DENVER – Colorado voters could decide this November the fate of a last-minute proposal that aims to reduce skyrocketing property values for at least the next decade after a group of county assessors announced last week property taxes would increase at unprecedented levels starting in 2024.
The proposal, which would provide immediate property tax savings for homeowners and businesses while also making sure schools, fire departments and a range of other public safety districts continue to get funded, would also create limits to protect homeowners and businesses from seeing their property taxes rise too quickly.
"Coloradans are about to get hit with painful property tax spikes, which is why we're taking action now to meet the moment and provide real relief for Colorado families," said Senate President Steve Fenberg, D-Boulder, at a news conference in which he, along with Gov. Polis and other state lawmakers, announced the proposal Monday. "This transformative proposal delivers long-term reductions in property tax rates while providing immediate savings on this year’s property taxes, so we can better support our schools and our communities and build a Colorado everyone can afford to love."
The measure was expected to be introduced as a bill in the legislature Monday and only needs the support of a simple majority to be on the ballot later this year. With the end of 2023 legislative session fast approaching, state lawmakers only have a week left to pass the bill.
Here's what we know about what’s in the proposal
The proposal would not only cut the average homeowner’s tax increase in half, allowing homeowners and businessess average savings of about $1,264 on property taxes over the next two years, it would also reduce the residential assessment rate (the percentage that people pay on their property value for their home or their business) from 7.15% to 6.7% in 2023 and 2024. This reduction would continue in future years for primary residences, while second homes or investment properties would be excluded.
Besides the cuts to the assessment rate, the proposal would also reduce the taxable value of a home by $40,000 in 2023 and 2024. Just like the previous cut, second homes or investment properties would also be excluded from these reductions.
The bill would cap district property tax collection from going past the rate of inflation, with the exemption on school districts, and would allow local governments to override the cap after notifying property owners.
It would also protect funding for public schools, fire districts, water districts, as well as ambulance and hospital districts in areas of the state that aren’t growing as fast by taking some of the predicted revenue surplus the state would otherwise need to return Colorado residents under the Taxpayer Bill of Rights (TABOR), according to our partners at The Denver Post.
Finally, it would provide seniors who currently receive the Homestead Exemption a larger reduction of $140,000 and would allow them to continue to receive this reduction if they were to move (something they otherwise would lose).
Rep. Chris deGruy Kennedy, D-Lakewood, said Monday property tax reductions cannot be considered without accounting for the impacts they will have on local governments, but argued the proposal makes “responsible reductions” that protect schools, fire departments, child welfare services and more, so that Coloradans can keep up with the cost of living.
“A long-term replacement to the Gallagher Amendment”
At a news conference Monday, Gov. Polis said capping property taxes to the rate of inflation is a “long-term replacement to the Gallagher Amendment,” which was repealed by Colorado voters in 2020. The Gallagher Amendment, which was passed in 1982, was meant to be a way to keep residential property tax rates lower than the rates paid by non-residential property owners, like businesses.
“We’re proposing lowering tax assessments on businesses by over 10% over the next decade, saving businesses hundreds of millions of dollars and fixing the distortion that Gallagher led to,” Polis said in front of Democratic state lawmakers who support the measure. “I think the path of the ballot is clear and I’m confident the voters want property tax relief and don’t want to defund our schools, so I’m very optimistic for the passage of this bill in November.”
Opponents of the measure were quick to decry the governor's plan.
In a statement Monday, Michael Fields, the president of Advance Colorado, a conservative group which advocates for smaller government, said the proposal was "half-baked."
"We’ve got a five-alarm fire in Colorado and our Governor showed up with a squirt gun. ... To summarize this bill: the Governor and legislature are paying for part of this “relief” with money taxpayers are already owed, creating a fake cap on property tax increases, and going after even more of our TABOR refunds. We really waited this whole session for this half-baked proposal? Voters deserve a real long-term solution to this crisis."
House Minority Leader Mike Lynch, R-Wellington, said Democrats, including the governor, "waited until the last minute to fix a problem they knew was coming all along."
“While we at the Capitol were making too many new laws that were way too expensive, real Coloradans across the state have been opening up their mail and finding tax bills they cannot pay. Democrats and the Governor waited until the last minute to fix a problem they knew was coming all along. House Republicans have been raising this urgent issue for months, if not longer,” stated Leader Lynch. “The Democrats cannot treat TABOR like an ATM machine to resolve the state's financial issues, most of which are self-inflicted. The people of Colorado should be skeptical of the Governor’s hastily introduced plan with only one week left in the session. He seems to want to convince us this plan will solve all financial shortfalls, such as school funding, teacher pay, fire and police, and resolve Colorado’s property tax issues for homeowners and businesses. Given this sugar-coated plan must be approved by voters, it's concerning the Governor has no PLAN B if it fails.”
Representative Lisa Frizell’s (R-Castle Rock)bill HB23-1054, Property Valuation, was voted down by Democrats in the Finance committee on March 9th, 2023. Rep. Frizell’s bill would have eliminated the 2023 property reassessment for most classes of property and would have made additional changes to property valuations and assessment rates for the 2023 and 2024 property tax years.
House Assistant Minority Leader Rose Pugliese(R-Colorado Springs) and Rep. Frizell's bill SB23-108, Allowing Temporary Reductions In Property Tax Due, passed the Senate on March 1st and is still awaiting to be heard in the House. Their bill specifies that local governments may administer temporary tax credits or mill levy reductions for the purpose of providing temporary property tax relief.
Property taxes are based on a home's value, meaning an increase in value equals an increase in taxes. Since the Gallagher Amendment was repealed in 2020, there has been a barrage of property tax legislation slowly making tax policy more complicated, according to county assessors.
So what happened that set off alarms last week?
Property is revalued every two years in odd-numbered years in the state of Colorado, and for the time period ending on June 30, 2022, residential properties in the Denver metro area increased between 35% and 45% - with some topping at 60% in pockets of the Front Range.
Denverites feeling the pinch of the rise in their property taxes can get help, along with programs that address needs like utilities, rent, and food.
