By Elyse Apel
The Center Square

The National Taxpayers Union Foundation recently secured a major legal victory in Colorado that will result in $3 million in taxpayer reimbursements for certain property owners.

Tyler Martinez, a senior attorney for the foundation’s Taxpayer Defense Center, exclusively spoke with The Center Square about the case.

Martinez explained that the case centered on a water conservancy district in northeastern Colorado that doubled its mill levy rate without voter approval. The courts ruled this was not allowed under the state’s Taxpayer Bill of Rights, commonly known as TABOR.

“The main thing that TABOR does is allow people to have the right to vote on any tax increases or or taking on new debt,” Martinez explained. “If the government wants more money, they have to tell tell the people why and the people say yes or no.”

In March 2024, the Colorado Court of Appeals unanimously ruled in favor of the taxpayers in Aranci v. Lower South Platte Water District. Upon the water district appealing, the state Supreme Court announced it would not take up the case.

“It’s been five years of litigation,” Martinez said. “It has taken forever to vindicate these taxpayers rights, and so it’s a great win.”

The Lower South Platte Water Conservancy District, a government entity, made the move to double the mill levy on local property owners. In 2020, property owners in the district, which includes parts of rural Morgan, Washington, Logan and Sedgwick counties, were shocked by the unexpected increase.

James Aranci, one of those property owners, joined a coalition of his neighbors who were represented by the foundation’s Taxpayer Defense Center in the lawsuit.

“The Taxpayer Defense Center exists precisely for situations like this. In these cases, there’s a lot of commitment in time and money that most people can’t afford on their own,” Martinez said. “We can provide pro bono legal help and invest that five years and bounce around all the courts, and take that time to make sure … there is justice for all the taxpayers.”

Taxpayer repayment

The district has now been ordered by the courts to repay the current property owners the tax increase, which it must do over the next 10 years. After months of negotiations, it settled on the potential repayment options in June, which will begin in the property tax year 2025 (which is collected in 2026).

Additionally, not only must the district repay, it also has to pay 10% simple interest and reimburse attorneys’ fees and costs. In total, that will all amount to roughly $3 million. Martinez explained this is a monumental win.

“It is pretty rare for a case that deals with taxes to have to repay attorneys’ fees,” he said.

Joe Frank, general manager at the Lower South Platte Water Conservancy District, spoke with The Center Square about the case and the repayment plan.

“The district acknowledges its violation of TABOR, accepts the decisions of the courts, and desires to take full responsibility for its obligation to effect repayment to the constituents of the district,” Frank said.

According to its website, the district was first formed in 1964 and works to conserve waters flowing in the South Platte River and its tributaries. It also participates in “water-related projects” within the district.

Martinez said it is unclear how exactly the district will come up with the money for repayment.

“They shouldn’t have doubled the rate. When they were told that, they doubled down and kept fighting and digging in their heels for five years,” he said. “It’s a problem their own creation … They will probably have to tighten their belt, but what matters most is that the taxpayers give back what was illegally taken from them.”

As for the district, Frank also acknowledged that financial reality.

“The district will receive significantly less property tax revenue over the next 10 years,” he said. “Therefore, service revenues will increase over time and expenses (including staffing) will decrease.”

There are a couple different methods that have been approved for repayment, including a tax credit or temporary tax reduction. Each year, according to Martinez, the district is required to check in with the courts and give public notice on how it will be repaying it.

He added that there is no application process for property owners to receive the credit, it will be automatic as the government generates property tax bills.

“We wanted to make sure that they couldn’t do any shenanigans,” Martinez said. “They have to do it in the normal process.”

Battle over TABOR

Since TABOR was passed in 1992, there has been a growing assault on the law in recent years.

Proponents of getting rid of TABOR, almost entirely Democrats, argue it leads the state government to cut spending on necessary programs.

Or, as a recent failed joint resolution that would have required the General Assembly to sue TABOR to determine its constitutionality stated, TABOR’s spending limits “deprived [Colorado] of a republican form of government.”

But Martinez said TABOR has greatly benefited the state.

“It’s the magic sauce that made Colorado boom for the last 20 years,” he explained. “It doesn’t have to restrict the government. It just requires the government to say what it wants the money for.”

Backlash against TABOR has received little public support. In fact, in 2023, voters resoundingly voted against Proposition HH, which would have put TABOR refunds at risk of elimination by using excess TABOR funds to backfill lost revenue. That proposition received just 39% approval, showing that the vast majority of Coloradans still support TABOR.

The National Taxpayers Union Foundation and its Taxpayer Defense Center plans to continue to defend TABOR and Colorado’s taxpayers.

“We will always advocate for the taxpayers,” Martinez said. “We are on team taxpayer here, no matter what.”