NEWS 10/18/2026
How Proposition NN could change the politics of tax breaks in Colorado
Plus: Dems ramp up CD3 spending. Jared Polis on ballot measures. Melat Kiros on taxing the rich.
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Supporters gather at the “Yes for Colorado Kids” campaign kickoff in support of Proposition NN at Denver West High School on July 17 in Denver. (Cheney Orr, The Colorado Sun)
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If Colorado voters pass Proposition NN — the school funding measure that would increase the state spending cap by more than $4 billion — it could fundamentally change the politics of tax breaks at the state Capitol.
Lawmakers have long had an on-again, off-again relationship with tax breaks because of how they interact with the Taxpayer’s Bill of Rights.
The TABOR cap, of course, limits state revenue to the rate of inflation and population growth. Any revenue collected beyond that has to be refunded to taxpayers.
As a result, in years with a TABOR surplus, tax credits become a way for lawmakers to give money to their favorite cause without the trade-offs that come with spending money from the state budget. Instead, all it costs is a slice of the TABOR surplus, which has to be refunded to taxpayers anyway.
The problem — as any Joint Budget Committee member will tell you — is what happens when the TABOR surplus goes away. In those years, tax credits cut directly into state services, because there’s less money left over for lawmakers to spend.
That has resulted in a political dynamic that varies depending on how much revenue the state is bringing in at the time. In TABOR surplus years, state tax breaks tend to proliferate. And in bad economic times, lawmakers look for tax breaks to get rid of so they have more dollars they can spend on public services.
This has come to a head a few times in the last decade, most recently in the 2025 special session, when Democrats eliminated a number of tax breaks to stanch the budget bleeding caused by H.R. 1, the federal tax and spending bill passed last year by Congressional Republicans.
If Proposition NN passes, however, the equation changes. Tax credits will no longer feel like Monopoly money when there’s a TABOR surplus. Instead, they will cut directly into a pot of voter-approved funding that would otherwise be spent on K-12 schools.
Lawmakers got a sneak peek at the optics this would create earlier this year when some Democrats proposed giving tax breaks to data centers. Because the state was so close to the TABOR cap, doing so could have eliminated two tax credits for low-income Coloradans that automatically turn on and off based on the state’s annual revenue growth.
The result: Tax breaks for billionaire-owned tech giants could have literally come out of the pockets of Colorado’s poorest families.
If Proposition NN passes, expect that dynamic to repeat with every proposed tax break that surfaces at the state Capitol in the future. But unlike the data center bill, future tax breaks would come from dollars reserved for school districts and childcare.
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CORRECTION : An item in last week’s edition on Proposition 137 incorrectly reported the latest Taxpayer’s Bill of Rights surplus projections from the governor’s office. The Governor’s Office of State Planning and Budgeting forecasts the state will have $607 million in TABOR surplus this fiscal year and $287 million next fiscal year, and $334 million in the year after that.
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COMPETING WITH K-12
When lawmakers drafted the bill that became Proposition NN, they took care to ensure that it wouldn’t take money away from other Democratic priorities, such as the family affordability tax credit and the expanded low-income tax credit.
That’s noteworthy for a few reasons. For one thing, those tax credits were designed to spend down the billion-dollar TABOR surpluses the state was experiencing after the pandemic. But by keeping them in place, it means Proposition NN won’t generate nearly as much money for K-12 as it could have otherwise.
It also means that the tax credits will eventually compete directly with K-12 for funding in a way that lawmakers never intended.
“The premise of those credits is that they are designed only to become available when they don’t damage the budget,” Greg Sobetski, the chief economist for Colorado Legislative Council Staff, told the JBC last month.
“In the Prop. NN situation, those credits are now not reducing the TABOR surplus — they’re reducing the amount available for education,” he added.
But, as state Sen. Jeff Bridges, D-Greenwood Village, noted, that would also be true of every other tax break the state provides.
If NN passes, “essentially, all tax credits now are dollars that could be used elsewhere — or theoretically, at least could be used for general fund purposes,” Bridges said. “Whereas, with this TABOR cap, we just sort of have this money that we can’t use anyway, and the legislature has found all sorts of ways to use it through tax credits.”
It’s not clear what that will mean going forward for the low-income tax credits. But, if Proposition NN passes, expect there to be a lot more scrutiny of tax breaks in the future — particularly ones that don’t align with the priorities of legislative Democrats.
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WHAT TO WATCH IN THE WEEK AHEAD
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- State candidates and committees must report their fundraising and spending between Oct. 1 and Oct. 14 on Monday.
- The Legislative Audit Committee meets at 9 a.m. Monday at the state Capitol.
- The Capitol Development Committee meets at 10 a.m. Tuesday, also at the state Capitol.
- Colorado Sun Elections Editor Jesse Paul will interview Republican U.S. Rep. Gabe Evans and his Democratic challenger, former state Rep. Manny Rutinel, separately in front of a live audience at the University of Northern Colorado starting at 6:30 p.m. Tuesday. Find details and register to attend here.
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YOU HEARD IT HERE
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“Taxing the rich is important to fund our programs, but it’s also important to protect our democracy, to make sure that no one individual accumulates enough wealth and enough power and enough influence to become so above the law that they could literally do whatever they want.”
— Melat Kiros, the Democratic nominee in Colorado’s 1st Congressional District
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Kiros, the democratic socialist from Denver who defeated Democratic U.S. Rep. Diana Degette, a three-decade incumbent, in the June primary, made the comment at a Tattered Cover bookstore event Monday with investing expert and author Amanda Holden.
Kiros urged attendees to vote for Amendment 87 in November, a ballot question backed by progressives that would replace Colorado’s flat income tax with six new brackets. If passed, it would cut taxes for most Coloradans and raise taxes on people and companies making more than $500,000 to fund healthcare, K-12 education and childcare programs.
“We’ve created an entire system, an entire political system where you can literally buy politicians like you’re buying a cup of coffee,” she said.
POLIS ON BALLOT MEASURES
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Gov. Jared Polis over the weekend released his annual list of how he’s voting on Colorado’s ballot measures.
Polis is a “no” on Amendments 81, 82, 83, 84 and 87. He’s also a “no” on Propositions 134 and 135.
The governor says he will be voting “yes” on Amendments 85, the plain-language ballot measure initiative, and 86, the conservative measure aimed at making it harder to redraw congressional maps mid-decade. He’s also a “yes” on Proposition 136, which would cap the state’s income tax rate at 4.4%, and Ballot Issue 7A, which would increase the sales tax in some Front Range communities to raise money for a passenger rail system.
Polis is also a “yes” on Proposition NN, which would eliminate Taxpayer’s Bill of Rights refunds for the foreseeable future and route that money exclusively, for the first 10 years, to education and early childhood programs.
Polis said he’s undecided on Proposition 132, which would increase criminal penalties for fentanyl dealing and possession, as well as Proposition 133, which would make human trafficking of a minor punishable by life in prison, and Proposition 137, which would route sales tax revenue from sporting goods purchases to conservation, wildfire mitigation and outdoor recreation.
“While I don’t like when spending is done on the ballot (because we still have to balance everything), this makes some sense because it’s the sales tax collected on goods used for outdoor recreation so it makes sense it supports the outdoors,” Polis wrote on Facebook about 137.
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THE POLITICAL TICKER
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TV ADS
Another week, another round of new TV ads from congressional candidates.
Democrat Jessica Killin, who is trying to unseat Republican U.S. Rep. Jeff Crank in the 5th Congressional District, is running a new spot criticizing President Joe Biden’s immigration policies.
“Joe Biden completely failed us on the border,” she said.
The ad is confusing because … Killin worked in Biden’s White House as a presidential adviser and chief of staff to then-Vice President Kamala Harris’ husband, Doug Emhoff.
Killin is also running a new ad tying Crank to President Donald Trump.
Former state Rep. Manny Rutinel, a Democrat running to unseat Republican U.S. Rep. Gabe Evans, is out with a pair of new TV ads criticizing Evans over high gas prices and his votes against releasing the Epstein files. (Evans eventually voted to release the files once it became clear the effort would pass, but he initially sided with Trump in fighting their disclosure.)
BUSINESS COUNCIL
The Governor’s Competitiveness Council last week sent a letter opposing Amendment 87, in the latest sign of business groups mobilizing against the proposed graduated income tax system.
“Taxes are not the only consideration in deciding where to live, invest, or build a business, but they matter,” reads the letter, which was signed by more than two dozen business leaders. “States ignore that fact at their peril.”
The council issued the letter days ahead of its full report on how to make Colorado more competitive for businesses, a 44-page road map released by Gov. Jared Polis on Wednesday that calls for eliminating regulations and simplifying the tax code, particularly at the local level.
The report also calls for more public investments in job training, housing and transportation infrastructure — but doesn’t identify how to pay for it.
AMENDMENT 87 IMPACTS
The Romer Institute of Evidence-based Policy released its own evaluation of Amendment 87 this week and found mixed evidence in the academic research for the claims made on the campaign trail.
Several studies agree that higher corporate taxes reduce economic growth and investment, although only moderately. Others found either no relationship or the opposite — a small positive relationship between higher corporate tax revenue and personal income growth.
But while taxes may reduce business investment somewhat, there are clear benefits, too: An analysis of more than 30 studies found that increased public spending on K-12 improves educational attainment, with low-income children seeing the largest gains.
On the individual income tax side, studies found that raising taxes on higher earners does lead some households to relocate or find ways to shelter more of their income from state taxes.
GOVERNOR’S OFFICE
Tucked inside an announcement from Gov. Jared Polis’ office last week about his efforts to drive down gas and diesel prices was news that the Democrat has asked the Trump administration to, for a second year, waive reformulated gas requirements for the Denver area in 2027.
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THE NARRATIVE
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The DCCC put the 3rd Congressional District on the map. Democratic groups haven’t reported entering the fray — yet.
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U.S. Rep. Jeff Hurd, R-Grand Junction, meets with constituents Aug. 17 at a library in Glenwood Springs. (Jesse Paul, The Colorado Sun)
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When the Democratic Congressional Campaign Committee earlier this month added Colorado’s 3rd Congressional District to its list of top 2026 targets, it was meant as a signal to Democratic groups that they should start spending on the race to unseat Republican U.S. Rep. Jeff Hurd.
As of Thursday night, nearly two weeks later, no Democratic super PACs had reported heeding that call by investing in the district against Hurd or for his Democratic challenger, former Aspen City Councilman Dwayne Romero.
We’re told, however, that the cavalry is coming and their spending will show up soon on the Federal Election Commission website.
Additionally, the House Majority PAC, a Democratic super PAC tied to House Minority Leader Hakeem Jeffries, is slated to use some of the TV ad time it reserved in Colorado to help Romero. And the DCCC is spending $50,000 to help Romero get more airtime for one of his existing ads.
But the Democratic spending allegedly on the horizon will have to be big to keep up with the money already dropped on the race to benefit Hurd.
FEC filings show about $1 million has been spent since May in the 3rd District on Hurd’s behalf, most of it from super PACs tied to President Donald Trump.
If the Democratic spending doesn’t ramp up more in the coming days, it could be for a few reasons:
- Democratic groups think their money is needed elsewhere
- They think Hurd is toast regardless
- They don’t think Romero can beat Hurd
- The spending will come in at the last minute
The fourth option seems most unlikely given that Election Day is about two weeks away and Colorado voters have had their ballots for a week or more at this point. Any Democratic investment in the 3rd District at this point could be fairly called last minute.
Remember: Democrats were mostly ignoring the 3rd District a few months back.
Julie Merz, executive director of the DCCC, sent a memo to donors last week citing the 3rd District in warning that the group needs more money to prevent “leaving winnable races on the table.” (The memo was first reported by Punchbowl News.)
Hurd reported raising $465,000 in July, August and September and spent $1.3 million during that span, starting October with $925,000 in the bank. Romero, who was recently endorsed by the Blue Dog Democrats in Congress, reported raising more than $700,000 during the quarter, not including $110,000 he loaned his campaign, but had just $262,000 in the bank to start October after spending about $650,000.
(Romero had loaned his campaign $460,000 in total through September.)
What’s confusing is, if the 3rd District really is in play, how Democratic super PACs have begun investing in the 4th Congressional District seeking to unseat Republican U.S. Rep. Lauren Boebert, who is considered the most secure of Colorado’s four GOP members of Congress.
As The Sun reported this week, a super PAC funded by a liberal California billionaire dropped $1.5 million into the 4th District in opposition to Boebert, building on about $50,000 spent by a PAC tied to the Democratic group American Bridge 21st Century in support of Boebert’s Democratic challenger, Eileen Laubacher.
The House Freedom Caucus’s super PAC had spent about $450,000 to defend Boebert in the 4th District.
Laubacher had raised about $13 million for her longshot bid to unseat Boebert through September and had more than $3.3 million in the bank to begin October after spending nearly $10 million of that haul. Boebert had less than $250,000 in the bank to start the month after raising about $150,000 during the stretch and spending a little more than that.
Most of the congressional super PAC spending in Colorado this year has gone to the highly competitive 8th Congressional District, followed — not so closely — by the 5th Congressional District.
WTF FEC FILING OF THE QUARTER
Our what-the-fudgesicle FEC report of the quarter comes from Republican state Sen. Mark Baisley, whose campaign said it raised and spent $0 in July, August and September as he vies to unseat Democratic U.S. Sen. John Hickenlooper.
Baisley reported a measly $26,000 in cash on hand to begin October.
If that’s not a mistake, it’s shocking in a state where many millions used to be spent on every U.S. Senate race. “Wha? No, that is not right. I will investigate and let you know…” Baisley said over text Thursday night when we inquired about his campaign’s quarterly filing.
Baisley later said his campaign would be refiling. Still, entering October with $26,000 in the bank, even if there was fundraising and spending last quarter, is atrocious for a major party Senate candidate.
Hickenlooper reported having more than $2.3 million in the bank to start October after raising $860,000 during the quarter and spending about $925,000.
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THE BIGGER PICTURE
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