A quirk of the Taxpayer’s Bill of Rights requires that even if voters agree to a tax increase — in this case about $176 million in new tobacco and nicotine taxes approved by voters in 2020 — if it generates more money than estimated, the state has to refund the excess.
The question in Proposition II is whether the state can keep the $23 million in tobacco and nicotine sales tax revenue that was generated above the $176 million estimate. If voters say no on Nov. 7, the state will be forced to refund that money to the stores that collected it from smokers, chewers, and vapers and lower the sales tax in future years.
The answer seems clear to us. Voters intended the money generated by these new and increased sin taxes would fund a new preschool program to get every Colorado 4-year-old in a school seat before kindergarten for at least 10 hours a week.
Colorado state lawmakers and Gov. Jared Polis who championed the new tax in Proposition EE in 2020 delivered on their promise — parents used an online portal this summer and fall to get 15 hours of tuition-free preschool funded with state tobacco and sales tax dollars.
But, there is no shortage of need.
As we opined earlier this month, some of Colorado’s students who are most in need of early childhood education were denied additional hours (up to 30) of class time funding under the new program. There simply wasn’t enough money to meet the needs of these students. Some private school leaders are reporting that they are losing money on the state’s tuition rates, and school districts like Cherry Creek fear a number of students did not enroll in preschool this year.
Preschools are not immune from the pressures of inflation, especially with the struggle to find teachers when most preschools do not pay a living wage.
Allowing the state to keep the nicotine and tobacco taxes for the preschool program is part of the cost of running a new state-wide education system.
This vote is not without precedent.
Colorado voters approved new taxes for the state’s new recreational marijuana system. The revenue estimates missed the mark, and the state asked voters if they could retain the extra revenue that had been collected.
Voters said yes to Proposition BB in 2015 and the marijuana industry has thrived despite sin taxes that are much higher than Colorado’s nicotine and tobacco taxes. The revenue from Proposition BB went to school funding — predominately one-time funding for rural schools in need of building repairs and infrastructure improvements. However, we would be thrilled if the nicotine and tobacco taxes caused a reduction in business for Big Tobacco and helped people kick their addictions. Some of the money from the tax does fund smoking and vaping cessation programs.
In a similar vein, voters can approve Proposition II and keep the funding flowing to the new preschool program.
The full taxation plan under Proposition EE hasn’t even been fully implemented yet. Sales taxes on nicotine and tobacco products will continue to increase over the next several years. The Post supported EE in 2020 and we hope voters will give the plan a chance to get fully implemented before adjusting the revenue.