Some of the most consequential fights over Colorado government finance in the coming years won’t happen at the state legislature or at the ballot box, but in a courtroom, where fiscal conservatives and business groups are contesting government fees of as little as 20 cents.

In Aspen, a taxpayer advocacy group is fighting a 20-cent surcharge on grocery bags in a lawsuit that’s now gone all the way to the Colorado Supreme Court.

At the state government level, a small business coalition is arguing that the secretary of state’s office for decades has been illegally using business filing fees to finance a slew of unrelated government services.

And — perhaps most significantly — the TABOR Foundation is challenging the constitutionality of a $264 million hospital fee that generates another $264 million in matching funds from the federal government to pay for uncompensated care.

At issue in each of these cases is a seemingly simple question: What’s the difference between a tax and a fee?

But no matter how small some of the contested fees are, the answer could have wide-ranging consequences for taxpayers and virtually every level of Colorado government.

“Enormous implications”

The tax-vs.-fee debate is not unique to Colorado, but the ramifications here are amplified by the state’s Taxpayer’s Bill of Rights, or TABOR, which requires voter approval to raise taxes.

After the landmark constitutional measure was passed in 1992, lawmakers have increasingly turned to fees to fund government services ranging from higher education to bridge repairs to hospitals. The simplest explanation: Fees don’t require voter approval.

The most high-profile example of the tax-vs.-fee debate in recent years has been the political fight over the hospital provider fee — a charge imposed on hospital stays that other states refer to as a “bed tax.” A 2015 lawsuit challenging that fee is still pending in Denver County District Court.

“If in the aggregate, it was judicially determined that a fee is a tax — and if a fee is a tax, it’s got to go before the voters — that would have enormous implications,” said John Straayer, a political science professor at Colorado State University. “It would put more stuff on the ballot, and probably lead to more defeats, and more problems in providing basic public services.”

Straayer is a vocal TABOR critic, but his assessment is largely shared by TABOR supporters.

“I think the impacts are huge,” said William Perry Pendley, president of the Mountain States Legal Foundation, which is representing the plaintiffs in the bag and hospital fee lawsuits. “And that’s why tax-and-spend officials have fought so hard on this.”

The newfound importance of the tax-vs.-fee distinction has led to a slew of legal challenges since TABOR was adopted. And in cases over the years, the courts have given some general guidance. Taxes fund a wide range of services that benefit the general public. Fees are supposed to provide a benefit to the fee payer and fund a service that’s directly related to the fee itself. But courts have stopped short of defining how strictly those guidelines should be enforced.

“We don’t think the court has ever answered the question of how exact a fee has to be to be a fee,” said Suzanne Staiert, the deputy secretary of state, whose office is defending a lawsuit brought by the National Federation of Independent Business.

Where’s the line?

In its suit filed in 2014, the small business association complains that the secretary of state’s office has been improperly using a slew of business filing fees to fund things that have nothing to do with the agency’s enforcement of business regulations — namely, elections.

To Jason Dunn, NFIB’s attorney, that makes the charges more akin to taxes than fees.

“Roughly 90 percent of the money goes to something other than managing the business documents,” Dunn said. “Our argument is, Look: That, by definition, is a tax.”

Complicating the matter, the filing fees were established before TABOR took effect. They may not have increased since then, but they have grown as the number of business filings has increased. So, too, has the scope of government services they’ve been used to finance.

So one question Dunn is posing is, where’s the line? If state lawmakers can use business fees to fund Colorado’s new mail-in ballot program, why not other programs? Why not roads, or courts, or schools?

“Conducting elections is perhaps the most fundamental thing the government does,” Dunn said. “That ought to be an expense borne by the general public and therefore paid out of the general fund.”

The secretary of state’s office, too, wants the court to offer clearer guidance. Both sides are petitioning the state Supreme Court to take up the case, after the Court of Appeals ducked the tax-vs.-fee issue in its ruling this spring that overturned a lower-court finding in the secretary of state’s favor.

“If the courts limit their holding to just, ‘Well, this all predated TABOR,’ then it never answers the question of how nimble we can be as an agency,” Staiert said. “Are we bound by these fees that were in place back in the ’90s, or can we adjust fees based on the needs of the office? That’s not the question the courts have answered.”

‘Potentially crippling municipalities’

The state Supreme Court hasn’t decided whether it will take up the filing fee issue, but its decision in another case will be closely watched by policymakers and TABOR defenders alike.

The high court in June heard oral arguments in the Aspen bag fee dispute, which the Colorado Union of Taxpayers appealed after its case against the 20-cent grocery bag charges was twice rejected in lower courts.

The city of Aspen argues that the fees are directly related to the services they help fund — a waste reduction and recycling program.

But the taxpayers’ union says the bag fee is basically a sin tax, like the special sales tax on cigarettes, which is used to discourage a harmful behavior — in this case, the use of wasteful grocery bags.

Pendley, whose firm is representing the taxpayers’ union in the dispute, says that if this fee and others pending in the courts are upheld, other governments will be emboldened to raise fees of their own in order to circumvent TABOR.

“If we are unsuccessful, it will give carte blanche to those officials to raise taxes however they want, whenever they want,” said Pendley, whose firm is representing the taxpayers’ union.

During oral arguments in June, several justices said they were having difficulty differentiating the bag fee from things like court fees, which benefit both the fee payer and the public as a whole. And in the past, the courts have typically sided with the government in challenges brought under TABOR.

One exchange in particular highlighted the outsized stakes of the tiny fee.

“If this court changes the definition of fee and tax … we are going to be calling into question all of those other fees and potentially crippling municipalities’ and local government’s ability to fund those essential services,” said Andrea Bryan, Aspen’s assistant city attorney.

In reply, Justice William Hood noted that TABOR was designed to be interpreted in a way that restrains government.

“Would we be doing that, or has TABOR already effectively done that?” he said.