BOARD00489

• Board Meeting Date: 7/24/2000
• Description: Impacts of Initiative 205 on Water Districts
• Board Meetings - Doc Type: Memo

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Sherman & Howard L.L.C.

A1TORNEYS & COUNSELORS AT LAW
633 SEVENTEENTH STREET, SUITE 3000
DENVER, COLORADO 80202
TELEPHONE: [phone]
FAX: [phone]
OFFICES IN: COLORADO SPRINGS
RENO . LAS VEGAS

TAXCUT 2000
FREQUENTLY ASKED QUESTIONS

On May 25, 2000, the Colorado Secretary of State certified a citizens' initiative
entitled "Taxcut 2000" for inclusion on the November 7, 2000 ballot. Taxcut 2000 has important
implications for the State of Colorado and its local governments. The following "Frequently Asked
Questions" will provide an introduction to the issues raised by Taxcut 2000.

Question 1. What is Taxcut 2000?

Taxcut 2000 (the "Amendment") is a citizens' initiative to amend the Colorado
Constitution. The Amendment, which will be considered by Colorado voters on November 7,2000,
will add a new paragraph to Article X, Section 20 of the Colorado Constitution ("TABOR"). The
full text of the Amendment follows:

(8)(d) A $25 tax cut, increased $25 yearly (to $50, $75...), shall
lower each tax in each tax bill for each 2001 and later district: utility
customer and occupation tax and franchise charge; vehicle sales, use,
and ownership tax; yearly income tax; property tax; income and
property t3x equal to yearly revenue from sales and use taxes on food
and drink other than tobacco and alcohol; and income tax equal to
yearly . revenue from estate taxes. (8)( d) tax cuts and state
replacement of local revenue shall not lower state or local excess
revenue, the state may limit local acts increasing replacement costs,
joint income tax returns equal twO tax bills, and attorney fees and
costs to enforce (8)( d) shall a1wavs be paid to successful plaintiffs
only.

Question 2. What governments will be affected by the Amendment?

The Amendment will affect the State and all local governments which impose one
or more of the taxes described in the Amendment. The Amendment will have the greatest impact
on the State and those local governments which are dependent upon the property tax or State
revenue. Local governments which are largely funded by sales tax revenue and either (i) have little
or no property tax revenue or (ii) depend on the State for little financial support are likely to be the
least directly affected. A government which receives property tax revenue from a large number of
taxpayers will have a greater revenue loss than a government with the same assessed valuation
which receives revenue from a small number of taxpayers.