Senate adopts bill letting state claw back some TABOR refunds after federal tax changes despite legal warnings

The Colorado Senate on May 8 passed House Bill 14-19, a measure directing the state controller to adjust prior-year TABOR refund calculations tied to federal tax changes, following extended floor debate and multiple failed amendments.

Supporters, including the bill sponsor on the floor, argued the measure corrects refund calculations after the enactment of HR1, which they said retroactively reduced 2025 income-tax collections and therefore changed the revenue base used to determine TABOR refunds. "The reduction in TABOR refunds was entirely because of HR 1," a supporter told the chamber, saying the change reflects the reality of the state’s 2025 revenues.

Opponents repeatedly urged colleagues to heed nonpartisan staff warnings that current accounting rules do not support retroactive accrual adjustments and that asking the controller and auditor to re-open certified books could invite legal challenges. "Our nonpartisan staff gave us a recommendation: don't do this," a senator opposing the bill said on the floor, arguing the state's books were closed in accordance with the constitution and generally accepted accounting principles.

Lawmakers offered floor amendments intended to require voter approval before retaining TABOR refunds and to guarantee repayment of any withheld amounts to taxpayers in later years; both were rejected. One amendment would have required that any effort to retain TABOR money be subject to voter approval; another would have spread returned dollars back to taxpayers over future fiscal years. Debate focused on the legal risks, the appropriate scope of accounting corrections after fiscal-year close, and the magnitude of the overrefund estimate, which witnesses and staff said had changed during the process.

The Senate ultimately voted to adopt the bill as amended on the floor. The measure passed the chamber after the final count was read and the motion to adopt carried. Sponsors said the bill is intended to align refunds with actual collections after HR1; critics warned that the step could expose the state to court challenges and could damage the status of prior audits and certifications.

Next steps: With Senate passage, the bill will move forward in the legislative process toward final enactment steps specified in statute.