In 2019, voters legalized sports betting in Colorado and authorized the state to collect up to $29 million a year in tax revenue, which goes primarily to water projects. Any money collected in excess of that limit must be refunded.
Proposition JJ, submitted by the Legislature to a statewide vote in November, would eliminate that cap and allow Colorado to keep all sports betting tax revenue it collects.
Here’s what you need to know about countermeasures.
What impact will Proposition JJ have on the status quo?
When voters in 2019 passed Proposition DD, which legalized sports betting in Colorado starting in May 2020, the measure imposed a 10% tax on operator profits.
Nonpartisan fiscal analysts estimate that this could generate up to $29 million a year in tax revenue. But state tax revenues rose sharply after Congress passed a bill in 2022 that would limit the number of free bets sports betting operators could offer starting in 2023.
The $29 million cap was exceeded in the fiscal year that ended June 30, and is expected to be exceeded again this fiscal year and next, according to preliminary data.
The Taxpayer Bill of Rights, a constitutional amendment approved by voters in 1992, requires that funds collected in excess of the tax’s expected revenue be refunded unless voters allow the government to keep the funds. . That’s where Proposal JJ comes into play.
Where is the tax revenue going now?
First, this revenue will cover all related administrative costs incurred by the Colorado Gaming Department. And up to $1.74 million will be donated to a “Hold Harmless” fund to help casino towns, counties and community colleges that derive tax revenue from traditional gambling that have lost revenue because sports betting has siphoned off wagers. Organizations such as the State Historical Fund will be compensated.
The remainder goes to the Water Plan Implementation Cash Fund to pay for projects under the Colorado Water Plan. The Colorado Legislature typically appropriates these funds through the annual budget process for Colorado Water Conservation Commission project bills.
If voters approve Prop. JJ, the state would be allowed to keep all sports betting tax revenue and distribute it in the same way as before. That means more money will just go into water projects.
The Bureau of Reclamation’s Paradox Valley Division on the Dolores River near Bedrock, Colorado. The unit extracts naturally occurring saline groundwater to prevent excessive salinity in the river. (Corey Robinson, Special Reporter, Colorado Sun)
For example, in the 2023-24 fiscal year that ended June 30, Colorado collected about $29.9 million, based on preliminary data. If voters pass Proposition JJ, the state could keep and spend an additional $900,000.
If Proposition JJ is defeated in November, the 2019 ballot measure, Proposition DD, will remain in effect with a $29 million cap and the state will refund the excess $900,000 to licensed casinos and sports betting operators. I will do it.
What happens if proposal JJ fails?
Because of the way the bill that puts Prop. JJ on the ballot is written, if it fails, any tax revenue collected over the $29 million cap would be refunded to sports betting operators. This provision is intended to persuade voters to vote “yes” on this question.
Proposition JJ was placed on the ballot through the passage of House Bill 1436, which had bipartisan support.
Excess revenue refunds paid to operators are expected to be collected in the amount of approximately $900,000 during the 2023-24 budget year, approximately $1.2 million in 2024-25, and approximately $2.5 million in 2025-26. has been done.
Opponents of Prop. JJ argue that the measure is effectively a tax increase because it eliminates rebates to businesses. Opponents argue that if a state collects more revenue than voters approve, it should issue refunds instead of expanding government programs.
What does Proposition JJ mean for state funding for water projects?
The 2023 Colorado Water Plan outlined that the state will need billions of dollars in water projects over the next few decades.
The Colorado Water Conservation Commission, Colorado’s top water policy agency, works to improve canals and headgates that bring water to farms and ranches across Colorado, support habitat for endangered fish species, support water, and more. grants and grants to communities around Colorado to support water projects. Fund conservation projects and drought programs based on recreational needs.
Looking ahead, the Colorado Water Conservation Commission estimates that approximately $3.85 billion in loans and grants will be required over the next 30 years. With current funding, including tax revenue from sports betting, the state said there would be a shortfall of about $1.5 billion in grant and loan programs, or about $50 million a year through 2050.
Statecoach Reservoir in Statecoach State Park near Steamboat Springs. (Josh Cook, Special Reporter, Colorado Sun)
This does not include water-related projects by other state agencies, which total at least $20 billion, according to the 2023 Water Plan.
Supporters of Prop. JJ argue that the measure will help the state meet its water needs, as Colorado’s water supplies are strained by prolonged drought, climate change and increased demand from a growing population. There is. Nevertheless, proposal JJ provides only a fraction of what is needed.
They also argue that this is not a tax increase because tax revenue is already being collected at the current rate.
How does this fit into the national context?
America’s water infrastructure is often more than 50 to 100 years old and needs upgrades, repairs, and improvements to meet changing environmental and public health regulations. Colorado’s local water utilities are already raising water rates to accommodate the needs of aging infrastructure.
Colorado’s Western Slope is also part of the Colorado River Basin, which provides water to 40 million people in seven Western states, the lands of 30 tribal nations, and two Mexican states.
The Colorado River is overstressed by water demands and environmental changes such as prolonged droughts and rising temperatures. These issues impact Coloradans across the state who rely on Colorado River water and other rivers with limited supplies.
In response, communities and water utilities are developing water conservation programs, drought plans, and more to protect the water used by Colorado’s farms, ranches, cities, and industry.
Who is spending money to support or oppose the JJ proposal?
Yes on JJ is the publishing committee supporting Proposition JJ. As of September 25th, it has raised $490,000.
The Environmental Defense Action Fund contributed $280,000, making it the largest donor to the committee. The second-largest donation to the commission to date, $120,000, came from the research and advocacy arm of a Boulder-based real estate company that invests in water rights ownership on Colorado’s Western Slope. This is from one Conscience Bay Research. The Colorado Cattle Union, a statewide agricultural lobbying group, contributed $50,000, and the American Rivers Action Fund, another environmental advocacy group, contributed $40,000.
Yes on JJ spent $6,661.62 as of Sept. 25, most of which went to consulting services with RKG Development and OnSight Public Affairs.
There is no organized opposition to this measure.
Story type: Explainer
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