The Colorado legislature’s inaction so far this year on a long-term fix effort to address rising property tax bills has prompted two fiscal policy nonprofits — one conservative and the other liberal — to propose competing ballot measures that would dramatically reshape the state’s financial picture.
The policy battle is a repeat of what happened at the Colorado Capitol last year, when the same groups, neither of which have to disclose their donors, initiated property tax ballot measures when the General Assembly was slow to act. They backed down only when lawmakers passed a Band-Aid bill giving property owners two years of temporary tax relief.
Property tax revenue funds schools and local governments, meaning that any discussion about how they should change carries extremely high stakes. The stakes have only increased since Colorado voters in 2020 repealed the Gallagher Amendment, which prevented residential property tax bills from getting too big but, when combined with the Taxpayer’s Bill of Rights, strangled local government budgets.
Rising property values across Colorado after the COVID-19 pandemic began have caused property tax bills to jump, too. Coloradans will get new property assessments from their counties starting May 1.
Colorado’s property taxes are among the nation’s lowest. But a big increase in property tax bills will really affect people with fixed incomes, such as retirees, who bought their homes when they were worth much less and weren’t expecting such a large financial burden.
Gov. Jared Polis and Democrats, who control the Capitol, say they are committed to coming up with a long-term fix this year. But the legislative session is more than halfway over — the General Assembly adjourns May 8 — and no proposals have been made public.
The governor and lawmakers have committed to expanding an existing property tax relief plan in the 2023 and 2024 tax years to $900 million, $200 million more than what was approved during the 2022 legislative session in a deal that got the nonprofits to abandon their ballot measures.
“Conversations are obviously ongoing,” Senate President Steve Fenberg, D-Boulder, told reporters Tuesday. “I know there’s conversations happening with advocates, with connected districts, with businesses etc.”
In the absence of state lawmakers doing something, however, independent groups have stepped in to try to fill the vacuum — and also pressure the General Assembly to get moving.
Advance Colorado, the conservative fiscal nonprofit, entered the property tax conversation first this year with Initiative 21, which would be on the November statewide ballot. It would amend the state constitution to cap property tax increases at 3% per property and set aside up to $100 million in state TABOR surplus each year for fire districts.
What is TABOR?
The Taxpayer’s Bill of Rights, or TABOR, is a 1992 constitutional amendment that requires voter approval for all tax increases in Colorado. It also caps government growth and spending, mandating that tax revenue collected in excess of the cap be refunded to taxpayers. The cap is calculated using inflation and population rates.
Read more here.
TABOR caps government growth and spending each year based on population increases and the rate of inflation. Any money collected above the cap must be refunded to taxpayers unless voters say otherwise.
Michael Fields, who leads Advance Colorado, said the measure is an insurance policy against legislative inaction this year. “I think we’re wanting to see what the legislature comes up with,” Fields said. “But given that we can’t go back in time, we wanted to get it filed and get it through the process.”
The Bell Policy Center, the liberal-leaning fiscal nonprofit, responded last week by filing eight proposed 2023 ballot measures for review by the state’s Title Board. If they are approved, Bell Policy Center can begin collecting signatures to have them placed on the fall ballot.
The measures, submitted in partnership with the Colorado Education Association, the state’s largest teacher union, would reduce or cap property tax increases and/or use TABOR surplus to replace the revenue lost by school, fire district and local water project budgets.
Scott Wasserman, who leads the Bell Policy Center, says the measures are intended to neutralize Initiative 21 from Advance Colorado and also serve as a hedge against legislative inaction on property tax policy this year.
“It is clear from the initiatives already filed by those who seek to destroy Colorado’s revenue base that these interests want to undercut the legislature’s ability to address the uneven effects of a property tax spike,” the Bell Policy Center and Colorado Education Association said in a joint statement. “The measures we’ve filed would restrict the damage of possible statewide reductions or limitations, and ensure communities are adequately funded, while also protecting property taxpayers at this time of increasing property values. In the event the legislature is unable to reach a solution this year, we fully intend to move them forward and supersede any other initiative.”
Here’s the gist of what the Bell Policy Center/Colorado Education Association measures would do, in some combination:
- Direct TABOR surplus — forecast to be more than $2.5 billion in the current fiscal year ending June 30 — to education, local fire districts and water projects to make up for any money lost from property tax assessment rate reductions or caps on Coloradans’ increasing property tax bills. The measures wouldn’t affect TABOR surplus until the 2023-24 fiscal year, which begins July 1.
- Cap commercial and residential property tax increases at 3% annually, unless a property is valued at more than $2 million or $3 million, depending on the version of the ballot measure. Two of the initiatives would instead limit property tax increases by lowering property assessment rates.
Groups often file several iterations of the same or similar ballot measures and then decide later which one to pursue.
Some of the Bell Policy Center/Colorado Education Association proposals would change statute and others that would amend the state constitution. Wasserman estimates the changes would reduce property tax revenue by about $800 million. If state economic and tax forecasts are correct, there should be enough TABOR surplus in coming years to replace the deficit.
In reality, it will be very difficult for either Advance Colorado or the Bell Policy Center to get a property tax measure on the November ballot.
It takes time and a lot of money — potentially millions — to go through the Title Board process and then collect the 125,000 voter signatures required to get an initiative on the statewide ballot.
It’s even harder to get a constitutional amendment on the statewide ballot. That comes with the additional requirement that the voter signatures gathered include at least 2% of the registered voters in each of Colorado’s 35 state Senate districts.
Advance Colorado has deep pockets — again, it doesn’t disclose its donors — and Fields has a proven track record of getting fiscal policy questions on the ballot.
How are property taxes calculated?
Property taxes are determined by how much your county assessor values your property, what the state’s property assessment rate is and what your local mill-levy rate is.
A mill is a $1 payment on every $1,000 of assessed value.
Bell Policy Center, by comparison, is backed by some wealthy foundations, including Gary Community Ventures, a philanthropic group focused on policy change that helps children and families. But the Bell Policy Center hasn’t really spent the kind of money that Advance Colorado and its associated political nonprofits have dedicated to ballot measures in recent election cycles.
Fields cast doubt on the Bell Policy Center’s ability to follow through.
“I would encourage Scott and his donors to do some polling on how popular TABOR refunds are with Coloradans. Last time, they couldn’t even get enough signatures to get their tax hike (Initiative 271 in 2020) on the ballot, so it’s hard to believe these are actually serious proposals.”
Wasserman pointed out that Initiative 12 — which would have tied income tax rates to the amount of money people make, charging higher earners more — was a proposed constitutional amendment and that signature gathering for the measure was launched during the pandemic. He said his proposals this year are 100% serious.
“We always are serious when we file measures at the Title Board,” he said. “You can’t just cut local revenue without a backfill for the loss.”
There are also questions about the viability of the proposals from both the Bell Policy Center and Advance Colorado. Properties often fall into multiple taxation districts with different mill levy rates, which determine how much people owe the government.
It would likely be tough for local governments to work together and determine how to cap a property owner’s tax bill.
CORRECTION: This story was updated at 9:34 a.m. on Wednesday, March 29, 2023, to correct the number of a ballot measure proposed by the Bell Policy Center in 2020. It was Initiative 271.