Colorado Voters to Decide in 2026 on Raising State Revenue Cap for K-12 Education Funding

Colorado voters will decide in November 2026 whether to significantly increase the state's constitutional revenue cap to direct more funding toward K-12 education. The measure, which is being advanced by the state legislature, would allow the government to retain and spend billions in tax revenue that would otherwise be returned to taxpayers under the Taxpayer’s Bill of Rights (TABOR). The proposed statute would raise the TABOR cap by an amount equal to the state's highest single-year spending on public schools, which is currently around $4.6 billion. TABOR, a constitutional amendment passed in 1992, limits the growth of state government revenue based on the annual rates of inflation and population growth. Any revenue collected above this limit must be refunded to taxpayers. This ballot measure would create a major exception to that rule, earmarking the retained funds for educational expenses such as increasing teacher pay, reducing class sizes, and preparing students for the workforce. From a business perspective, any modification to TABOR introduces significant fiscal uncertainty. While increased education funding can foster a stronger future workforce, altering a foundational tax and spending limitation like this complicates long-term financial planning for companies operating in Colorado. Businesses and individual taxpayers, including many small business owners who file as individuals, rely on the predictability of tax refunds during surplus years. This proposal effectively redirects those expected returns into a state-managed fund, changing the fiscal landscape. The push for the ballot measure is led by advocates like the Colorado Education Association (CEA), the state's largest teachers union. Proponents argue the current system is obsolete and hamstrings the state's ability to address critical education needs. “For more than 30 years, an outdated and arbitrary revenue cap has kept our state funding tied up so tightly that we can’t invest in public education and keep up with student needs,” CEA President Kevin Vick said at a recent press conference. He noted that even when Colorado’s economy is strong, the cap prevents the state from using revenue it already collects. The proposed change comes as multiple reports highlight a significant funding deficit in the state's education system. According to two recent studies commissioned by the legislature, Colorado falls short by an estimated $3.5 billion to $4 billion annually in what is needed to adequately meet all student needs. Despite the legislature recently fully funding K-12 education as required by the constitution and eliminating the “budget stabilization factor” that previously allowed for underfunding, supporters of the ballot measure say a structural change is necessary to close the larger gap. However, the financial impact of the measure, if passed, would not be immediate or guaranteed. According to the governor's office, the state projects it will exceed the existing TABOR cap by approximately $711 million in the next fiscal year and $516 million the year after. It could take at least a decade, assuming consistent economic growth and no recessions, for the state to collect enough surplus revenue to reach the full new cap limit. Furthermore, the state does not collect revenue above the cap every year. A December forecast from the non-partisan Legislative Council Staff predicted a $297 million surplus for fiscal year 2025 but a $465 million deficit below the cap for fiscal year 2026, meaning no surplus funds would be available. Vick acknowledged the incremental nature of the change, stating it might initially provide “$90 million to $100 million” in relief. In our experience, Colorado voters have consistently shown a strong preference for fiscal restraint, making the measure's passage a significant challenge. The repeated failure of similar initiatives highlights a deep-seated skepticism toward complex fiscal reforms, especially those that trade direct tax refunds for long-term, indirect government spending programs. For business owners, the core issue is often predictability. Navigating these constantly shifting state tax policies is a major compliance burden. This is precisely the kind of complex scenario where our expertise in tax preparation and compliance becomes critical for clients. C&S Finance Group LLC helps businesses understand and plan for such legislative changes, and you can learn more at csfinancegroup.com. The proposal faces a difficult historical precedent. Colorado voters have repeatedly rejected efforts to raise taxes or lift the TABOR cap. Most recently, in 2023, Proposition HH, a measure that sought to increase the cap to fund property tax relief, was defeated by a 19-point margin. Other past efforts focused on education have also failed, including Amendment 73 in 2018, which would have created a new, progressive income tax structure, and Amendment 66 in 2013, which proposed a two-tiered income tax increase. These past results indicate a significant hurdle for supporters to overcome in convincing the electorate. The legislation to officially place the measure on the November 2026 ballot requires a simple majority in both chambers of the state legislature, a threshold expected to be met given the Democratic majorities. Once certified, the focus will turn to the ensuing public debate and campaign efforts. The outcome will likely depend on whether proponents can successfully frame the trade-off between taxpayer refunds and long-term education investment in a way that resonates with a historically tax-averse electorate.