Steven J. Lechner (Reg. No. 19853)MOUNTAIN STATES LEGAL FOUNDATION2596 South Lewis WayLakewood, Colorado 80227(303) [email protected]

[email protected]

Attorneys for Plaintiff

Case No.: 2013CV31974

Division: 1

BRIEF IN SUPPORT OF PLAINTIFFS

MOTION FOR PRELIMINARY INJUNCTION


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i

TABLE OF CONTENTS

TABLE OF AUTHORITIES ..................................................................................... iii

INTRODUCTION ..................................................................................................... 1

ARGUMENT ............................................................................................................. 3

I. THE TABOR FOUNDATION HAS A REASONABLEPROBABILITY OF SUCCESS ON THE MERITS ..................................... 4

A. HB13-1272 Creates New Taxes Without Voter Approval, InViolation Of TABOR ......................................................................... 4

B. HB13-1272 Is A Tax Policy Change Directly Causing A NetTax Revenue Gain To RTD And SCFD Without Voter

Approval, In Violation Of TABOR ................................................... 6

II. THE REMAINING REQUIREMENTS FOR A PRELIMINARYINJUNCTION ARE SATISFIED .................................................................. 10

A. There Is A Danger Of Real, Immediate, And Irreparable InjuryWhich Would Be Prevented By Injunctive Relief ............................. 10

B. There Is No Plain, Speedy, And Adequate Remedy At Law ForDefendants Constitutional Violations ............................................... 11

C. There Would Be No Disservice To The Public InterestInvolved In Enforcing The Colorado Constitution ............................ 11

D. The Balance Of Equities Tips In Favor Of The InjunctionBecause The TABOR Foundation Is Likely To Succeed OnThe Merits .......................................................................................... 12

E. The Injunction Will Preserve The Status Quo Because TheUnconstitutional Taxes Do Not Go Into Effect Until January 1,2014 ................................................................................................ 12

III. THE WAIVER OF BOND IS APPROPRIATE ............................................ 13

CONCLUSION .......................................................................................................... 13


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EXHIBITS

Exhibit 1, HB13-1272

Exhibit 2, RTD Resolution 006 (Apr. 2, 2013)

Exhibit 3, SCFD Board of Directors Meeting Minutes (Mar. 28, 2013)

Exhibit 4, Affidavit of Penn Pfiffner

Exhibit 5, Colorado Legislative Council, Final Fiscal Note ConcerningHB13-1272 (July 18, 2013)

Exhibit 6, Regional Transportation District, Fiscal Analysis


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iii

TABLE OF AUTHORITIES

CasesAm. Freedom Def. Initiative v. Suburban Mobility Auth. for Regl Transp.,

698 F.3d 885 (6th Cir. 2012) ......................................................................... 10

Arapahoe Cnty. Pub. Airport Auth. v. Centennial Express Airlines, Inc.,956 P.2d 587 (Colo. 1998) ............................................................................. 12

Baca v. Moreno,936 F. Supp. 719 (C.D. Cal. 1996) ................................................................ 13

Bickel v. City of Boulder,885 P.2d 215 (Colo. 1994) ............................................................................. 7

Bolt v. Arapahoe County School District Number Six,898 P.2d 525 (Colo. 1995) ............................................................................ 4

Bruce v. City of Colorado Springs,129 P.3d 988 (Colo. 2006) ............................................................................. 4, 6

Cacioppo v. Eagle County School Dist. Re-50J,92 P.3d 453 (Colo. 2004) ............................................................................... 9

City of Aurora v. Acosta,892 P.2d 264 (Colo. 1995) ............................................................................. 1

Colorado Common Cause v. Meyer,758 P.2d 153 (Colo. 1988) ............................................................................ 7

Colorado Wild v. U.S. Forest Service,299 F. Supp. 2d 1184 (D. Colo. 2004) ........................................................... 13

Denver Firefighters Local No. 858 v. City & County of Denver,292 P.3d 1101 (Colo. Ct. App. 2012) ............................................................ 4

Dodge v. Department of Social Servs.,600 P.2d 70 (Colo. 1979 ................................................................................ 10

Doe v. Pittsylvania County, Va.,842 F. Supp. 2d 927 (W.D. Va. 2012) ........................................................... 13

Gitlitz v. Bellock,171 P.3d 1274 (Colo. Ct. App. 2007) ............................................................ 4, 10, 11


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HCA-Healthone, LLC v. City of Lone Tree,197 P.3d 236 (Colo. Ct. App. 2008) .............................................................. 46, 9

Howard Elec. and Mechanical, Inc. v. Department of Revenue,771 P.2d 475 (Colo. 1989) ............................................................................. 4

Huber v. Colorado Mining Assn,264 P.3d 884 (Colo. 2011) ............................................................................. 4, 6, 8

Keller Corp. v. Kelley,187 P.3d 1133 (Colo. Ct. App. 2008) ............................................................ 12

Mesa County Bd. of County Comrs v. State,203 P.3d 519 (Colo. 2009) ............................................................................. 9

Nicholl v. E-470 Public Highway Authority,

896 P.2d 859 (Colo. 1995) ............................................................................. 10, 11

O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft,389 F.3d 973 (10th Cir. 2004) ...................................................................... 12

Preminger v. Principi,422 F.3d 815 (9th Cir. 2005) ......................................................................... 12

Rathke v. MacFarlane,648 P.2d 648 (Colo. 1982) ............................................................................. 4

Rodriguez v. Robbins,715 F.3d 1127 (9th Cir. 2013) ....................................................................... 11

Sanger v. Dennis,148 P.3d 404 (Colo. Ct. App. 2006) .............................................................. 12

Submission of Interrogatories on Senate Bill 93-74,852 P.2d 1 (Colo. 1993) ................................................................................. 1

Constitutional Provisions

Colo. Const. art. X, 20 ............................................................................................ passim

Statutes

C.R.S. 32-13-107(1)(a) ........................................................................................... 2, 5

C.R.S. 32-9-119(2)(a) ............................................................................................. 1, 2, 5


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C.R.S. 39-26-102(15)(a)(I) ..................................................................................... 3

C.R.S. 39-26-127 .................................................................................................... 2, 5, 6

C.R.S. 39-26-212 .................................................................................................... 2, 5, 6

C.R.S. 39-26-707(1.5)(b)(I) .................................................................................... 2

C.R.S. 39-26-707(1.5)(b)(II) .................................................................................. 2

C.R.S. 39-26-707(1)(c)(d), (2)(b)(c) ................................................................... 3

C.R.S. 39-28-202(4) ............................................................................................... 2

Regulations

Colo. Dept. of Rev. Reg. 39-26-707.1(1)(a)(i) .......................................................... 3

Other Authorities

Op. Atty Gen. No. 93-03 (Apr. 6, 1993) .................................................................. 7, 8

Op. Atty Gen. No. 95-02 (Apr. 14, 1995) ................................................................ 7, 8

Op. Atty Gen. No. 96-01 (Feb. 27, 1996) ................................................................. 7, 8


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INTRODUCTION

Through this lawsuit, the TABOR Foundation seeks enforcement of the Taxpayers Bill

of Rights of the Colorado Constitution (TABOR). Colo. Const. art. X, 20. In 1992,

Colorado voters adopted TABOR, limiting the power of government districts to levy taxes

without voter approval. Colo. Const. art. X, 20; City of Aurora v. Acosta, 892 P.2d 264, 268

(Colo. 1995). TABOR was designed to protect citizens from unwarranted tax increases.

Submission of Interrogatories on Senate Bill 93-74, 852 P.2d 1, 4 (Colo. 1993). Accordingly,

TABOR requires voter approval for 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).

In the 2013 legislative session, the Colorado General Assembly enacted HB13-1272,

which unlawfully authorizes the Regional Transportation District (RTD) and the Scientific and

Cultural Facilities District (SCFD) to levy new sales and use taxes on food, beverages,

cigarettes, advertising materials, and food containers. See HB13-1272 (attached hereto as

Exhibit 1). These new taxes will be levied by RTD and SCFD, beginning January 1, 2014. Both

RTD and SCFD lobbied in support of HB13-1272. See RTD Resolution 006 (Apr. 2, 2013)

(attached hereto as Exhibit 2); SCFD Board of Directors Meeting Minutes 4.3 (Mar. 28, 2013)

(attached hereto as Exhibit 3). To aid its lobbying efforts, RTD identified numerous projects that

would receive the increased revenues generated by the HB13-1272 taxes. See Exhibit 2.

RTD and SCFD are government districts as defined by TABOR, and therefore their tax

policies are subject to voter approval. Colo. Const. art. X, 20(2)(b). RTD and SCFD have the

authority to levy sales and use taxes upon every transaction or other incident with respect to

which a sales tax is now levied by the state . . ., with several notable exceptions. C.R.S. 32-9-


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119(2)(a); C.R.S. 32-13-107(1)(a). Prior to the passage of HB13-1272, RTD and SCFD had no

authority to levy sales and use taxes on food, beverages, cigarettes, advertising materials, and

food containers, as specified in HB13-1272. C.R.S. 32-9-119(2)(a); C.R.S. 32-13-107(1)(a);

C.R.S. 39-26-127; C.R.S. 39-26-212. HB13-1272 unlawfully creates new authority for RTD

and SCFD to tax these items.1

The food tax created by HB13-1272, 45 (citing HB10-1191), applies to candy as

defined by C.R.S. 39-26-707(1.5)(b)(I): a preparation of sugar, honey, or other natural or

artificial sweeteners in combination with chocolate, fruit, nuts, or other ingredients or flavorings

in the form of bars, drops, or pieces. Candy shall not include any preparation containing flour

and shall require no refrigeration.

The beverage tax created by HB13-1272, 45 (citing HB10-1191), applies to soft

drinks as defined by C.R.S. 39-26-707(1.5)(b)(II): nonalcoholic beverages that contain

natural or artificial sweeteners. Soft drinks do not include beverages that contain milk or milk

products, soy, rice, or similar milk substitutes, or greater than fifty percent of vegetable or fruit

juice by volume.

The cigarette tax created by HB13-1272, 23, 6 (citing HB13-1144), applies to

cigarettes as defined by C.R.S. 39-28-202(4), which includes all tobacco products likely to be

offered to, or purchased by, consumers as a cigarette.

1HB13-1272 also eliminates RTDs and SCFDs authority to tax low-emitting motor vehicles,vending machine sales of food (other than candy and soft drinks), and machinery or machinetools. HB13-1272, 23.


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The advertising tax created by HB13-1272, 45 (citing HB10-1189), applies to

advertising materials that are distributed in Colorado by any person engaged solely and

exclusively in the business of providing cooperative direct mail advertising. C.R.S. 39-26-

102(15)(a)(I).

The food container tax created by HB13-1272, 45 (citing HB10-1194), applies to

nonessential food and beverage related items, such as utensils, napkins, grocery bags, bags for

bulk produce, carryout containers for leftover food, straws, toothpicks, stirring sticks, cup

sleeves, etc. C.R.S. 39-26-707(1)(c)(d), (2)(b)(c); Colo. Dept. of Rev. Reg. 39-26-

707.1(1)(a)(i).

TABOR Foundation members registered to vote within RTDs and SCFDs jurisdiction

buy and/or use food, beverages, cigarettes, advertising materials, and/or food containers.

Affidavit of Penn Pfiffner 34 (attached hereto as Exhibit 4). These members will be forced

to pay the taxes created by HB13-1272, but have had no opportunity to vote on these new taxes.

Id. 68. Absent an injunction, these new taxes will go into effect on January 1, 2014, in

violation of TABOR. HB13-1272, 7; Colo. Const. art. X, 20(4)(a). Accordingly, these new

taxes are unlawful and must be enjoined.

ARGUMENT

Entry of a preliminary injunction is appropriate here because: (a) the TABOR

Foundation has a reasonable probability of success on the merits; (b) there is a danger of real,

immediate, and irreparable injury which would be prevented by injunctive relief; (c) there is no

plain, speedy, and adequate remedy at law for Defendants constitutional violations; (d) there

would be no disservice to the public interest involved in enforcing the Colorado Constitution; (e)


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the balance of equities tips in favor of the injunction; and (f) because the unconstitutional taxes

go into effect on January 1, 2014, the injunction will preserve the status quo pending final

resolution on the merits. Denver Firefighters Local No. 858 v. City & County of Denver, 292

P.3d 1101, 1104 (Colo. Ct. App. 2012) (citingRathke v. MacFarlane, 648 P.2d 648, 65354

(Colo. 1982));see also Gitlitz v. Bellock, 171 P.3d 1274, 1278 (Colo. Ct. App. 2007).

I. THE TABOR FOUNDATION HAS A REASONABLE PROBABILITY OF

SUCCESS ON THE MERITS.

A. HB13-1272 Creates New Taxes Without Voter Approval, In Violation Of

TABOR.

TABOR requires governmental entities to obtain voter approval before imposing any

new tax . . . . Huber v. Colorado Mining Assn, 264 P.3d 884, 886 (Colo. 2011) (quoting Colo.

Const. art. X, 20(4)(a));Bolt v. Arapahoe County School District Number Six, 898 P.2d 525,

540 (Colo. 1995). HB13-1272 creates new sales and use taxes on food, beverages, cigarettes,

advertising materials, and food containerswithout voter approval. Accordingly, these new

taxes are unlawful and must be enjoined.

When a use tax is levied on new items, the expansion of the use tax . . . constitute[s] a

new tax.2HCA-Healthone, LLC v. City of Lone Tree, 197 P.3d 236, 242 (Colo. Ct. App. 2008);

see also Bruce v. City of Colorado Springs, 129 P.3d 988, 995 (Colo. 2006)(a tax increase

indicates that the tax burden borne by an individual taxpayer will be greater than its present

amount.). HCA-Healthoneis controlling here. In that case, the City of Lone Tree attempted to

levy its existing use tax against all tangible property, despite the fact that voters had only

2This conclusion applies equally to sales taxes because, [t]he use tax is supplementary to thesales tax rather than separate from it. Howard Elec. and Mechanical, Inc. v. Department ofRevenue, 771 P.2d 475, 477 (Colo. 1989).


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approved a use tax on construction and building materials. Id. at 24142. The Court of Appeals

rejected this unilateral attempt to expand the use tax because it would result in new taxes,

requiring voter approval pursuant to TABOR. Id. at 242. Accordingly, the City lacked authority

to levy its use tax on new items, until voters approved an expansion of the tax. Id. at 244.

RTD and SCFD explicitly lacked authority to tax cigarettes prior to the passage of HB13-

1272. RTDs enabling statute grants it the power to levy . . . 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 . . . except that: . . . The sale of cigarettes shall be exempt from such

sales tax. C.R.S. 32-9-119(2)(a)(III) (emphasis added). SCFDs enabling statute grants it

the power to levy such uniform sales and use taxes throughout the district . . . upon every

transaction or other incident with respect to which a sales and use tax is levied by the state . . .

except that such sales and use tax shall not be levied the on sale or use of cigarettes. . . .

C.R.S. 32-13-107(1)(a) (emphasis added). HB13-1272 removes these explicit limitations on

RTDs and SCFDs taxing authority, expanding their sales and use taxes and thereby creating

new taxes on cigarettes without voter approval. HCA-Healthone, 197 P.3d at 242.

Moreover, prior to February 2010, the State did not levy sales and use taxes on candy,

soft drinks, advertising materials, or food containers. SeeC.R.S. 39-26-127; C.R.S. 39-26-

212. The General Assembly made these items subject to the state sales and use taxes in February

2010, but explicitly declined to give taxing authority over these items to any other Colorado

governmentsincluding RTD and SCFD. C.R.S. 39-26-127 (no expansion of local authority

to levy sales tax); C.R.S. 39-26-212 (no expansion of local authority to levy use tax).

Accordingly, RTD and SCFD had no authority to levy taxes on candy, soft drinks, advertising


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materials, or food containers, until HB13-1272 unlawfully granted that authority. SeeHB13-

1272, 4 and 5 (amending C.R.S. 39-26-127 and C.R.S. 39-26-212, respectively, to create

or expand RTDs and SCFDs authority to levy sales and use taxes.). This expansion of RTDs

and SCFDs taxing authority creates new taxes without voter approval. HCA-Healthone, 197

P.3d at 242.

HB13-1272 creates new authority for RTD and SCFD to tax food, beverages, cigarettes,

advertising materials, and food containers. Prior to the enactment of HB13-1272, RTD and

SCFD did not have the authority to levy taxes on those items. HB13-1272 grants that authority

by removing explicit statutory limitations on RTDs and SCFDs taxing authority. Accordingly,

the taxes on food, beverages, cigarettes, advertising materials, and food containers that will go

into effect on January 1, 2014, are new taxes, levied without voter approval in direct violation of

TABOR. Colo. Const. art. X, 20(4)(a);HCA-Healthone, 197 P.3d at 242. These taxes must be

enjoined, pending voter approval.

B. HB13-1272 Is A Tax Policy Change Directly Causing A Net Tax Revenue

Gain To RTD And SCFD Without Voter Approval, In Violation Of TABOR.

Even if the taxes created by HB13-1272 were not new taxes, HB13-1272 nevertheless

institutes a tax policy change that directly causes a net tax revenue gain to RTD and SCFD.

Therefore, the HB13-1272 taxes would still require voter approval prior to implementation.

Colo. Const. art. X, 20(4)(a).

The phrase tax policy changes is not defined by TABOR. Huber, 264 P.3d at 892. In

construing the meaning of TABOR, this Court must give effect to the voters intent . . . by

according words found in the constitutional provision their plain, common, and ordinary

meanings. HCA-Healthone, 197 P.3d at 240 (citingBruce, 129 P.3d at 99293). The Colorado


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Supreme Court has described a courts duty in TABOR cases as guided by this canon of

construction: [W]here 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).

The Colorado Attorney General has issued several opinions interpreting the meaning of

tax policy change as used in TABOR. Most of these opinions were issued months or a few

years after the passage of TABOR, and are therefore especially useful in understanding voter

intent in passing TABOR. An Attorney Generals Opinion is obviously entitled to respectful

consideration as a contemporaneous interpretation of the law by a governmental official charged

with the responsibility of such interpretation. Colorado Common Cause v. Meyer, 758 P.2d

153, 159 (Colo. 1988) (A courts resolution of an issue of statutory construction, however, must

proceed from an independent analysis of the statutory scheme . . . .).

The Attorney General has concluded that legislative action terminating a tax exemption

would constitute a tax policy change requiring voter approval. Op. Atty Gen. No. 95-02 (Apr.

14, 1995). The Attorney General considered it obvious that a change in a tax structure would be

a tax policy change subject to TABOR:

Of course, a change in the structure itselfthe addition or deletion of a statutoryvariable, a change in the method by which rates are computed, or any increase inthe standard or computed rates in the tax tableswould trigger the need foradvance voter approval, assuming a resultant net revenue gain.

Op. Atty Gen. No. 93-03 (Apr. 6, 1993). The Attorney General reiterated this conclusion three

years later:

A change in tax policy occurs when a statutory modification is made to thestandards or rules governing the imposition of a specific tax. For example, amodification might be made to the subject of a tax, the timing of a tax, or the


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determination of liability under a tax. If a change does not modify the standardsor rules regarding the imposition of a tax, no tax policy is being changed.

Op. Atty Gen. No. 96-01 (Feb. 27, 1996).

Thus, if the subject of a tax, the standards or rules regarding the imposition of a tax,

or a statutory variable are modified, or if an exemption is eliminated, a tax policy change

occurs. Id.; Op. Atty Gen. No. 93-03; Op. Atty Gen. No. 95-02. If the change results in a net

revenue gain, TABOR requires voter approval before the change can go into effect. Colo. Const.

art. X, 20(4)(a);Huber, 264 P.3d at 886.

As demonstrated above, HB13-1272 indisputably modifies the subject of a tax, the

standards or rules regarding the imposition of a tax, and statutory variables governing a tax by

modifying what items are subject to RTD and SCFD sales and use taxes. The bill also eliminates

tax exemptions. HB13-1272 therefore institutes tax policy changes. Colo. Const. art. X,

20(4)(a).

Because HB13-1272 institutes tax policy changes, those changes require voter approval if

they directly cause a net tax revenue gain to any district. Colo. Const. art. X, 20(4)(a). The

General Assembly was advised by the Legislative Council that both RTD and SCFD would

realize net tax revenue gains of 0.6 percent per year from the HB13-1272 taxes. See Colorado

Legislative Council, Final Fiscal Note Concerning HB13-1272 (July 18, 2013) (attached hereto

as Exhibit 5). RTD echoed the Legislative Council conclusion that HB13-1272 would result in a

net tax revenue gain. See Regional Transportation District, Fiscal Analysis (attached hereto as

Exhibit 6). RTD levies 1.0 percent sales and use taxes; SCFD levies 0.1 percent sales and use

taxes. Compl. 6, 9. If HB13-1272 goes into effect, it will generate approximately $2.7


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million per year in additional tax revenue for RTD and approximately $270,000 per year in

additional tax revenue for SCFD. Compl. 2326; Exhibit 6.

In dicta, the Colorado Supreme Court has suggested that the language tax policy

change . . . cannot be applied to any policy modifications that may have a de minimis impact on

a districts revenues. Mesa County Bd. of County Comrs v. State, 203 P.3d 519, 529 (Colo.

2009). There is no textual support for such a limitation. See Colo. Const. art. X, 20. The only

metric the Court suggested to define de minimis impact, was a situation where the cost of the

election could exceed the additional revenue obtained. Id. Here, the total impact of HB13-1272

is nearly $3 million per year. Common sense indicates that several million dollars of increased

revenueper yearis therefore not a de minimis impact. Indeed, TABOR elections have been

held to seek voter approval for tax revenue increases totaling as little as $700,000 per year. See

HCA-Healthone, 197 P.3d at 329 (Shall City . . . taxes be increased by up to $700,000 annually

. . . .). Several elections have been held to authorize revenue increases of approximately $3

million. See id.at 238 (Shall [the Citys] taxes be increased $3.0 million annually, . . . .);

Cacioppo v. Eagle County School Dist. Re-50J, 92 P.3d 453, 457 (Colo. 2004) (Shall the Eagle

County School District RE50J taxes be increased $3,115,827 annually . . . .). RTD has already

earmarked the increased revenues realized from HB13-1272 to accelerate funding for

numerous FasTracks projects. Exhibit 2. Therefore, HB13-1272 is a tax policy change directly

causing a net tax revenue gain to RTD and SCFD, requiring voter approval prior to

implementation.3 Colo. Const. art. X, 20(4)(a).

3Mesa Countys holding with respect to Colo. Const. art. X, 20(4)(a) is that [o]nce a[TABOR] revenue limit is validly waived, it is unnecessary to require a second election for laterlegislation directing the use of the additional funds that a district received as a result of the


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II. THE REMAINING REQUIREMENTS FOR A PRELIMINARY INJUNCTION

ARE SATISFIED.

Having demonstrated that the TABOR Foundation has a reasonable probability of

success on the merits of its constitutional claim, the remaining preliminary injunction factors

may be easily disposed of: (a) there is a danger of real, immediate, and irreparable injury which

would be prevented by injunctive relief; (b) there is no plain, speedy, and adequate remedy at

law for Defendants constitutional violations; (c) there would be no disservice to the public

interest involved in enforcing the Colorado Constitution; (d) the balance of equities tips in favor

of the injunction; and (e) because the unconstitutional taxes go into effect on January 1, 2014, the

injunction will preserve the status quo pending final resolution on the merits. Gitlitz, 171 P.3d at

1278. In cases where constitutional violations form the basis of the claim for relief, these factors

are essentially encompassed by the analysis of the movants likelihood of success on the

merits. Am. Freedom Def. Initiative v. Suburban Mobility Auth. for Regl Transp., 698 F.3d

885, 890 (6th Cir. 2012) (analyzing preliminary injunction in First Amendment context).

A. There Is A Danger Of Real, Immediate, And Irreparable Injury Which

Would Be Prevented By Injunctive Relief.

The Colorado Supreme Court has long recognized that [e]ven where no direct economic

harm is implicated, a citizen has standing to pursue his or her interest in ensuring that

governmental units conform to the state constitution. Nicholl v. E-470 Public Highway

Authority, 896 P.2d 859, 866 (Colo. 1995) (citingDodge v. Department of Social Servs., 600

waiver election. Such legislation is not a policy change, but an implementation of the waiverelection. Id. This holding is irrelevant here, since voters have not waived any TABOR revenuelimitations with respect to RTD and SCFD.


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P.2d 70, 71 (Colo. 1979)). If Defendants are permitted to levy the unconstitutional taxes on

January 1, 2014, they will do irreparable damage to the Colorado Constitution. See Gitlitz, 171

P.3d at 1279 ([A]s a corollary, an injunction is available as equitable relief if there is no legal

remedy that provides full, complete, and adequate relief. An injury may be irreparable,

therefore, where monetary damages are difficult to ascertain or where there exists no certain

pecuniary standard for the measurement of the damages.). The taxes authorized by HB13-1272

violate the Colorado Constitution; accordingly, the TABOR Foundations members will suffer

irreparable injury to their interest in ensuring that governmental units conform to the state

constitution if Defendants are permitted to levy the unconstitutional taxes on January 1, 2014.

Nicholl , 896 P.2d at 866.

B. There Is No Plain, Speedy, And Adequate Remedy At Law For Defendants

Constitutional Violations.

The only plain, speedy, and adequate remedy for Defendants constitutional violations is

equitable relief. The Colorado Supreme Court has held that taxpayers have standing to seek to

enjoin an unlawful expenditure of public funds. Nicholl, 896 P.2d at 866. Indeed, equitable

relief is the only way to ensur[e] that governmental units conform to the state constitution. Id.

Accordingly, the TABOR Foundation has no plain, speedy, and adequate remedy at law.

C. There Would Be No Disservice To The Public Interest Involved In Enforcing

The Colorado Constitution.

The public interest is served by requiring adherence to the Constitution, which is all that

the TABOR Foundation requests here. See Rodriguez v. Robbins, 715 F.3d 1127, 1146 (9th Cir.

2013) (It stands to reason that the public interest also benefits from a preliminary injunction that

ensures that federal statutes are construed and implemented in a manner that avoids serious


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constitutional questions.);Preminger v. Principi, 422 F.3d 815, 826 (9th Cir. 2005)

(Generally, public interest concerns are implicated when a constitutional right has been

violated, because all citizens have a stake in upholding the Constitution.). Accordingly, the

injunction would serve the public interest.

D. The Balance Of Equities Tips In Favor Of The Injunction Because The

TABOR Foundation Is Likely To Succeed On The Merits.

When a party shows a reasonable probability of success on the merits and that it would

suffer irreparable harm in the absence of the injunction, it follows that the balance of equities

favors the injunction. Cf. Keller Corp. v. Kelley, 187 P.3d 1133, 1137 (Colo. Ct. App. 2008).

Because the TABOR Foundation has shown that it is probable that it will succeed on the merits

and because its members will suffer irreparable harm if the preliminary injunction is not granted,

the balance of equities favors the injunction. Id.

E. The Injunction Will Preserve The Status Quo Because The Unconstitutional

Taxes Do Not Go Into Effect Until January 1, 2014.

The issuance of the injunction will preserve the status quo. Generally, the status quo to

be preserved is the the last peaceable uncontested status existing between the parties before the

dispute developed. O Centro Espirita Beneficiente Uniao Do Vegetal v. Ashcroft, 389 F.3d

973, 1006 (10th Cir. 2004) affd and remanded sub nom. Gonzales v. O Centro Espirita

Beneficente Uniao do Vegetal, 546 U.S. 418 (2006);see also Arapahoe Cnty. Pub. Airport Auth.

v. Centennial Express Airlines, Inc., 956 P.2d 587, 598 (Colo. 1998) (Scott, J., concurring);

Sanger v. Dennis, 148 P.3d 404, 419 (Colo. Ct. App. 2006). Here, the last peaceable status

before the dispute was the absence of the HB13-1272 taxes on food, beverages, cigarettes,

advertising materials, and food containers. Because the unconstitutional taxes go into effect on


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13

January 1, 2014, the injunction will preserve the status quo pending final resolution on the

merits.

III. THE WAIVER OF BOND IS APPROPRIATE.

The waiver of bond in this case is appropriate because the TABOR Foundation is a non-

profit, public interest organization, defending important constitutional provisions and the

Foundation seeks only to oblige Defendants to comply with existing constitutional requirements.

See Colorado Wild v. U.S. Forest Service, 299 F. Supp. 2d 1184, 1191, n.31 (D. Colo. 2004)

(waiving bond for non-profit group and collecting cases);see also Doe v. Pittsylvania County,

Va., 842 F. Supp. 2d 927, 937 (W.D. Va. 2012);Baca v. Moreno, 936 F. Supp. 719, 738 (C.D.

Cal. 1996).

CONCLUSION

For the foregoing reasons, this Court should enjoin Defendants from collecting the

unconstitutional taxes created by HB13-1272, until such time as voters approve those taxes.

DATED this 24th day of October 2013.

Respectfully submitted,

/s/ James M. ManleyJames M. Manley (Reg. No. 40327)Steven J. Lechner (Reg. No. 19853)MOUNTAIN STATES LEGAL FOUNDATION2596 South Lewis Way

Lakewood, Colorado 80227Telephone: (303) 292-2021Facsimile: (303) [email protected]@mountainstateslegal.com

Attorneys for Plaintiff


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CERTIFICATE OF SERVICE

I certify that true and accurate copies of the foregoing document were caused to be served

on Defendants on the 28th day of October 2013, as reflected in the Affidavits of Service filed in

this matter on October 29, 2013. I further certify that on the 29th day of October 2013, the

foregoing document was filed with the Court.

/s/ James M. ManleyJames M. Manley


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Exhibit 1


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HOUSE BILL 13-1272

BY REPRESENTATIVE(S) Hullinghorst, Fields, Fischer, Kagan, Labuda,

Rosenthal, Williams, Court, Levy, Melton, Moreno, Schafer, Singer, Tyler;

also SENATOR(S) Steadman, Heath, Jones.

CONCERNING THE MODIFICATION OF A SPECIAL DISTRICT'S SALES AND USE

TAX BASE TO MAKE IT THE SAME AS THE STATE'S SALES AND USE TAX

BASE.

Be it enacted by the General Assembly of the State of Colorado:

SECTION 1. Legislative declaration.(1) The general assembly

finds and declares that:

(a) The regional transportation district and the scientific and cultural

facilities district have the same sales and use tax base as the state with

respect to tangible personal property, but the districts and the state havedifferent exemptions for several types of such property;

(b) This leads to confusion for taxpayers and it is an administrative

burden for vendors who collect and remit the tax to the state; and

(c) Therefore, the intended purpose of the tax expenditures in this

act is to simplify the administration and collection of sales and use tax for

NOTE: This bill has been prepared for the signatures of the appropriate legislative

officers and the Governor. To determine whether the Governor has signed the bill

or taken other action on it, please consult the legislative status sheet, the legislative

history, or the Session Laws.

________

Capital letters indicate new material added to existing statutes; dashes through words indicate

deletions from existing statutes and such material not part of act.


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the regional transportation district and the scientific and cultural facilities

district.

SECTION 2. In Colorado Revised Statutes, 32-9-119, amend(2)

(a) as follows:

32-9-119. Additional powers of district. (2) (a) To provide

revenue to finance the operations of the district, to defray the cost of

construction of capital improvements and acquisition of capital equipment,

and to pay the interest and principal on securities of the district, the board,

for and on behalf of the district, after approval by election held pursuant to

articles 1 to 13 of title 1, C.R.S., and, with respect to any tax rate increase

that takes effect on or after March 2, 2009, in accordance with section

32-9-119.3, shall have HAS 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, pursuant to the provisions of article 26 of title 39, C.R.S.

except that:

(I) Such sales tax may be levied on vending machine sales of food

that are otherwise exempt pursuant to section 39-26-714 (2), C.R.S., and on

purchases of machinery or machine tools that are otherwise exempt

pursuant to section 39-26-709 (1), C.R.S.;

(II) The board shall continue to levy a sales tax on the sales of

low-emitting motor vehicles, power sources, or parts used for converting

such power sources as specified in section 39-26-719 (1), C.R.S.;

(III) The sale of cigarettes shall be exempt from such sales tax.

SECTION 3. In Colorado Revised Statutes, 32-13-107, amend(1)

(a) as follows:

32-13-107. Sales and use tax imposed - collection -

administration of tax - use. (1) (a) Except as otherwise provided in

paragraph (b) of this subsection (1), upon the approval of the registered

electors pursuant to the provisions of section 32-13-105, the board shall

have HASthe power to levy such uniform sales and use taxes throughout the

district created in section 32-13-104 upon every transaction or other

incident with respect to which a sales and use tax is levied by the state,

PAGE 2-HOUSE BILL 13-1272


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pursuant to the provisions of article 26 of title 39, C.R.S. except that such

sales and use tax shall not be levied the on sale or use of cigarettes and shall

be levied on:

(I) Purchases of machinery or machine tools that are otherwise

exempt pursuant to section 39-26-709 (1), C.R.S., to the extent such salesand purchases are subject to a sales and use tax levied by the regional

transportation district pursuant to section 29-2-105 (1) (d), C.R.S., on and

after the January 1 following the election in which such sales and use taxes

were approved;

(II) Sales of low-emitting motor vehicles, power sources, or parts

used for converting such power sources as specified in section 39-26-719

(1), C.R.S.; and

(III) Vending machine sales of food that are otherwise exempt

pursuant to section 39-26-714 (2), C.R.S.

SECTION 4. In Colorado Revised Statutes, amend39-26-127 as

follows:

39-26-127. Legislation modifying the state sales tax base - no

impact on local government sales tax bases - no expansion of local

authority to levy sales tax.(1) Notwithstanding the provisions of section

29-2-105 (1) (d), C.R.S., any provision of title 32, C.R.S., or any other

provision of law, AND EXCEPT AS SET FORTH IN SUBSECTION (3)OF THIS

SECTION, the levying of sales tax on, exemption from sales tax for, or local

option to levy sales tax on or provide an exemption from sales tax for any

tangible personal property or services under the sales tax ordinance or

resolution of any county, municipality, special district, authority, or other

local government or political subdivision of the state shall not be affected

in any way by the elimination, suspension, or modification of any sales tax

exemption or any other legislative modification of the state sales tax base

resulting from the enactment of any of the following bills:

(a) House Bill 10-1189, enacted in 2010;

(b) House Bill 10-1190, enacted in 2010;

(c) House Bill 10-1191, enacted in 2010;



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(d) House Bill 10-1194, enacted in 2010;

(e) House Bill 10-1195, enacted in 2010.

(2) EXCEPT AS SET FORTH IN SUBSECTION (3)OF THIS SECTION, this

section does not create or expand, and shall not be construed to create orexpand, any authority of any county, municipality, special district, authority,

or other local government or political subdivision of the state to levy sales

tax.

(3) BEGINNING JANUARY 1,2014,SUBSECTION (1)OF THIS SECTION

DOES NOT APPLY TO THE REGIONAL TRANSPORTATION DISTRICT ESTABLISHED

BY ARTICLE 9 OF TITLE 32, C.R.S., AND THE SCIENTIFIC AND CULTURAL

FACILITIES DISTRICT ESTABLISHED BY ARTICLE 13 OF TITLE 32, C.R.S.,

WHICH LEVY SALES AND USE TAX UPON EVERY TRANSACTION OR OTHER

INCIDENT WITH RESPECT TO WHICH A SALES AND USE TAX IS LEVIED BY THE

STATE.

SECTION 5. In Colorado Revised Statutes, amend39-26-212 as

follows:

39-26-212. Legislation modifying the state use tax base - no

impact on local government use tax bases - no expansion of local

authority to levy use tax.(1) Notwithstanding the provisions of section

29-2-105 (1) (d), C.R.S., any provision of title 32, C.R.S., or any other

provision of law, AND EXCEPT AS SET FORTH IN SUBSECTION (3)OF THIS

SECTION, the levying of use tax on, exemption from use tax for, or local

option to levy use tax on or provide an exemption from use tax for any

tangible personal property or services under the use tax ordinance or

resolution of any county, municipality, special district, authority, or other

local government or political subdivision of the state shall not be affected

in any way by the elimination, suspension, or modification of any use tax

exemption or any other legislative modification of the state use tax base

resulting from the enactment of any of the following bills:

(a) House Bill 10-1189, enacted in 2010;

(b) House Bill 10-1190, enacted in 2010;

(c) House Bill 10-1191, enacted in 2010;



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(d) House Bill 10-1194, enacted in 2010;

(e) House Bill 10-1195, enacted in 2010.

(2) EXCEPT AS SET FORTH IN SUBSECTION (3)OF THIS SECTION, this

section does not create or expand, and shall not be construed to create orexpand, any authority of any county, municipality, special district, authority,

or other local government or political subdivision of the state to levy use

tax.

(3) BEGINNING JANUARY 1,2014,SUBSECTION (1)OF THIS SECTION

DOES NOT APPLY TO THE REGIONAL TRANSPORTATION DISTRICT ESTABLISHED

BY ARTICLE 9 OF TITLE 32, C.R.S., AND THE SCIENTIFIC AND CULTURAL

FACILITIES DISTRICT ESTABLISHED BY ARTICLE 13 OF TITLE 32, C.R.S.,

WHICH LEVY SALES AND USE TAX UPON EVERY TRANSACTION OR OTHER

INCIDENT WITH RESPECT TO WHICH A SALES AND USE TAX IS LEVIED BY THE

STATE.

SECTION 6. In Colorado Revised Statutes, 39-26-706, amendas

amended by House Bill 13-1144(1) (c) as follows:

39-26-706. Miscellaneous sales and use tax exemptions - internet

access - refractory materials - precious metal bullion and coins.

(1) (c) (I) Notwithstanding any provision of law to the contrary, BUT

EXCEPT AS SET FORTH IN SUBPARAGRAPH (II)OF THIS PARAGRAPH (c), for

any local government or political subdivision of the state that levies a sales

or use tax based on the sales or use tax levied by the state pursuant to this

article, the sale or storage, use, or consumption of cigarettes is exempt from

the sales or use tax of such local government or political subdivision.

(II) SUBPARAGRAPH (I)OF THIS PARAGRAPH (c)DOES NOT APPLY TO

THE REGIONAL TRANSPORTATION DISTRICT ESTABLISHED BY ARTICLE9OF

TITLE 32,C.R.S.,AND THE SCIENTIFIC AND CULTURAL FACILITIES DISTRICT

ESTABLISHED BY ARTICLE 13 OF TITLE 32, C.R.S., WHICH, BEGINNING

JANUARY 1,2014,LEVY SALES AND USE TAX UPON EVERY TRANSACTION OR

OTHER INCIDENT WITH RESPECT TO WHICH A SALES AND USE TAX IS LEVIED

BY THE STATE.

SECTION 7. Effective date.This act takes effect January 1, 2014.



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SECTION 8. Safety clause.The general assembly hereby finds,

determines, and declares that this act is necessary for the immediate

preservation of the public peace, health, and safety.

____________________________ ____________________________

Mark Ferrandino John P. Morse

SPEAKER OF THE HOUSE PRESIDENT OF

OF REPRESENTATIVES THE SENATE

____________________________ ____________________________

Marilyn Eddins Cindi L. Markwell

CHIEF CLERK OF THE HOUSE SECRETARY OF

OF REPRESENTATIVES THE SENATE

APPROVED________________________________________

_________________________________________

John W. Hickenlooper

GOVERNOR OF THE STATE OF COLORADO



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Exhibit 2


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Exhibit 3


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!"#$ &'()$ '# $*)+",')! -++,*./-0123 456 4789

8:77 ;?@AAB "CDEC10D "?FE?1

-??EGFH -GFCE?I

SCFD Board members present:Chair Kathryn Spuhler, Vice ChairKathy Kucsan, Treasurer Dan Hopkins,Secretary Councilwoman Peggy Lehmann, Joseph Arcese, Bob Grant, Shepard Nevel, Kathleen Stapleton,Elaine D. Torres, Hal Logan and Damon O. Barry

SCFD staff present: Executive Director Peg Long, Program Manager Nancy McCamey, Program Manager Jessica Clare,Program Associate Erica Barclay, Office Systems Administrator Sheila Mieger

1. Introductions and Approval of Agenda

Kathryn Spuhler called the meeting to order at 1pm followed by introductions. A quorum was present, and the agenda wasapproved.

Diana Wilson, City of Lakewood Mayor pro tem, welcomed the Board to the Lakewood Cultural Center. The Center is aregional hub for local artists and touring acts. It is a venue for many SCFD funded organizations. SCFD dollars are vital tothe Lakewood community stated Diana. Kathy Hodgson, Lakewood City Manager, thanked the SCFD for helping bringculture and arts to the citizens. Both officials thanked Kathleen Stapleton for the contributions she has made to the City

and the County.

2. Oath of Office

Kathy Kucsan swore in Kathryn Spuhler, Douglas County appointee for a second term. Kathryn Spuhler swore in, KathyKucsan, Boulder County appointee for a second term. Kathryn Spuhler swore in, Elaine D. Torres, gubernatorialappointee. Elaine made a short introduction, sharing that she is the director of community affairs at News4, lives in Lowryand has a young son.

3. Approval of February 28, 2013 Board Minutes

Hal Logan motioned to approve the minutes. Kathleen Stapleton seconded. Motion to accept the minutes passed.

4. Reports

4.1 TreasurerDan Hopkins reported the January 2013 SCFD sales and use tax revenue was $3,298,645.83. This compares to January2012 tax revenue of $3,387,812.08. The variance is ($89,166.25). This is a 2.63% decrease in 2013 over month-to-date(MTD) and year-to-date (YTD) 2012.

4.2 Chairman

Kathryn Spuhler reported that the SCFD Taskforce for Education Programs and Services (STEPS) committee met with

Gully Stanford regarding possible community partnerships. Emily Hall, former SCFD intern, will be presenting on behalf

of STEPS at the Scientific and Cultural Collaborative Inter-tier Arts Education Summit on April 4.

4.3 Executive Director

Peg Long reported the following.

2013 ACH distribution dates are: March 15 (Tiers I & II), June 14 (Tier I), September 16 (Tiers I & II), December16 (Tiers I & II).

Banking requests for submissions went out to eight PDPA-qualified banks last week. The deadline forsubmissions is April 19th.

Peg gave each Board member an updated Budget Projection handout. Without an increase in interest rates or the.75% administrative allocation SCFD will deplete its reserves prior to 2016. The interest rates are not likely to goup before that time, and if they do, they are not likely to go up by much. Dan Hopkins asked each Board memberto consider ways for SCFD to acquire the administrative funds needed to continue. One option is to go to the


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legislature in 2015 asking for the administrative percentage to increase at the time of signing the bill; but stillmaintaining the public vote in 2016. This topic will be on the April 11 planning session agenda.

New website and social media update Since the launch of the new website on Feb. 1, the site has had 26,308visits. The Free Days page is the most visited. 28% of visitors are using mobile devices including tablets. Theaverage time spent on the website is 1.25 minutes, which is an increase over the old website. The site has seenhigh referral traffic from Facebook, Denver Botanic Gardens and Denver March Powwow. Most of the visitorsare from Denver. SCFD currently has 1,808 friends on Facebook and 647 people following on Twitter.

Peg attended a hearing on House Bill 13-1272.1. Multiplier used by the fiscal analyst is .6% increase, or the equivalent of about $252,000 on $42 million2. Amended effective date of January 1, 2014 instead of July 1 to eliminate $90,000 DOR fiscal note for printing

and mailing coupon books mid-year3. Some TABOR concerns expressed re: new taxes on soft drinks, candy & cigarettes (also food in containers)4. Bill drafter said Mesa County Supreme Court opinion deemed tax increases that are less than the cost of a

TABOR election would be considered de minimisand not in violation of TABOR5. Majority of committee questions addressed to RTD6. Lobbyist will request that bill sponsor obtain written confirmation from DOR that SCFD will not be charged

fees for software revisions to align SCFD taxes with the states

Melanie Layton, SCFD lobbyist, reported North Metro Chamber, Denver Chamber and C3 supported the bill.Colorado beverage association was against it. The bill will go to appropriations next. There is not a fiscal noteattached so it should move through quickly. The amount of money SCFD would net is not and cannot be certain.Melanie feels the bill will pass regardless of our support, but SCFDs support would be appreciated. PeggyLehmann sees SCFD supporting the bill as good government. It makes tax collection easier to understand andfacilitate.

Bob Grant motioned to support and endorse House Bill 13-1272 and direct SCFD lobbyist, Melanie Layton, to actaccordingly at her discretion to communicate the Boards support. Peggy seconded. The Board asked Melanie ifthe advantages outweigh the risks. It is not without risk, replied Melanie, but she felt the benefits do outweigh therisk. Melanie will focus on the new legislators and use this as an opportunity to educate them about what theSCFD is and its benefits. Peg Long was asked her opinion. She thinks the Board should support it. Dan Hopkinsoffered an amendment to Bobs motion in order to facilitate and simplify tax collection and to insure better

accuracy of tax collection. Bob accepted the amendment. All voted in favor.

5. Other Matters

The Board thanked Kathleen Stapleton for six years of service. Kathryn Spuhler read a proclamation honoring Kathleen.

6. Public Comment

Steve Wilson, co-chair of the SCC asked the Board if a bill was brought to the legislature in 2015 would it include allproposed changes to the statute or just the administrative share. Dan Hopkins replied that he feels the whole bill wouldhave to be presented but only the administrative change would take place immediately. Steve also asked how the electioncost recovery of $100,000 would be handled. Peg Long said each years recovery from Tier I and II organizations wouldoccur proportionally over the September, December and March distributions. The funds would be recovered from Tier IIIprior to the county allocations in the following year, i.e., 2014. Steve reported Citizens for Arts to Zoo (CATZ) presented

at the last SCC meeting. Kathryn Spuhler asked Steve if this was the first year all Tier Is have been members of the SCC.Yes, said Steve, although the DCPA has always been a member. Kathryn asked if having them part of the SCC haschanged the organizations budget. He said that currently their budget is set up such that any extra money goes into thepathways program. Additional funds have allowed for the existence of a marketing budget. Steve said there could befurther changes to the budget structure in the future including some administrative help for Charlotte DArmond Talbert,coordinator of the SCC.

Kathy Spuhler reported she attended Colorado Ballets dress rehearsal of Light. She strongly recommended people attendthe performance. Marie Belew Whitley, Executive Director of the Colorado Ballet said there were four performances left.She offered Board discounted tickets.


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Malik Robinson and Cleo Parker Robinson of New Dance Theatre dba Cleo Parker Robinson Dance asked the Board if

they could and would be willing to reverse SCFD staffs decision not to accept their Tier III multi-county grant due to it

being incomplete. New Dance had all the information required but, due to an error on the organizations part, the

application did not include all of the required information. After a lengthy discussion, including hearing comments from

County Cultural Council members, the Board thanked Malik and Cleo for all that their organization does for the public.

The board took no action on the request on the grounds that the Board does not have jurisdiction to do so. A determination

of whether a grant application is complete or submitted by the deadline is based on agreed upon county criteria and is a

County Cultural Council decision. All seven councils have formally assigned their authority to enforce grant application

compliance requirements to SCFD Staff. It was confirmed that the organization could still move forward with its grant

application to Denver County. Cleo thanked the Board for considering the request.

7. Adjournment

The meeting was adjourned at 3:40 pm.

________________________________________________

Secretary


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Exhibit 4


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Exhibit 5


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HB13-1272

ColoradoLegislative Council StaffFiscalNote

FINAL

FISCAL NOTE

Drafting Number:Prime Sponsor(s):

LLS 13-0623Rep. Hullinghorst

Sen. Steadman

Date:Bill Status:

Fiscal Analyst:

July 18, 2013Signed into Law

Larson Silbaugh (303-866-4720)

TITLE: CONCERNING THE MODIFICATION OF A SPECIAL DISTRICT'S SALES AND USE

TAX BASE TO MAKE IT THE SAME AS THE STATE'S SALES AND USE TAX BASE.

Fiscal Impact Summary FY 2013-14 FY 2014-15

State Revenue

State ExpendituresGeneral Fund

FTE Position Change

Effective Date: The bill was signed into law by the Governor on May 28, 2013, and takes effect on

July 1, 2014.

Appropriation Summary for FY 2013-2014:See State Appropriations section.

Local Government Impact:See local government impact section.

Summary of Legislation

This bill makes the Regional Transportation District (RTD) and Scientific and Cultural

Facilities District (SCFD) sales and use tax bases identical to the state sales and use tax base.

Background

Currently, some items that are exemptfrom the RTD and SCFD sales and use tax are taxable

for state purposes, and vice versa. Table 1 shows how the RTD and SCFD sales and use tax base

differs from the state sales and use tax base.


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Page 2 HB13-1272July 18, 2013

Table 1. Differences in State Tax Base and RTD and SCFD Tax Bases

Taxable or Exempt Item

Taxable by State

and Exempt fromRTD and SCFD

Taxable by RTD and

SCFD and Exemptfrom State

Candy and Soft Drinks

Cigarettes*

Direct Mail Advertising Materials

Food Containers

Low-emitting Motor Vehicles, Power Sources, and

Related Parts

Machinery or Machine Tools

Vending Machine Sales of Food Excluding Candy

and Soft Drinks

* Under current law, cigarettes will be exempt for sales and use taxes starting July 1, 2013. HB 13-1144 would eliminate the

sales and use tax exemption for cigarettes, and is currently on the House calender for consideration of Senate amendments.

State Revenue

This bill makes the RTD and SCFD tax bases identical to the state sales and use tax base.

Because there is no change to the state sales and use tax base, there is no state revenue impact.

State Expenditures

Each November, the Department of Revenue sends out tax coupon books with instructions

and guidance for common sales tax exemptions. With an effective date of January 1, 2014, the

Department of Revenue can notify taxpayers of the change from this bill through existing business

practices.

Local Government Impact

This bill changes the sales and use tax base for RTD and SCFD by eliminating some

exemptions and adding some others. These changes in the tax base will lead to an estimated net

increase of about 0.6 percent in sales and use tax revenue for RTD and SCFD.

Departments Contacted

Revenue Regional Transportation District


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Exhibit 6


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brief in support of plaintiff’s motion for preliminary injunction

Documents