A federal appeals court on Monday revived a lawsuit challenging Colorado's strict limits on taxes and spending.
The 10th U.S. Circuit Court of Appeals said a lower court erred when it ruled that 10 local governments had no legal standing to file a lawsuit seeking to overturn a Colorado constitutional amendment known as the Taxpayer Bill of Rights or TABOR.
In a 2-1 decision, the appeals court said the plaintiffs — eight school boards, the Boulder County commissioners and a special district — do have a right to sue. The court didn't rule on the merits of the lawsuit.
TABOR, approved by voters in 1992, requires state and local governments in Colorado to get voter approval to increase taxes and issue bonds. It requires governments to refund taxes in excess of annual limits.
The lawsuit, filed in 2011, says that putting taxing authority in the hands of voters violates the federal law that admitted Colorado as a state. They say that law requires Colorado to have a republican form of government, and that elected officials should have the power of taxation.
Monday's appeals court ruling, written by Judge Stephanie Kulp Seymour, said the issue is complicated, likening it to "sludge."
TABOR's critics say it causes chronic state underinvestment in education and roads. Supporters say it imposes fiscal discipline on elected officials and limits taxes.
Michael Fields, director of the conservative group Colorado Rising Action, told The Denver Post he was confident TABOR will be upheld.
"People give government its authority, and Coloradans again and again choose having a say on tax increases and the size of government," he said.
David Skaggs, an attorney for the plaintiffs, told the newspaper the case has been stuck in procedural questions for eight years. "Now I hope we will be heading back to district court to finally get to the merits," he said.
The Democratic-controlled Legislature will ask voters in November's election to allow the state to retain excess tax revenue. House Speaker KC Becker argued the state should do all it can to address underfunded priorities, especially at a time of sustained economic growth.
TABOR opponents are trying to get a separate measure on the 2020 ballot that repeals it entirely.