Resident generated news about Lakewood, Colorado

Lakewood Violates TABOR Promises to Voters

There is no dispute that the City of Lakewood must comply with a recent Colorado Supreme Court ruling requiring repayment of illegally collected Business and Occupation taxes. However, the way Lakewood is paying that refund has raised concerns that voters were misled about how their TABOR money would be used.

City staff and Council presented the TABOR Fund as the only option available. However, the TABOR Fund is a Lakewood-created accounting mechanism, not a requirement of state law or the court decision. Lakewood could have paid the refund from the General Fund. Instead, on January 26, 2026, City Council voted to take money from the TABOR Fund that had been explicitly promised to voter-approved purposes.

The de-TABOR Vote

In November 2024, Lakewood voters approved Ballot Issue 2A, allowing the city to retain excess TABOR revenues permanently. The pitch was simple, repeated often, and emotionally persuasive: the money would be spent on parks, public safety, and streets and sidewalks. One-third for each.

These promises were not vague aspirations; they were written plainly into the ballot language (see below) and reinforced repeatedly by city staff and council members.

Now, barely a year later, staff recommended that $29 million of that voter-approved TABOR revenue be transferred into the general fund to pay a refund tied directly to Lakewood’s illegal imposition of taxes without voter approval. Parks, police, and potholes are quietly being replaced with lawyers, refunds, and financial cleanup.

That is not what voters agreed to.

As Lakewood resident Celia Greenman writes on Lakewoodspeaks.org: “Good-bye parks, police and hello potholes. If council follows staff recommendations on reallocating TABOR funds, then please remove the words trust and transparency in future discussions from the dais or in ward meetings.”

Lakewood Says TABOR Fund Is The Only Legal Choice

Lakewood created a separate TABOR Fund to hold excess revenue and be accountable for spending. That fund is restricted and may only be used for voter-approved purposes.

The City’s own financial reporting breaks TABOR Fund spending into categories tied to the ballot language. Notice below how spending is broken out into voter-approved categories.

There is no category for refund, legal, or financial mistakes. There is no discretion in the Fund use. There was no discretion in the ballot vote for TABOR Fund use. In fact, Lakewood Municipal Code 12.7 specifically says that City Council can only transfer unencumbered funds – not restricted ones.

Despite this, staff repeatedly told Council that the refund had to be paid from the TABOR Fund and that no other option existed.

That claim is false. The criteria for going into the fund is different than the criteria for going out of the fund.

How Did Lakewood Explain Away Restricted Fund Use

So how did Lakewood explain using TABOR funds for one reason if Lakewood voters explicitly voted to only use funds for different things?

Lakewood kept repeating that the money went into the TABOR Fund so had to come out.

The taxes in question are called the B&O taxes, for Business & Occupation. These taxes, like most taxes, were paid into the General Fund, not the TABOR Fund. According to the state TABOR, Lakewood is only allowed to collect a set amount of revenue. When Lakewood reaches the state mandated limit, the excess revenue could be refunded, but in Lakewood it is moved into the restricted TABOR Fund.

In short, all excess revenue is transferred into the TABOR Fund.

Lakewood used the graphic below to show the taxes that must be refunded. According to this graphic, one would think that the entirety of the B&O tax was transferred to the TABOR Fund.

Is that true? No

Lakewood did not calculate at what specific time the mix of revenues coming in hit the TABOR limit. A proportional accounting would show contributions from sales tax, use tax, property tax, and other sources.

In reality, B&O taxes represent roughly 3% of Lakewood’s total tax revenue, as shown in the graph below.

Using these percentages, the B&O tax would only contribute about $294,000 to the TABOR Fund. Not $3.6 million claimed by staff in their graphic. Not even $1 million. Not even half.

Lakewood did not present this data.

If there was a legal mandate to take money out of the TABOR Fund that came from the B&O tax, Lakewood would have to do a more accurate job of figuring out how much of the TABOR Fund was the B&O tax, specific to the court case. Lakewood did not do that. Their calculations show that 100% of the B&O tax went directly into the TABOR Fund. This is false.

Lakewood is robbing the TABOR Fund. Approved unanimously by City Council.

The Audit Argument

Councilors Rein and LeBure questioned staff about the need to pay from the TABOR Fund. Lakewood Chief Financial Officer Holly Bjorkland supported the Councilors’ claims that the money has to come from TABOR and there is no other option.

This is false.

Auditors review compliance and disclosure. They do not dictate policy choices. If circumstances require an exception, those circumstances can be fully explained — just as they should be explained when restricted funds are used for purposes that voters never approved.

Notably, City Council did not seek any independent legal or financial opinion.

TABOR Funds Were Never Meant for This

The ballot measure eliminating TABOR refunds in Lakewood was explicit. Excess revenues were to be allocated as follows:

One-third for parks, recreation, and open space

One-third for public safety-related equipment, services, or personnel

One-third for streets, sidewalks, and infrastructure

Using TABOR funds to pay for a court refund tied to an illegally imposed tax violates both the spirit and the letter of that voter authorization. It transforms a restricted, purpose-driven fund into a discretionary backstop for Lakewood mistakes.

Accountability Still Matters

City Manager Kathy Hodgson has been in charge since 2010. She oversaw the tax changes, the legal strategy, and the financial planning—or lack thereof. Yet none of the people responsible for this failure are being held accountable. Instead, residents are being told to “trust” the same system that created the problem.

Trust is not restored by breaking promises.

The reality is that voters have voted to approve tax increases for parks, potholes, and police. Until residents realize that these promises are false and hold Lakewood officials accountable, there is no need for any serious consideration of cutting pet projects or decreasing overall spending to maintain any budget.

The budget was approved unanimously by City Council on Oct 6, 2025. No mention of the lawsuit was made in public by staff or Council. Instead of accountability, Lakewood seems to be purposely withholding information and misleading residents.

The Real Cost: Public Confidence

Voters supported Ballot Issue 2A because they believed in the promise of parks, safer neighborhoods, and better infrastructure. Residents may not have voted yes if they had known this money could be used to clean up an illegal tax scheme.

Using these TABOR funds –

Violates previous promises for TABOR
Violates fiscal trust because Council spent money on their pet projects first
Violates accountability

Once trust is lost, it is far harder to repay than any court judgment.