HB23-1290 - Proposition EE Funding Retention Rate Reduction refers a ballot measure to voters at the November 2023 statewide election to retain excess revenue collected from Proposition EE, which benefit the pre-k program, that otherwise would be refunded, and to maintain the tax rates that were approved in Proposition EE.
Proposition EE was referred to voters under House Bill 20-1427 and approved in November 2020. The measure increased cigarette and tobacco taxes, created a new tax on nicotine products, and created a minimum price for cigarette sales. Revenue from the new taxes is exempt from TABOR as a voter-approved revenue change. Beginning January 1, 2021, the cigarette tax increased from $0.84 to $1.94 per pack; the tax for tobacco products increased from 40 percent to 50 percent of manufacturer’s list price (MLP); and the new tax for nicotine products, 30 percent of MLP, was instituted. The measure requires tax rates to increase incrementally until FY 2027-28, reaching $2.64 per pack for cigarettes and 62 percent of MLP for tobacco and nicotine products.
If voters approve the ballot measure, the bill increases state revenue relative to current law expectations for reduced tax rates. The bill also clarifies current law if the measure is not approved by the voters. Conditional upon voter approval, the bill increases state revenue, which is transferred to and spent from a cash fund. Regardless of voter approval, the bill creates a one-time transfer of the excess revenue to a holding fund.
CWPMA has contacted key members and the consensus is that this legislation helps defend future statewide initives that would ban flavor nicotine and tobacco products. As long as the bill stays unamended, CWPMA will be in a neutral position.
The bill has passed out of the House and is scheduled to be heard in Senate Finance on 5/2.