Taxpayer Group Asks Court to Overturn “Unconstitutional” Car Tax

May 22, 2012
By
Joe Gratz / Foter

DENVER– In 2009, then Governor Bill Ritter and his blue ribbon Colorado Transportation Commission pushed the Funding Advancements for Surface Transportation and Economic Recovery Act (FASTER) through the Democrat-controlled state legislature, imposing a fee on vehicle registrations to generate roughly $250 million annually for bridge repairs.

Opponents protested that it was an unconstitutional tax hike in violation of the Taxpayer’s Bill of Rights – an argument that advanced Monday when a lawsuit was filed in the Denver County District Court by Mountain States Legal Foundation, on behalf of the TABOR Foundation, against the Colorado Bridge Enterprise and its directors.

The suit alleges that TABOR Foundation members were denied their constitutional right to vote on $100 million in taxes levied on vehicle registrations and $300 million in government bonds authorized by the Colorado Bridge Enterprise. The Foundation is seeking declaratory and injunctive relief and a refund of all revenues collected with interest in accordance with TABOR.

“In clear violation of TABOR, the General Assembly enacted and CDOT (Colorado Department of Transportation) implemented a scheme to levy taxes and raise revenues without a vote of the people of Colorado,” declared William Perry Pendley, president of Mountain States Legal Foundation.

Though the tax is levied on all vehicle registrations, Pendley noted that 29 of Colorado’s 64 counties have received no direct benefit from the tax.

“The way the Department of Transportation operates has been changed dishonestly; it was done through corruption of definitions and language in order to sneak around the rules,” said Penn Pfiffner, chairman of the TABOR Foundation.

“At some point our government must admit when it increases taxes, rather than try to fool citizens by saying taxes are ‘fees.’ At some point it must admit that the debt it wants to plunge its citizens into must first receive their permission before it is issued,” he said.

In 2009, the Colorado Transportation Commission and CDOT compiled a list of 128 bridges in dire need of repair which was the crux then-Governor Ritter’s campaign for FASTER.

“FASTER will protect our roads and bridges from uncontrollable decline so that parents can safely take their kids to school, so that businesses can safely transport goods and services, and so tourists can safely visit our great state,” Ritter asserted at the time.

“From the time Ritter got into office, he pushed for a ‘car tax,’ and FASTER essentially fulfilled that,” declared state Sen.Kent Lambert(R-Colorado Springs) who has vigorously opposed the act.

“It was an obvious tax increase without the vote of the people,” said Lambert. “The cost of registering vehicles through a fee is minimal, but the FASTER money was used for other purposes and should have been considered general taxation… I felt it was unconstitutional on its face.”

Then-House Republican Leader Mike May adamantly opposed the FASTER bill and the amendments to divert money from bridges to transit systems.

“The cookie jar is already being raided,” declared May. “Funds are already being siphoned off to develop mass transit.”

Although the revenue goals have fallen short, the Transportation Commission awarded $14 million of FASTER funds for statewide and regional transit projects for fiscal year 2013.  The projects include park-n-ride lot improvements, bus purchases, RTD ticket kiosks and bus benches.

Coloradans rebelled against the deeply unpopular levy, which increased vehicle registration fees by an average of $41 per car.  Taxpayers also chafed under a staggering $100 penalty for late registration payments that was imposed when FASTER was enacted in 2009.

Though the bridge repairs are slated to be completed in 2017, there is not a sunset for the fees assessed on vehicle registrations and car rentals as well as bridge and road tolls.

According to the Colorado Bridge Enterprise 2010 annual report, $300 million in bonds were issued at a 6.1 percent interest rate, nearly 4 percent paid by the state and the remainder paid by the federal Build America Bond subsidy. The bonds were designated for construction and repair of 47 bridges, to date no action has been taken on 55 bridges on the critical list.

In order to qualify as an enterprise, the state has temporarily transferred its ownership of more than 75 bridges to the Colorado Bridge Enterprise. According to an article published by the Independence Institute in May 2011, Richard Sokol reported that CDOT claimed only two bridges had a combined value of $1.4 million – and the others had zero value – in order to comply with TABOR’s enterprise regulations that cap the value of transferred bridges at $6.8 million.

“What is so hard for politicians to understand? A vote of the people would seem to be a pretty simple concept,” saidJeff Crank, state director of Americans for Prosperity. “Citizens should have been allowed to vote on the $100 million in new taxes and $300 million in new government bonds imposed by the Colorado Bridge Enterprise.  AFP fully supports the lawsuit to restore citizens’ rights in Colorado.”

To continue its sales pitch to the public, the Colorado Transportation Commission communication subcommittee met with Commissioner Heather Barry on January 18, 2012, to review a plan of “key messages and tactics” that focus on transportation, the economy, CDOT activities, funding and “what it means to the transportation of the future.”

The public relations “plan calls for a variety of internal and external communication tactics that utilize CDOT employees and the transportation commission to help educate stakeholders” in urban, rural and mountain regions.

In 2010, the Democrat sponsor of the controversial “Car Tax” hike, then-Rep. Joe Rice, was defeated by Republican challenger Kathleen Conti.  Ritter chose not to seek re-election.

Comments made by visitors are not representative of The Colorado Observer staff.

4 Responses to Taxpayer Group Asks Court to Overturn “Unconstitutional” Car Tax

  1. May 22, 2012 at 12:09 pm

    Glad to see this unconstitutional tax increase finally challenged in court, as one of the earliest (and leading) critics of the FASTER bill.

    Also happy to have played a part in setting the conditions for a legal challenge to have reasonable prospects for success (in the now Mullarkey-less Colorado Supreme Court).
    http://www.clearthebenchcolorado.org/2012/05/21/the-colorado-car-tax-er-faster-%E2%80%9Cvehicle-registration-fee%E2%80%9D-increase-challenged-in-court-as-violation-of-state-constitution/

  2. Stan
    March 28, 2014 at 8:51 am

    While the registration increase,in my mind, could possible be justified as a fee for usage the late charges are fines that can not be justified as a user fee. The original Colorado State Supreme Court found that registration charges were fees that could be justified by the vehicle use of the road way. The registration fee being a toll for the usage of the roadway. The late charge, though, is a punishment for paying late. In other words a government fine. Constitutionally there has to be due process for a fine to be imposed. A fine also can not be considered a toll for usage which the original Supreme court ruling limited vehicle registration fees to. The issue that the fine can’t be contested in court and that the fines are not connected to usage of the roads should make them unconstitutional and unlawful.

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