Proponents defend two ballot measures to eliminate Colorado food sales and use taxes; staff pressed definitions, preemption and bond protections

Proponents of two related ballot initiatives seeking to repeal Colorado sales and use taxes on food and on food sold for immediate consumption defended the measures during a March 20 review by Legislative Council staff and the Office of Legislative Legal Services.

Nicole Myers of the Office of Legislative Legal Services opened the session by reading the staff memorandum and the stated purposes of initiative 2025–26 number 274, which include making legislative findings, eliminating state sales tax on food, redefining food broadly, excluding alcohol and certain labeled supplements, preempting local food taxes, allowing narrowly tailored regulatory fees, and protecting existing bonded indebtedness authorized before Jan. 1, 2028.

Natalie Metton, a designated petition representative for the proponents, said the draft was amended to clarify several points staff flagged. "That is our intent," Metton said when staff asked whether the initiative is intended to repeal the existing statutory definition and "repeal and reenact" the relevant subsections in the Colorado Revised Statutes.

Staff pressed proponents on how retailers and the Department of Revenue would determine which items qualify as "food" or "food for immediate consumption," citing edge cases such as plain ice, dual‑labeled dietary supplements, packaged candy and fruit juices that can be taxed under current law. Myers asked whether retailers would be put in the position of making point‑of‑sale determinations; Metton said the amended language narrows exclusions and that nutrition‑facts versus supplement‑facts panels would be a primary guide: products with a federal supplement‑facts panel would remain taxable. "If it has the supplement panel...then that is what categorizes it differently," Metton said.

On the question of alcohol, staff sought clarification of section 4, which the memorandum proposed to repeal and reenact with amendments to state whether alcoholic beverages are taxed. Metton reiterated that the proponents do not intend to add a new tax on alcohol and that alcohol beverages are excluded from the food exemption in the measures.

A central legal issue staff raised was whether the initiative's preemption of local sales and use taxes on food would conflict with home‑rule authority under the Colorado Constitution. Metton responded that proponents view taxation of food as a matter of statewide concern and that the measure is intended to supersede local taxing authority to achieve uniformity.

Staff also asked about the measure's protections for existing bonded indebtedness that relied on food‑tax revenues. Metton said the amended draft allows local governments to continue collecting the pledged tax solely to satisfy scheduled principal and interest payments and provides a 90‑day wind‑down period following full payment. She said enforcement would rely on taxing agencies, auditors and, ultimately, taxpayer enforcement rather than a new enforcement mechanism within the initiative.

When staff asked about possible fiscal impacts on municipalities that rely on restaurant and prepared‑food sales tax revenue, Metton said proponents believe consumer savings would lead households to spend elsewhere in the taxed economy and that local governments could seek alternative revenue if necessary. Metton characterized the consumer benefit as modest but tangible, saying proponents estimate "roughly 10 days of groceries in a year" of savings for households.

Myers and other staff noted numerous technical drafting details needed to implement the proposal as written—including precise amending‑clause language and placement of new statutory sections—and recommended language changes to make the repeal‑and‑reenact approach explicit in the statutory text. Metton said the proponents had made many of those drafting changes in the amended drafts and welcomed further guidance.

The staff review covered both initiative 274 and the related initiative 275 (which narrows scope to food sold in ready‑to‑eat or ready‑to‑drink form, described in the hearing as "prepared food"). The proponents confirmed the two measures were submitted by the same designated representatives and that the drafters had aligned the language where appropriate.

The hearing concluded with no formal votes or actions; staff asked whether they should walk through the memorandum's technical comments and the proponents declined, saying most issues had been addressed in the amended drafts. The session was adjourned.

The next steps for both initiatives are procedural: proponents may further revise language in response to staff technical comments before the measures proceed through the Title Board process and any subsequent ballot‑qualification steps.