The press conference Monday on the state Capitol steps was unusually short, Gov. Jared Polis told reporters, because the news being announced spoke for itself: every Colorado taxpayer will be getting $400 — $800 for joint filers — in a check in the mail late this summer.
“It’s a very simple policy: check your mailbox in late August, early September,” Polis said.
To hear him and other leading Colorado Democrats tell it, state government is responding to the fact that gas, groceries and a bunch else cost more these days. They could have sat on the $1.4 billion they’ll use for this program until next tax return season, the Democrats said, but better to get it to people soon, as inflation spikes and outpaces wage growth.
Standing next to a banner that read, “Putting $400 in Coloradans’ pockets,” the governor touted the plan as “another big step to save people money.” On social media and in reporters’ inboxes, his administration called it the Colorado Cashback and the Colorado Dividend.
Left unsaid in this rollout was the fact that Colorado taxpayers were already set to get back hundreds — more, for some wealthier folks — in tax refunds that come from the same pot of money covering the $400 checks. It’s all drawn from revenues the state is constitutionally barred from retaining by the voter-approved conservative fiscal device known as TABOR, or the Taxpayer’s Bill of Rights.
But save for a passing remark by Treasurer Dave Young, none of the Democrats even mentioned TABOR in their speeches at Monday’s announcement. None mentioned that the money they’ll use on checks this summer was already scheduled to go out, and indeed required to go out.
And none mentioned that in recent weeks Polis, the news conference emcee, privately fought Democratic lawmakers’ attempts to restructure TABOR refunds to benefit the working class.
“Smart politics”
The focus of the messaging was rather that, one, everybody’s getting a $400 check and, two, it’s coming about eight months earlier than TABOR refunds usually do. Checks should land a couple of months before ballots go out, in what figures to be a critical year for Democrats trying to hold onto their Capitol trifecta, and for Republicans hoping to finally regain a modicum of power at the state level.
The Senate minority leader, Republican Chris Holbert of Douglas County, said he was “insulted” by the Democrats’ framing. But he had to give them credit.
“I think it’s smart politics,” he said, “especially in an election year, because so many people don’t understand the differences and don’t have time to look at the differences between our state government and the federal government.”
The former can’t deficit-spend, meaning there is no chance for the kind of out-of-thin-air stimulus the latter can order. Holbert expects many — perhaps even most — Coloradans will see these checks and assume they’re just like the $1,400 payments the federal government sent out earlier in the pandemic.
“A very clever campaign tactic,” said the GOP’s top budget official in the Senate, Carbondale’s Bob Rankin.
“I think the timing is interesting. It’s just before a critical campaign in which we, the Republicans, believe we have a chance to make significant gains. (Democrats) realize that, and so this is just a campaign trick. It doesn’t really help anybody very much above what they would get through the normal process.”
Though they were not forthcoming about it in the program’s unveiling, several Democrats in follow-up interviews conceded that, yes, the election is on their minds. The House is controlled 41-24 by Democrats, but only 20-15 in the Senate, so three flipped seats in November would swing the chamber right. One of the lead sponsors of the bill to implement the checks program, SB22-233, is Sen. Nick Hinrichsen, a Democrat of Pueblo who was not a driving force behind the policy, but whose seat is a must-get for Republicans in November. Both House sponsors are Democrats in November races that should be competitive.
“Are there election-year implications? Absolutely,” said Denver Democratic Sen. Chris Hansen, Rankin’s colleague on the Joint Budget Committee. “Everything we’ve done this session, we’ve obviously thinking about the election. We are really trying to carefully manage our policies this session to be advantageous for Colorado, but also to recognize the political moment we’re in. Nationally, this is going to be a tough cycle for Democrats, I think we can all see. … We’re trying to recognize that and proceed carefully as a result.”
But he and other Democrats insisted they did not mean to distort reality when they stood with the governor to announce their “very simple” tax refund plan.
The real numbers
TABOR requires the state to refund tax revenue in strong economic years, and the 2021-22 fiscal year wrapping in June has been unusually strong. So much so, in fact, that the state is poised to send back north of $2 billion — the highest total in a generation. According to a March forecast by nonpartisan state economists, even the lowest earners in the state were projected to get back at least $333 each.
Had the legislature taken no action, the roughly $2 billion in refunds would have gone out as follows: $163 million in property tax relief for seniors and veterans; $133 million in a temporary cut to the state’s flat income tax rate; and the remainder, about $1.7 billion, in sales tax refunds tiered in six levels based on income, with poorer people at the bottom tier receiving smaller refunds and higher-income people getting back more.
“The governor’s office would have been perfectly fine with the TABOR refunds going out as projected,” Senate Majority Leader Dominick Moreno said Tuesday, after the checks program was unveiled. “At least through the mechanism and policy we have outlined, it’s more equitable. It benefits folks on the lower end of the income spectrum more than it would have otherwise.”
That, of course, is not how the program was sold in its rollout. Democrats didn’t get into details on how the majority of taxpayers — that is, the roughly 75% of adults in the state who make under $100,000 — will see one-time increases in TABOR refunds that are nowhere near $400 above what was already scheduled. Neither did they say that the top four of the state’s six designated income tiers will lose money.
Rep. Julie McCluskie of Dillon, a Democrat who chairs the budget committee, said that her party has a basic challenge in messaging on fiscal policy: TABOR is easy for Republicans to sell at front doors and in mailers, because one can explain in just a couple of sentences that it’s a check on government growth and a way for Coloradans to have a say on taxes.
She believes Democrats have a compelling story to tell, too — but it takes longer to spit out: TABOR, Democrats generally believe, is disastrous for Colorado because it does not allow the state’s spending to keep up with its evolution. They blame TABOR for chronic underfunding of education, transportation, climate action, behavioral health support and more. They note that fiscal policy here saves wealthier people more money through the flat income tax and tiered TABOR refunds. They daydream about what good they could do through the state budget if they weren’t constrained by things like the refund requirement, or if the state had a progressive income tax scheme that taxed the rich at a higher rate.
So, it is hard to lay the groundwork for the anti-TABOR movement, Democrats often say, because their side’s argument contains so much more nuance than the pitch Republicans can make. Political messaging is already hard, McCluskie added — especially on this topic.
“The biggest problem that we have, and maybe this is social media and maybe it’s how fast the world moves these days, is that we try to communicate and we’re lucky if we get a headline out there,” McCluskie said in an interview. “It is hard to explain the complexities of many policies. I don’t ever want to be disingenuous, and I’m committed to being fair and transparent in everything I do. But it is hard to have the time or the ability to explain these stories, the details, in a way that people will be receptive to.”
Inviting friendly headlines
Some other Democratic leaders distanced themselves from the vastly simplified message displayed on the banner on Monday: “Putting $400 in Coloradans’ pockets.”
“I’m not in charge of banners,” House Speaker and Denver Democrat Alec Garnett said.
Hansen suggested The Denver Post direct questions about messaging to the governor’s office, which declined an interview request and sent back a short statement mostly reiterating Monday’s talking points.
Hansen also argued that the checks program will be more impactful for lower earners than one would infer from reading the nonpartisan state economic forecast pegging the bottom tier at a projected $333 in sales tax refunds. But it is evidence of the difficulty of quickly and plainly relaying appealing messages on TABOR from the left that it takes a while to understand his case.
That case is this: The $333 figure is calculated based off of an assumed $1.7 billion in sales tax refunds — put another way, that’s $2 billion minus the property tax relief and temporary income tax cut — from fiscal year 2021-22. But the checks program only costs $1.4 billion, and if the formula that informs the six-tier system were run through that amount of money, the state’s lowest earners would get back $276. Hansen insisted that an extra $124 is no small thing to a working person.
If the state uses just $1.4 billion to send out checks this summer, that would still leave about $300 million in projected refunds not already dedicated to property tax relief, an income tax cut or $400 refunds. Left untouched, that money would be run through the six-tier formula, delivering Coloradans another couple dozen bucks at most, on average.
Except Democrats do plan to touch that money. They expect in these waning days of the legislative session, which ends May 11, that they will approve around $150 million in tax credits and fee relief. Such policies — suspension of the gas tax, for example, or credits for senior housing — reduce revenues to the state and effectively reduce the total amount of money to be refunded by TABOR. If all goes to the Democrats’ plan, there will actually be closer to $1.85 billion in refunds from the current fiscal year.
Democrats have for months been fairly open about how they’d like to reform TABOR, and specifically about how they believe TABOR refund money can be redirected to people struggling economically, away from those who are doing fine. But in the days leading up to Monday’s announcement, many of them suddenly hesitated to speak frankly in interviews about what, exactly, they and Polis planned to announce. The united front they presented on the Capitol steps was a product of difficult and weeks-long negotiations between a governor and legislative leadership split on how to play this.
But none of that came through in the announcement.
“I’m happy to talk to anybody about what we are doing with this policy, what the background is, what the context is, what we’re doing with TABOR refunds,” McCluskie said. “We often end up relying on headlines to communicate to the public.”
They earned some favorable ones this time.
Reported local television stations, “Governor Jared Polis and Colorado legislators have announced that many residents will receive $400 cash back,” and, “If you’re a Colorado taxpayer, the state wants to reward you with a little extra in your pocket.” Some news outlets that did mention TABOR failed to explore the nuance behind the program. The Democrats kept things simple, and local news outlets mostly did, too.
Said McCluskie, “When you look at the complexities of TABOR, trying to communicate all of that in a bite-size, realistic frame — you do the best you can.”
