The Special Session That Skipped the Vote

How do you raise more than $300 million a year in new state revenue in a state whose constitution says new taxes need a vote of the people?

You declare that none of it counts.

Colorado's constitution includes the Taxpayer's Bill of Rights, known as TABOR. Voters added it in 1992. It requires a statewide vote, before the fact, for any new tax, any tax rate increase, any "extension of an expiring tax," or any "tax policy change directly causing a net tax revenue gain." In plain terms, when the state wants to take more of your money, TABOR says you get to vote on it first.

In August 2025, Colorado had a budget problem. On August 6, Governor Jared Polis called lawmakers back to the Capitol for a special session. He said the new federal tax law, known as H.R. 1, would cut state revenue by more than $1.2 billion in the current year. Lawmakers met from August 21 to August 26. The Governor signed the bills below on August 28, 2025.

1. HB25B-1001 made a tax on high earners permanent. The federal tax code has a deduction for "qualified business income." It lets many small business owners, whose business profits show up on their personal tax returns, deduct up to 20 percent of that income. Colorado had required single filers earning over $500,000, and married couples earning over $1 million, to add that deduction back and pay state tax on it through tax year 2025. This bill made that rule permanent. Farmers are exempt. The Legislature's estimate: $45.9 million in the first half-year and $95.5 million the next year.
2. HB25B-1002 raised corporate taxes two ways. It added Hong Kong, Ireland, Liechtenstein, the Netherlands, and Singapore to Colorado's list of tax havens, which pulls companies based there into Colorado's tax base. It also made corporations pay state tax on a federal deduction for income they earn from sales to foreign customers. And it lets the head of the state Department of Revenue decide that a company is based overseas to avoid taxes. Estimate: $35.6 million, then $72.2 million.
3. HB25B-1003 doubled a tax rate. Insurance companies with a home or regional office in Colorado had paid a reduced 1 percent tax on the premiums they collect. Starting in 2026, they pay 2 percent. Estimate: $44.1 million in the first half-year, then $91.1 million.
4. HB25B-1004 sold future taxes at a discount. The state Treasury may sell up to $125 million in tax credits to insurance companies and corporations for as little as $100 million in cash. The price can go as low as "eighty percent" of face value. Buyers use the credits to pay their taxes through 2033. Think of it as a store gift card sold for 80 cents on the dollar: the state gets cash now and collects less tax later. Estimate: up to $103.2 million now, then up to $75 million less the next year and up to $50 million less the year after.
5. HB25B-1005 took away small stores' collection fee. When you buy something, the store collects sales tax and sends it to the state. Colorado let stores with $1 million or less in taxable sales keep 4 percent of the tax they collected, up to $1,000 each filing period, to cover the cost of doing that work. Starting in 2026, no store keeps anything. About 82,000 retailers were claiming the fee. Estimate: $27.6 million, then $56.8 million.

Add up the four tax bills for the 2026-27 budget year: $95.5 million, $72.2 million, $91.1 million, and $56.8 million. That is about $315 million in one year, before counting the tax credit sale.

None of it went to the voters.

Each bill includes a statement explaining why TABOR does not apply.

HB25B-1001 says making the rule permanent is only a "continuation" that brings in no "net revenue gain." HB25B-1004 says selling tax credits is not a tax change and is not debt, because buyers are simply paying their taxes early. HB25B-1002, HB25B-1003, and HB25B-1005 each say their revenue gain is "de minimis," a legal phrase meaning too small to matter. All three point to the same 2018 Colorado Supreme Court case, TABOR Foundation v. Regional Transportation District.

Every one of the five tax bills also carries a "safety clause." That is a line Colorado lawmakers can add declaring a law "necessary for the immediate preservation of the public peace, health, or safety." It makes the law take effect right away, and it stops citizens from gathering signatures to put the law on the ballot. So voters were shut out twice: no TABOR vote before, and no chance to challenge it after.

Look at the case lawmakers relied on. In 2013, a state law lined up the Denver-area transit district's sales tax with the state's, adding some items and removing others. The result was a projected 0.6 percent increase in the transit district's revenue, about $2.7 million a year. The Colorado Supreme Court ruled that a law "causing only an incidental and de minimis tax-revenue increase" does not need a vote. It described that law as one meant "to simplify tax collection and ease administrative burdens."

Now compare HB25B-1003. It simplifies nothing. It takes a 1 percent tax rate and makes it 2 percent, and the Legislature's own estimate puts the gain at $91.1 million a year. HB25B-1005 takes a fee that 82,000 stores were keeping and moves $56.8 million a year to the state.

Eleven days after the Governor signed these bills, the Colorado Supreme Court tightened the rule. In MetroPCS California, LLC v. City of Lakewood, decided September 8, 2025, all seven justices agreed that Lakewood needed a public vote before extending its tax to phone companies that had not been taxed before. The court explained that the 2018 exception fit a law that both added and removed taxes. Lakewood's changes only added taxes, and their revenue was "not merely incidental to their enactment." HB25B-1003 and HB25B-1005 also only add taxes. No court has applied that ruling to them, and as of September 24, 2026, we found no lawsuit challenging them.

The Legislature's own word gives the argument away. "Incidental" means a side effect, something that happens on the way to a different goal. This session was called because the state needed money. The money was the goal. A revenue gain cannot be a side effect of a bill whose purpose is to raise revenue.

Supporters have real arguments. Colorado's budget runs to tens of billions of dollars, so even $91 million is a small percentage of total state revenue, close to the 0.6 percent the court accepted in 2018. The high-earner rule in HB25B-1001 was already on the books, so keeping it can fairly be called keeping things as they were. The federal government created the shortfall, and a state that must balance its budget had to act. And the State Auditor's March 2025 review found that from 2022 to 2024, 15 of the 18 insurance companies getting the reduced rate cut their Colorado workforces by about 4,300 jobs while their tax break grew by about $17.5 million. Ending a tax break that was not buying the jobs it promised is a defensible choice.

The insurance break may well have deserved to end, and the high-earner rule may be good policy. Those are fair arguments for lawmakers to make to voters. TABOR's question is who decides, and Colorado voters wrote the answer into their constitution: they do. TABOR's own list of what needs a vote also includes the "extension of an expiring tax." HB25B-1001 took a rule that was set to expire after 2025 and made it permanent. A test built for a small transit-district cleanup was stretched to cover a tax rate that doubled, and a safety clause was added so no one could put the question to voters afterward.

There was a sixth bill. SB25B-004 delayed the start of Colorado's artificial intelligence regulation law from February 1 to June 30, 2026. It raised no money. It passed with support from both parties, 32-2 in the Senate and 48-14 in the House, with Republican cosponsors. And it is the only bill on this list without a safety clause. Colorado citizens could have gathered signatures to put it on the ballot.

The bill that raised nothing left voters a way in. The five that raised hundreds of millions did not.

HB25B-1001 passed the House 43-19 and the Senate 23-12. HB25B-1002 passed 43-20 and 22-13. HB25B-1003 passed 41-21 and 22-13. HB25B-1004 passed 41-20 and 22-12. HB25B-1005 passed 37-25 and 18-17, a one-vote margin in the Senate. None of the five had a Republican cosponsor, and every lead sponsor was a Democrat.

TABOR says the people decide when Colorado raises taxes. In August 2025, lawmakers decided the people did not need to be asked.

This is our read of the law. We encourage you to read it yourself and reach your own conclusions.