Why it matters
Taxpayers would decide whether Colorado keeps $817 million that otherwise would return through income, sales and property tax refunds in the first year, while only about $203.6 million is directed to schools and the higher limit on what the state can keep stays after the 10-year school window ends.
Ballot pitch centers on school funding for 10 years
Colorado lawmakers have introduced a bill with 42 Democrat sponsors to send voters a November 2026 ballot question asking whether the state should increase investment in kindergarten through 12th grade education for the next 10 years.
Senate Bill 26-135 would refer the question to voters, and a review of the 13-page bill text and the Legislative Council Staff fiscal note, the legislature's estimate of the measure's impact, published March 10, shows the proposal reaches beyond the 10-year school funding pitch in the ballot language.
The measure targets the Taxpayer's Bill of Rights, the state rule that limits how much tax money Colorado can keep and sends the rest back as refunds, known as TABOR. Because it is a ballot referral rather than a constitutional amendment, it needs only a simple majority in both chambers to reach the ballot.
Refund cut reaches $817 million in first year
The Legislative Council Staff fiscal note projects an $817 million reduction in refunds in fiscal year 2027-28, the first year the plan would take effect, with losses spread across income, sales and property tax refund methods.
The fiscal note breaks the $817 million down to $319.8 million from the income tax rate reduction, $285.3 million from the six-tier sales tax refund and $211.9 million from property tax refunds. Those are three separate ways refunds would shrink under the plan.
Of the $817 million retained, approximately $203.6 million would go to schools through the Positive Factor, a new funding factor for school districts. Surplus revenue beyond the education allocation would go to the general fund, where the legislature could spend it for any purpose.
State can keep more tax money long after school funding window ends
Section 24-77-302(1) says that for state fiscal years starting on or after July 1, 2027, the state may retain and spend revenue it otherwise would have been required to refund, and that authority has no end date.
The school part runs on a different clock. Section 24-77-302(2)(b) directs the legislature to fund the Positive Factor for school districts for each state fiscal year beginning on or after July 1, 2027, and before July 1, 2037, a 10-year window that ends even as the higher cap continues indefinitely.
The bill raises the maximum revenue the state can retain from $21.19 billion under the current limit, known as the Referendum C cap, to $26.01 billion. The $4.8 billion increase equals the state's K-12 education funding for fiscal year 2026-27.
Ballot wording leaves out permanent change and dollar cost
The ballot language includes an audit requirement but does not mention that the cap raise is permanent, that surplus revenue can go to the general fund for any purpose, or the $817 million first-year refund reduction.
It also does not disclose any dollar amount, even though the fiscal note puts a specific first-year figure on the refund loss. The measure does not raise tax rates, according to Chalkbeat Colorado, and would instead reduce or eliminate the annual refunds taxpayers have received in recent years.
The bill is scheduled for its first hearing before the Senate Finance Committee on Thursday, March 12. If lawmakers approve the referral, November 2026 voters would get the final say on whether the state keeps revenue that otherwise would have been refunded.
