DISTRICT COURT, JEFFERSON COUNTY STATE OF COLORADO 100 Jefferson County Parkway Golden, Colorado 80401

TABOR FOUNDATION, a Colorado non-profit corporation,

Plaintiff,

v. REGIONAL TRANSPORTATION DISTRICT; BILL JAMES, BARBARA DEADWYLER, ANGIE RIVERA-MALPIEDE, JEFF WALKER, CLAUDIA FOLSKA, TOM TOBIASSEN, GARY LASATER, KENT BAGLEY, JUDY LUBOW, LARRY HOY, PAUL DANIEL SOLANO, LORRAINE ANDERSON, NATALIE MENTEN, BRUCE DALY, and CHARLES SISK, Directors of the Regional Transportation District; SCIENTIFIC AND CULTURAL FACILITIES DISTRICT; KATHRYN SPUHLER, KATHY KUCSAN, DAN HOPKINS, PEGGY LEHMANN, JOSEPH ARCESE, DAMON BARRY, ROBERT GRANT, ROB JOHNSON, HAROLD LOGAN, JR., SHEPARD NEVEL, ELAINE TORRES, and MARJORIE LONG, Directors of the Scientific and Cultural Facilities District; COLORADO DEPARTMENT OF REVENUE; and BARBARA BROHL, Executive Director, Colorado Department of Revenue, Defendants.

COURT USE ONLY

James M. Manley (Reg. No. 40327) Steven J. Lechner (Reg. No. 19853) MOUNTAIN STATES LEGAL FOUNDATION 2596 South Lewis Way Lakewood, Colorado 80227 (303) 292-2021 jmanley@mountainstateslegal.com lechner@mountainstateslegal.com Attorneys for Plaintiff

Case No.: Division:

COMPLAINT

DATE FILED: October 23, 2013 11:34 AM FILING ID: 4EEDF907F9F59 CASE NUMBER: 2013CV31974

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Plaintiff, the TABOR Foundation, on behalf of its members and by and through its

undersigned attorneys, hereby files this Complaint against Defendants and alleges as follows:

INTRODUCTION

1. Plaintiff seeks enforcement of the Taxpayer’s Bill of Rights of the Colorado

Constitution (“TABOR”). Colo. Const. art. X, § 20. TABOR requires a vote of the people

before a government district may: create new debt, levy new taxes, increase tax rates, or institute

tax policy changes directly causing a net tax revenue gain. Id. Colorado House Bill 13-1272

was intended to empower Defendants, without a vote of the people, to levy new taxes on food,

beverages, cigarettes, advertising materials, and food containers. Unless this Court enforces the

rights of Plaintiff’s members to vote, as guaranteed by TABOR, Defendants will begin levying

these new taxes on January 1, 2014. Plaintiff therefore seeks declaratory and injunctive relief to

prevent Defendants from unconstitutionally levying these new taxes.

JURISDICTION AND VENUE

2. This Court has jurisdiction over Plaintiff’s claims for relief pursuant to the

Colorado Constitution, article VI, section 9, and article X, section 20.

3. Venue is proper under Colorado Rule of Civil Procedure 98(b)(2) in any

jurisdiction where Defendants or their agents engage in taxation. Defendants levy taxes in

Jefferson County, Colorado; thus, venue is proper in Jefferson County.

PARTIES 4. Plaintiff TABOR Foundation is a nonprofit, public-interest organization with its

principal place of business in Lakewood, Colorado. The TABOR Foundation is dedicated to

protecting and enforcing the Taxpayer’s Bill of Rights on behalf of its members. It has members

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who live, work, and shop in the Regional Transportation District and the Scientific and Cultural

Facilities District and who are registered to vote. The TABOR Foundation’s members will be

required to pay the unconstitutional taxes levied by Defendants under HB13-1272.

5. Defendant Regional Transportation District (“RTD”) is a special district,

organized “[t]o establish, maintain, and operate a mass transportation system.” C.R.S. § 32-9-

119(1)(l). It is a district as defined by Colo. Const. art. X, § 20(2)(b).

6. RTD collects 1.0 percent sales and use taxes throughout Denver, Broomfield,

Boulder and Jefferson Counties, the western portions of Adams and Arapahoe Counties, the

northern portion of Douglas County, and portions of Weld County annexed by Brighton,

Longmont, and Erie.

7. Defendants Bill James, Barbara Deadwyler, Angie Rivera-Malpiede, Jeff Walker,

Claudia Folska, Tom Tobiassen, Gary Lasater, Kent Bagley, Judy Lubow, Larry Hoy, Paul

Daniel Solano, Lorraine Anderson, Natalie Menten, Bruce Daly, and Charles Sisk are the

Directors of RTD and are responsible for overseeing RTD. In that capacity they are responsible

for implementing the taxes complained of in this action and are sued in their official capacities.

8. Defendant Scientific and Cultural Facilities District (“SCFD”) is a special district,

organized “to assist scientific and cultural facilities within the district.” C.R.S. § 32-13-107(3).

It is a district as defined by Colo. Const. art. X, § 20(2)(b).

9. SCFD collects 0.1 percent sales and use taxes throughout Adams, Arapahoe,

Boulder, Broomfield, Denver, Douglas, and Jefferson Counties.

10. Defendants Kathryn Spuhler, Kathy Kucsan, Dan Hopkins, Peggy Lehmann,

Joseph Arcese, Damon Barry, Robert Grant, Rob Johnson, Harold Logan, Jr., Shepard Nevel,

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Elaine Torres, and Marjorie Long are the Directors of SCFD and are responsible for overseeing

SCFD. In that capacity they are responsible for implementing the taxes complained of in this

action and are sued in their official capacities.

11. Defendant Colorado Department of Revenue is responsible for collecting taxes

levied by RTD and SCFD, including the taxes complained of in this action.

12. Defendant Barbara Brohl is the Executive Director of the Colorado Department of

Revenue. In that capacity, she is responsible for collecting taxes levied by RTD and SCFD,

including the taxes complained of in this action, and is sued in her official capacity.

STATEMENT OF FACTS 13. TABOR requires voter approval in advance before a government district may:

levy new taxes, increase tax rates, or institute tax policy changes directly causing a net tax

revenue gain. Colo. Const. art. X, § 20(4)(a).

14. RTD and SCFD are government districts as defined by Colo. Const. art. X, §

20(2)(b) and are subject to TABOR’s voting requirements.

15. In the 2013 legislative session, the Colorado General Assembly enacted HB13-

1272, which unlawfully authorizes RTD and SCFD to levy new sales and use taxes on food,

beverages, cigarettes, advertising materials, and food containers.

16. Beginning January 1, 2014, RTD and SCFD will levy the new sales and use taxes

created by HB13-1272.

17. The food tax created by HB13-1272 applies to “candy” as defined by C.R.S. § 39-

26-707(1.5)(b)(I): “a preparation of sugar, honey, or other natural or artificial sweeteners in

combination with chocolate, fruit, nuts, or other ingredients or flavorings in the form of bars,

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drops, or pieces. ‘Candy’ shall not include any preparation containing flour and shall require no

refrigeration.”

18. The beverage tax created by HB13-1272 applies to “soft drinks” as defined by

C.R.S. § 39-26-707(1.5)(b)(II): “nonalcoholic beverages that contain natural or artificial

sweeteners. ‘Soft drinks’ do not include beverages that contain milk or milk products, soy, rice,

or similar milk substitutes, or greater than fifty percent of vegetable or fruit juice by volume.”

19. The cigarette tax created by HB13-1272 applies to cigarettes as defined by C.R.S.

§ 39-28-202(4), which includes all tobacco products “likely to be offered to, or purchased by,

consumers as a cigarette.”

20. The advertising tax created by HB13-1272 applies to “advertising materials that

are distributed in Colorado by any person engaged solely and exclusively in the business of

providing cooperative direct mail advertising.” C.R.S. § 39-26-102(15)(a)(I).

21. The food container tax created by HB13-1272 applies to “nonessential” food and

beverage related items, such as utensils, napkins, grocery bags, bags for bulk produce, carryout

containers for leftover food, straws, toothpicks, stirring sticks, and cup sleeves. C.R.S. § 39-26-

707(1)(c)–(d), (2)(b)–(c); Colo. Dept. of Rev. Reg. 39-26-707.1(1)(a)(i).

22. Prior to the passage of HB13-1272, RTD and SCFD did not have the authority to

levy sales and use taxes on food, beverages, cigarettes, advertising materials, and food

containers, as specified in HB13-1272.

23. The taxes created by HB13-1272 are expected to result in a net tax revenue gain

of approximately 0.6 percent per year for RTD.

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24. The taxes created by HB13-1272 are expected to result in a net tax revenue gain

of approximately 0.6 percent per year for SCFD.

25. The taxes created by HB13-1272 are expected to result in a net tax revenue gain

of approximately $2.7 million per year to RTD.

26. The taxes created by HB13-1272 are expected to result in a net tax revenue gain

of approximately $270,000 per year to SCFD.

27. The taxes created by HB13-1272 are “new tax[es],” as defined by Colo. Const.

art. X, § 20(4)(a).

28. The taxes created by HB13-1272 are “tax rate increase[s],” as defined by Colo.

Const. art. X, § 20(4)(a).

29. The taxes created by HB13-1272 are “a tax policy change directly causing a net

tax revenue gain to any district,” as defined by Colo. Const. art. X, § 20(4)(a).

30. The taxes created by HB13-1272 are subject to TABOR’s requirement that “voter

approval in advance” is necessary for “any new tax, tax rate increase, . . . or a tax policy change

directly causing a net tax revenue gain to any district.” Colo. Const. art. X, § 20(4)(a).

31. TABOR Foundation members registered to vote within RTD’s and SCFD’s

jurisdiction buy and/or use food, beverages, cigarettes, advertising materials, and/or food

containers, as specified in HB13-1272. These members will continue to buy and/or use these

items after January 1, 2014.

32. TABOR Foundation members registered to vote within RTD’s and SCFD’s

jurisdiction are not exempt from paying sales or use taxes.

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33. TABOR Foundation members registered to vote within RTD’s and SCFD’s

jurisdiction will be forced to pay the taxes created by HB13-1272 beginning on January 1, 2014.

34. TABOR guarantees these members’ right to vote before RTD and SCFD may:

levy new taxes, increase tax rates, or institute tax policy changes directly causing a net tax

revenue gain. Colo. Const. art. X, § 20(4)(a).

35. No public vote seeking approval of the taxes created by HB13-1272 was held

before Defendants were unlawfully authorized to levy the taxes.

36. No public vote seeking approval of the taxes created by HB13-1272 will be held

prior to January 1, 2014, when the taxes are collected for the first time.

37. The taxes authorized by HB13-1272 violate the Colorado Constitution;

accordingly, Plaintiff’s members will suffer irreparable injury to their “interest in ensuring that

governmental units conform to the state constitution” if Defendants are permitted to levy the

unconstitutional taxes on January 1, 2014. Nicholl v. E-470 Public Highway Authority, 896 P.2d

859, 866 (Colo. 1995).

CLAIM FOR RELIEF (Unconstitutional Taxation)

38. Plaintiff hereby incorporates the allegations in the preceding paragraphs as if the

same were fully set forth here.

39. Beginning January 1, 2014, RTD and SCFD will levy new sales and use taxes on

food, beverages, cigarettes, advertising materials, and food containers.

40. These new taxes are subject to TABOR’s requirement that “voter approval in

advance” is required for “any new tax, tax rate increase, . . . or a tax policy change directly

causing a net tax revenue gain to any district.” Colo. Const. art. X, § 20(4)(a).

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41. No public vote seeking approval of these new taxes was held before Defendants

were authorized to levy the taxes, nor will such a vote be held prior to the taxes going into effect

on January 1, 2014.

42. TABOR Foundation members had no opportunity to vote on these new taxes, yet

will be forced to pay them.

43. The TABOR Foundation is therefore entitled to declaratory relief and preliminary

and permanent injunctive relief on behalf of its members against enforcement and maintenance

of the taxes created by HB13-1272, until such time as voters approve those taxes.

PRAYER FOR RELIEF

WHEREFORE, the TABOR Foundation respectfully requests that this Court:

A. Declare that the taxes created by HB13-1272 without voter approval violate Colo.

Const. art. X, § 20 and therefore their collection is unconstitutional;

B. Enjoin Defendants from collecting the unconstitutional taxes created by HB13-

1272, until such time as voters approve those taxes;

C. Award Plaintiff costs and attorney fees in accordance with law, including Colo.

Const. art. X, § 20(1); and

D. Award any other further relief this Court deems just and appropriate.

DATED this 23rd day of October 2013.

Respectfully submitted, /s/ James M. Manley James M. Manley (Reg. No. 40327) Steven J. Lechner (Reg. No. 19853) MOUNTAIN STATES LEGAL FOUNDATION 2596 South Lewis Way

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Lakewood, Colorado 80227 Telephone: (303) 292-2021 Facsimile: (303) 292-1980 jmanley@mountainstateslegal.com lechner@mountainstateslegal.com Attorneys for Plaintiff