Colorado’s property tax arms race ended Friday morning after conservative and liberal groups moved to withdraw the ballot measures they were pursuing for the November ballot that would have dramatically altered the tax code.
Democratic leaders in the legislature, meanwhile, vowed not to pursue an opposing ballot initiative that would have prevented property tax changes from being made through the statewide ballot.
In exchange, the legislature will move forward with Senate Bill 238 without changes, a measure that, if it is signed into law in the coming days as expected, will reduce projected property tax increases by $700 million over the next two years. The legislation was aimed at heading off an even bigger reduction being pushed by business interests.
The decision by all sides to back down ends a high-stakes game of chicken that threatened to grip the Capitol in the final days of the 2022 legislative session. In jeopardy were billions of dollars in funding for schools and local governments.
The agreement reached Friday was so tense and sensitive that those involved asked for photographs of notarized documents before they agreed to back down. The signed documents withdrawing the ballot measures have been gathered by a third party and will be submitted to the Colorado Secretary of State’s Office once Senate Bill 238 is sent by the legislature to Gov. Jared Polis to be signed into law.
Here are the details of what happened in exchange for Senate Bill 283 moving forward without significant changes:
- Scott Wasserman, who leads the liberal-leaning Bell Policy Center, and Javier Mabrey, a Democratic housing activist running to be a state lawmaker, signed documents withdrawing their proposed ballot measures that would have enacted a new property tax or fee on homes worth more than $2 million.
- State Rep. Colin Larson, R-Ken Caryl, signed documents withdrawing his initiatives that would have capped property valuation increases at roughly 3% for taxation purposes.
- Suzanne Taheri, who works with conservative fiscal policy activist Michael Fields, signed documents withdrawing his initiative that would have capped property tax increases at 2% annually “unless the property is substantially improved by adding more than 10% square footage to the existing building or structures or its use changed in which the property’s actual value shall be reappraised.”
- Democratic leaders in the legislature promised to shelve their attempt to block property tax changes on the statewide ballot.
“My hand is off the button,” said Sen. Chris Hansen, a Denver Democrat who is a prime sponsor of Senate Bill 238 and who was working on the ballot initiative to restrict how property tax changes can be made. “I’m so glad we would work out a common sense legislative solution to this situation.”
Larson said that “getting everyone to stand down was important.”
“At the end of the day,” he said, “the stakes were getting too high.”
Wasserman and Mabrey, however, said in a joint statement that “this debate is far from over.”
“We continue to have a very unfair tax code that can’t tell the difference between a starter home and a mansion,” the pair said. “Some of the wealthiest people and interests in our state are using the citizens initiative process to control the conversation and force changes that defund communities instead of making them stronger. We’re glad a deal was reached that avoids permanent damage to our state and delivers some economic relief to those who need it. But we know there are better ways to solve our housing affordability crisis.”
Senate Bill 238 was the result of weeks of behind-the-scenes negotiations between Democratic Gov. Jared Polis, Democratic leadership in the legislature and Colorado Concern, a nonprofit representing the state’s business executives. It was unveiled Monday to prevent Colorado Concern, which was working with Larson, from moving forward with the ballot measures seeking to cap property valuations for taxation purposes at around 3%. The measures were expected to reduce property tax revenue for local governments and schools by $1.3 billion in their first year.
Colorado Concern agreed to stop pursuing its initiatives in exchange for a bill cutting property taxes by $700 million in the 2023 and 2024 tax years, with the state kicking in roughly $400 million to to make up for the revenue loss for schools and local governments, which are primarily funded by property tax revenue.
However, opponents of the bill — including Larson and Fields — took issue with how Colorado would come up with some of that $400 million. Roughly half that sum is already set to be refunded to taxpayers next year under the Taxpayer’s Bill of Rights, which caps how much revenue the state can collect.
Larson and Fields were threatening to move forward with their ballot initiatives seeking far deeper cuts if the provision about the use of TABOR refunds wasn’t changed. They also wanted Wasserman and Mabrey to withdraw their proposed ballot measures.
On the other side were Hansen and Sen. Bob Rankin, R-Carbondale, the prime sponsors of Senate Bill 238, who were threatening to move forward with a ballot initiative that would have changed the state constitution and prohibited property tax changes from being made through statewide ballot measures. The initiative would have come in the form of legislation and would have required the support of two thirds of the legislature to make the November ballot.
In the end, all sides decided to back down.
Mabrey and Wasserman signed notarized documents withdrawing their measures in the basement of the Colorado Capitol on Friday morning under the watchful eye of a lobbyist for Colorado Concern, which helped broker the end of the standoff.
Photos were taken of the documents to prove to all sides, who remained nervous about the agreement, that they could move on.
Senate Bill 238 passed the House on Friday. The Senate then approved House amendments to the bill, sending it to Polis to be signed into law.