City Council Study Session Agenda and Packet 2019 11 12

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CHAPTER FIVE: REVENUE AND FINANCE THE TABOR AMENDMENT LIMITATIONS ON REVENUES, TAXING, AND DEBT In November 1992, Colorado voters adopted the Taxpayer's Bill of Rights (TABOR) as an amendment to the state constitution.231 TABOR revolutionized municipal finance in Colorado by imposing a variety of limitations and election requirements on municipal decisions relating generally to revenue and taxation, spending, and multiple -year fiscal debt. In general, voter approval is required before imposing any new tax or tax increase, or entering any financial obligation that extends beyond the current fiscal year. Also, unless voters approve opting out of TABOR's revenue limitations, TABOR restricts the amount a municipality's revenue can increase from year to year.232 A full discussion of TABOR is beyond the scope of this publication. TABOR continues to be the subject of intense litigation determining the meaning of its terms and the scope of its requirements. Before any contemplated action in the general area of municipal finance is undertaken, both CML's TABOR publication and a municipal attorney should be consulted for direction.233 THE EXPENDITURE OF PUBLIC FUNDS APPROPRIATIONS AND PUBLIC PURPOSE Deciding how to spend the public's money is one of the governing body's most important duties. It is also likely to provoke the most criticism, since taxpayers are notably sensitive when their pocketbooks are affected. Two requirements must be met before an expenditure can be authorized — the expenditure must be for a public purpose, and the governing body must have previously appropriated sufficient money to cover the expenditure.234 There has been much litigation concerning what constitutes a public purpose. In general, a public purpose is one that will promote the general welfare.231 Even if a planned expenditure is for an authorized public purpose, the governing body still generally may not make the expenditure unless it has previously appropriated enough money to cover the expense of the contract or purchase.231 In its legal sense, "appropriation" is the formal allocation of a certain amount of money for a specific purpose. An appropriation serves to limit and guide municipal officials in making disbursements of funds. Generally, persons who enter into a contract with the municipality for purchases or services not covered by a prior appropriation will not be entitled to recover the full amount should the city default, despite the existence of the contract.217 ANNUAL APPROPRIATIONS ORDINANCE Pursuant to the Local Government Budget Law, before the beginning of the municipal fiscal year, the governing body must adopt a budget and pass its annual appropriations ordinance to cover expenditures for the coming year.231, If the governing body fails to adopt a budget by the date required for the mill -levy certification, the appropriations for the new year are set automatically at 90 percent of the amounts for the previous year.231 The total amount appropriated shall not exceed the anticipated revenue and expenditures outlined in the coming year's budget.241 231 COLO. CONST. art. X, § 20. 232 COLO. CONST. art. X, § 20 (With voter approval, municipalities may "opt -out" of TABOR's limitations on annual revenue increases, but there is no provision for opting out of TABOR's elections requirements for new taxes and debt.). 233 See generally CIVIL, TABOR: A Guide to the Taxpayer's Bill of Rights. 234 See generally C.R.S. §§ 29-1-101 et seq.; see also C.R.S. §§ 24-91-103 et seq. (public works construction contracts). 235 See generally City & Cty. of Denver v. Hallett, 83 P. 1066 (Colo. 1905). 236 C.R.S. § 29-1-110. 237 See generally Normandy Estates Metro. Recreation Dist. v. Normandy Estates, 553 P. 2d 386 (Colo. 1976) (limiting the plaintiff's remedy to equity only). But see C.R.S. § 24-91-103.6(4) (creating a different rule for construction contracts for public works projects). 238 C.R.S. §§ 29-1-101 et seq. 239 C.R.S. § 29-1-108(3). 240 C.R.S. § 29-1-108(2). Heather Balser / City of Louisville Order #4zzov C36(Ri!Xb&�UNICIPAL LEAGUE 29 opyright by C