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i_taxtask_2017a_2017-08-15t09:03:58z4 Hearing Summary

Date: 08/15/2017

Location: RM 271

Final

Discussion of Local Control



SALES AND USE TAX SIMPLIFICATION TASK FORCE


Votes: View--> Action Taken:
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01:20 PM -- Discussion of Local Control



Esther van Mourik, representing the Office of Legislative Legal Services, provided an overview of home rule authority and the relevant case law.



A copy of her presentation is provided in Attachment G.



Attachment G.pdfAttachment G.pdf



Article XX, Section 6 of the Colorado Constitution allows voters in cities or towns with more than 2,000 people to create or amend a home rule charter, which supersedes any state law in conflict.



Ms. van Mourik explained that in People ex rel. Stokes v. Newton (1940), the Supreme Court ruled that home rule charters delegate ultimate authority over matters of municipal concern to the appropriate home rule municipality. However, the state retains its authority in matters of statewide concern. The Supreme Court ruled in Berman v. City and County of Denver (1965) that municipalities retain the authority to levy taxes as a matter of municipal concern. Subsequent case law extended the Berman precedent in regards to sales tax specifically.



Ms. van Mourik proceeded to discuss instances in which conflicting state and local laws supersede one another. Home rule municipalities retain authority in areas of local concern. The General Assembly retains authority in areas of statewide concern. In areas of mixed state and local concern, municipalities may enact ordinances, but ordinances that conflict with state law are superseded by state law. This doctrine derives from the Supreme Court’s ruling in Denver v. State (1990). However, a test to determine which doctrine applies has not been developed. Instead, a court is able to make an ad hoc decision on what constitutes a statewide concern, and may consider the need for statewide uniformity as contemplated in Walgreen Co. v. Charnes (1991). In particular, Walgreen Co. v. Charnes acknowledged that the General Assembly has stated that sales and use tax have an extraterritorial impact, i.e. an impact beyond the municipalities in which they are imposed.



Winslow Construction Co. v. City & County of Denver (1998) reaffirms that the imposition of sales and use taxes is a matter of local concern. Ms. van Mourik explained that this case indicates that the Supreme Court is unwilling to overrule the precedent that sales and use tax is a matter of local concern, and the Supreme Court would need to overrule this precedent in order for state policy to supersede home rule jurisdictions in future sales tax matters.



In response to questions from task force members, Ms. van Mourik explained that the General Assembly cannot unilaterally overrule the Supreme Court’s decisions in cases like Winslow. For example, if the General Assembly were to enact a law that requires sales tax simplification measures in home rule municipalities, the legislation would carry a presumption of constitutionality. However, a lawsuit brought by a home rule jurisdiction could allege that the legislation had overstepped the state’s authority to regulate this area, and the ultimate decision regarding the constitutionality of the law would rest with the judicial branch.



Task force discussion ensued concerning the impact of the case law Ms. van Mourik discussed on the work of the task force.