Kerr v. Hickenlooper, Civil Action No. 11–cv–01350–WJM–BNB.

880 F.Supp.2d 1112

Andy KERR, Colorado State Representative, Norma V. Anderson, Jane M. Barnes, Member Jefferson County Board of Education, Elaine Gantz Berman, Member State Board of Education, Alexander E. Bracken, William K. Bregar, Member Pueblo District 70 Board of Education, Bob Briggs, Westminster City Councilman, Bruce W. Broderius, Member Weld County District 6 Board of Education, Trudy B. Brown, John C. Buechner, Ph.D., Lafayette City Councilman, Stephen A. Burkholder, Richard L. Byyny, M.D., Lois Court, Colorado State Representative, Theresa L. Crater, Robin Crossan, Member Steamboat Springs RE–2 Board of Education, Richard E. Ferdinandsen, Stephanie Garcia, Member Pueblo City Board of Education, Kristi Hargrove, Dickey Lee Hullinghorst, Colorado State Representative, Nancy Jackson, Arapahoe County Commissioner, William G. Kaufman, Claire Levy, Colorado State Representative, Margaret (Molly) Markert, Aurora City Councilwoman, Megan J. Masten, Michael Merrifield, Marcella (Marcy) L. Morrison, John P. Morse, Colorado State Senator, Pat Noonan, Ben Pearlman, Boulder County Commissioner, Wallace Pulliam, Frank Weddig, Arapahoe County Commissioner, Paul Weissmann, and Joseph W. White, Plaintiffs,

v.John HICKENLOOPER, Governor of Colorado, in his official capacity, Defendant.

Civil Action No. 11–cv–01350–WJM–BNB.

United States District Court, D. Colorado.

July 30, 2012.

David Evans Skaggs, Herbert Lawrence Fenster, McKenna Long & Aldridge, LLP, Emily L. Droll, Geoffrey M. Williamson, John A. Herrick, Lino S. Lipinsky De Orlov, Michael F. Feeley, Brownstein Hyatt Farber Schreck, LLP, Denver, CO, for Plaintiffs.

Bernard A. Buescher, Daniel D. Domenico, Maurice G. Knaizer, Megan Paris Rundlet, Colorado Attorney General's Office, Denver, CO, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

WILLIAM J. MARTINEZ, District Judge.

This action challenges the constitutionality and legality of the Taxpayer's Bill of Rights (“TABOR”), an amendment to the Colorado Constitution passed by voter initiative in 1992. Among other provisions, TABOR prohibits the Colorado General Assembly from increasing tax rates or imposing new taxes without voter approval. Plaintiffs allege that, by taking away the General Assembly's power to tax, TABOR violates Colorado's constitutional and statutory obligations to maintain a republican form of government.

This matter is before the Court on Defendant's Motion to Dismiss. (ECF No. 18.) In the Motion, Defendant argues that Plaintiffs lack standing to bring this action, that Plaintiffs' claims present non-justiciable political questions, and that Plaintiffs' Equal Protection claim and “Impermissible Amendment claim” ¹ are independently subject to dismissal. ( Id.) On February 15, 2012, the Court held oral argument on the Motion, and thereafter requested supplemental briefing from the parties on various issues related to standing. ( See ECF No. 57, 68). The Motion to Dismiss is fully briefed and now ripe for adjudication. ( See ECF No. 18, 30, 51, 72, 73; see also ECF No. 21–1, 61.)

Having carefully analyzed the issues presented, the Court GRANTS IN PART and DENIES IN PART the Motion to Dismiss. The Court holds that the Plaintiffs who are current members of the Colorado General Assembly have standing to bring this action, and therefore the action is not subject to dismissal for lack of standing.² The Court also holds that Plaintiffs' claims are not barred by the political question doctrine. Further, the Court holds that Plaintiffs have failed to state an Equal Protection claim, but that their “Impermissible Amendment claim” is not subject to dismissal. Therefore, the Court will allow this action to proceed past the pleading stage on all claims except for the Equal Protection claim.

I. BACKGROUND

A. TABOR

TABOR is codified in Article X,³ Section 20 of the Colorado Constitution. TABOR provides,⁴ among other things, that:

• A “district” (defined in TABOR as the State of Colorado or any local government in Colorado) “must have voter approval in advance for ... any new tax, tax rate increase, mill levy above that for the prior year, valuation for assessment ratio increase for a property class, or extension of an expiring tax, or a tax policy change directly causing a new tax revenue gain to any district.” Colo. Const. art. X, § 20, cls. (2)(b), (4)(a).⁵

• A district “must [also] have voter approval in advance for ... creation of any multiple-fiscal year direct or indirect district debt or other financial obligation whatsoever without adequate present cash reserves pledged irrevocably and held for payments in all future fiscal years.” Id.art. X, § 20, cl. (4)(b).⁶

• “The maximum annual percentage change in state fiscal year spending equals inflation plus the percentage change in state population in the prior calendar year.... The maximum annualpercentage change in each local district's fiscal year spending equals inflation in the prior calendar year plus annual local growth.... The maximum annual percentage change in each district's property tax revenue equals inflation in the prior calendar year plus annual local growth.... If revenue from sources not excluded from fiscal year spending exceeds these limits in dollars for that fiscal year, the excess shall be refunded in the next fiscal year unless voters approve a revenue change as an offset.” Id.art. X, § 20, cl. (7)(a)-(d).⁷

• “New or increased transfer tax rates on real property are prohibited. No new state real property tax or local district income tax shall be imposed.... Any income tax law change after July 1, 1992 shall also require all taxable net income to be taxed at one rate, excluding refund tax credits or voter-approved tax credits, with no added tax or surcharge.” Id.art. X, § 20, cl. (8)(a).

Given that TABOR is part of the Colorado Constitution, it cannot be revoked or amended without voter approval. SeeColo. Const. art. XIX, § 2, cl. (1) (provision of Colorado Constitution explaining how amendments to Constitution are adopted, and stating that proposed constitutional amendments “shall be submitted to the registered electors of the state for their approval or rejection [during a general election], and such as are approved by a majority of those voting thereon shall become part of this constitution”); id.art. XIX, § 1 (constitutional provision explaining how a constitutional convention is called, providing that voter approval must be obtained to hold the convention, and providing that voter approval is required for the adoption of any revisions, alterations, or amendments to the Constitution resulting from the convention); see also id.art. X, § 20, cl. (1) (provision of TABOR stating that “[o]ther limits on district revenue, spending, and debt may be weakened only by future voter approval”).

B. The Operative Complaint

For purposes of Defendant's Motion to Dismiss, the Court properly accepts as true the allegations in Plaintiffs' First Amended Substitute Complaint for Injunctive and Declaratory Relief (the “Operative Complaint”). ( See “Legal Standards” section below.)

1. Plaintiffs

This action is brought by 33 Plaintiffs. ( Id. ¶¶ 10–42.) Five Plaintiffs are current members of the Colorado General Assembly, four of whom are members of the Colorado House of Representatives and one of whom is a member of the Colorado Senate (the “Legislator–Plaintiffs”). ( Id. ¶¶ 10, 22, 28, 31, 36.) ⁸ Nine Plaintiffs are former members of the Colorado General Assembly. ( Id. ¶¶ 11, 16, 19, 30, 32, 34, 35, 40, 41.) Other Plaintiffs include current or former county commissioners, mayors, city councilpersons, members of boards of education, public university presidents and professors, public school teachers, and parentsof school-age children. ( See generally id. ¶¶ 10–42.) All Plaintiffs are Colorado citizens. ( Id.)

2. General Allegations

Plaintiffs' Operative Complaint states, “The purpose of this case is to seek a ruling that [TABOR] is unconstitutional because it deprives the state and its citizens of effective representative democracy, contrary to a Republican Form of Government as required under both the United States and Colorado Constitutions.” (ECF No. 36, ¶ 8.) Plaintiffs explain their position that “[a]n effective legislative branch must have the power to raise and appropriate funds. When the power to tax is denied, the legislature cannot function effectively to fulfill its obligations in a representative democracy and a Republican Form of Government.” ( Id. ¶ 7.) They allege that TABOR has caused a “slow, inexorable slide into fiscal dysfunction [in Colorado]” ( id. ¶ 3), and specifically allege that TABOR has constrained the state government's ability to comply with its constitutional obligation to adequately fund public education ( id. ¶ 81). After reviewing some of TABOR's provisions ( id. ¶¶ 75–77, 79), the Complaint states,

The totality of these TABOR provisions removes entirely from the Colorado General Assembly any authority to change state law concerning taxation to replace or increase revenue, and prohibits the General Assembly from raising funds by any other means, including borrowing. Moreover, the interactions of the provisions of TABOR may actually force existing taxes to be decreased without any action of the General Assembly.

( Id. ¶ 80.)

3. Claims

Plaintiffs bring five claims for relief in the Operative Complaint:

(1) The “Guarantee Clause claim,” alleging that TABOR violates Article IV, Section 4 of the United States Constitution (the “Guarantee Clause”). ( Id. ¶ 82.) The Guarantee Clause provides that “[t]he United States shall guarantee to every State in this Union a Republican Form of Government....” U.S. Const. art. IV, § 4. Plaintiffs' Guarantee Clause claim alleges that, “[b]y removing the taxing power of the General Assembly, the TABOR amendment renders the Colorado General Assembly unable to fulfill its legislative obligations under a Republican Form of Government...