Colorado passed the Gallagher Amendment, which regulates the property tax revenue a local government brings in, stipulating that of all the property tax revenue coming in across the state, 45% must be from residential and 55% must be from business. And it locked in business property taxes at 29%, leaving just the residential rates to fluctuate as the property market goes up and down.. This worked until…

Colorado passed TABOR, implementing two provisions that would hamstring the state budget. First, elected lawmakers could no longer set tax policies and were required for all tax increases to be voted on at the ballot. This meant the state could lower tax rates when the economy was good, but could not raise them when the economy was poor and leaving less money coming into the state budget from local governments. Secondly, a provision called the Revenue Cap, required the state to return any revenue to the taxpayers that exceeded a state constitutionally determined amount.

State legislature passed Permanent tax cuts instead of temporary ones, lowering the income tax rates and revenue for the state budget as required, but when the economy hit a recession just two years later the state budget was drastically underfunded and now had to pull funding for critical services.