Why it matters
Taxpayers would give up an estimated $817 million in refunds in the first year, while schools would receive approximately $203.6 million of the retained money and surplus beyond the education allocation could be spent for any purpose. The school funding runs 10 years, but the state's added power to keep refunds has no end date.
Lawmakers send tax refund question toward November ballot
Colorado lawmakers introduced Senate Bill 26-135 with 42 Democrat sponsors to refer a ballot question on taxpayer refunds and school funding to voters in November 2026.
The ballot wording asks whether the state should increase K-12 education investment 'for the next ten years.' A review of the 13-page bill text and the Legislative Council Staff fiscal note, the official estimate of the bill's cost and revenue effects, published March 10 found provisions extending well beyond that 10-year school pitch.
The bill is scheduled for its first hearing before the Senate Finance Committee on Thursday, March 12. Because the measure is a ballot referral rather than a constitutional amendment, the bill needs only a simple majority in both chambers to reach the November ballot.
State power to keep refunds would have no end date
For state fiscal years starting on or after July 1, 2027, Section 24-77-302(1) lets Colorado retain and spend revenue the state otherwise would have refunded. The refunds are required by the Taxpayer's Bill of Rights (TABOR), the state rule limiting how much tax money Colorado can keep before sending the rest back.
The bill text contains no end date for that authority, so the power to keep revenue above the TABOR cap begins in 2027 and continues indefinitely. The measure raises the maximum revenue Colorado can retain from $21.19 billion under the current state revenue cap, known as Referendum C, to $26.01 billion.
The $4.8 billion increase equals Colorado's K-12 education funding for fiscal year 2026-27. The school piece runs on a different clock: Section 24-77-302(2)(b) directs the legislature to fund a new Positive Factor for school districts for each state fiscal year beginning on or after July 1, 2027, and before July 1, 2037.
First-year refund cut reaches $817 million across three sources
The Legislative Council Staff fiscal note projects an $817 million reduction in TABOR refunds in fiscal year 2027-28, the first year the proposed change would take effect.
The projected cut breaks down as $319.8 million from the income tax rate reduction, $285.3 million from the sales tax refund paid in six tiers and $211.9 million from property tax refunds. Those three pieces add up to the full $817 million first-year reduction described in the fiscal note.
Of the $817 million retained, approximately $203.6 million would go to schools through the Positive Factor. The bill does not raise tax rates, according to Chalkbeat Colorado, but would reduce or eliminate the annual TABOR refunds Colorado taxpayers have received in recent years.
Surplus retained revenue beyond the education allocation would go to the general fund for any purpose, allowing the legislature to spend money kept from refunds on priorities beyond schools.
Ballot wording omits permanent change and first-year cost
The ballot language includes an audit requirement but does not mention that the revenue cap raise is permanent or disclose the $817 million first-year refund reduction.
The wording also does not mention that surplus revenue beyond the education allocation goes to the general fund for any purpose. It does not disclose any dollar amount.
The contrast at the center of the November question is the timeline: school funding through the Positive Factor is set for 10 years ending before July 1, 2037, while the authority to retain revenue above the cap has no end date. If the referral clears both chambers by simple majority, voters will decide the question in November 2026.
