Proposition 137 Will Shrink Your 2027 Colorado Tax Refund

Will your 2027 state income tax refund be smaller because of a new conservation fund?

If you file jointly, yes. Nonpartisan legislative analysts estimate the reduction at $52 to $166 per household. Single filers see a cut of $26 to $83. That is the direct, immediate price tag for Proposition 137.

The measure asks voters to divert an estimated $175 million in existing tax revenue each year from sporting goods sales. It is not new money. It is a reroute of cash already collected by the state, pulled from the general fund and shoved into a new Conserve and Protect Colorado’s Water, Land and Forests Fund.

Let's do the math on where that cash actually goes. The Colorado Sun reported Tuesday that $83 million of the total flows directly to Great Outdoors Colorado. For context, that nearly doubles the land conservation group’s annual revenue from the Colorado Lottery. Another $83 million splits between the Colorado Department of Natural Resources and the Colorado State Forest Service. That chunk is earmarked for wildfire mitigation and watershed restoration, a figure that would nearly quintuple the $16.4 million the state spends on those efforts today.

The remaining funds are smaller but specific. The Colorado outdoor recreation office and Colorado Parks and Wildlife’s Outdoor Equity Grant Program each get $4.3 million. By the measure’s second year, nonpartisan state fiscal analysts expect the fund to reach $180 million.

The mechanism that makes this complicated is TABOR, the Taxpayer’s Bill of Rights. TABOR limits state revenue and spending each year to the combined rate of inflation and population growth. The impact on your pocketbook depends entirely on where the state sits relative to that cap in any given year.

In years where the state is below the TABOR cap, the taxes collected on outdoor products are diverted from the general fund. That leaves less money for other public services, like road maintenance or school funding. But when the state exceeds the cap, the diverted revenue simply reduces the taxpayer refunds owed under TABOR. That is how you end up with a smaller check in April 2027.

Who is pushing this? The Colorado Sun noted the measure was filed by a consortium including Conservation Colorado, the Nature Conservancy, the Trust for Public Land, and Western Resource Advocates. Backers include Denver Water, the largest water utility in the state, and the Tri-State Generation and Transmission collective of 42 electric utilities. Dozens of elected officials have lined up behind it, as have national groups like the Conservation Fund and the Wilderness Society. It requires a simple majority to pass.

For folks around here, the wildfire mitigation number is the one that stings and soothes at the same time. Quintupling a $16.4 million budget is significant, but it is still a drop in the bucket compared to the cost of a single major fire season. The money comes from sales taxes on sporting goods, which means the people buying skis, bikes, and fly rods are effectively cross-subsidizing forest management.

The practical bottom line is straightforward. You are trading a modest slice of your tax refund for a massive injection into state land and fire management. The state gets more tools to fight fires before they start, but your general fund shrinks in years where the budget is tight. You are not losing money you didn't have; you are redirecting money you already paid. Whether that trade is worth it depends on whether you value a slightly larger refund or a state that spends five times more on keeping the forests from burning down.