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Townhomes and single-family residences are seen near the Montaine community on Oct. 17, 2022, in Castle Rock. (Olivia Sun, The Colorado Sun via Report for America)

An effort by conservative fiscal activists and GOP-led counties to block a 10-year property tax plan formed by Gov. Jared Polis and Democrats in the legislature from going before voters in November was denied Friday by a Denver judge. 

Denver District Court Judge David H. Goldberg found that he didn’t have jurisdiction to consider the case. But he also rejected arguments that Proposition HH violates requirements in the state constitution that ballot measures deal with a single subject and have clear titles.

The plaintiffs in the lawsuit, filed in May, included Advance Colorado, a conservative political nonprofit, and more than a dozen Colorado counties controlled by Republicans. Several GOP county commissioners and Republican current and former politicians also signed onto the legal action. 

“Prop. HH undoubtedly violates the single-subject and clear-title provisions in our constitution,” Michael Fields, who leads Advance Colorado, said in a written statement Friday. “We plan to appeal this decision.”

The appeal will go directly to the Colorado Supreme Court.

Polis’ office said the governor “appreciates the court’s ruling to allow the voters the opportunity to enact Proposition HH as passed by the legislature.” Senate President Steve Fenberg, D-Boulder, celebrated the ruling.

“I am pleased that the court today agrees that voters should have their say,” Fenberg said in a written statement.

Sen.Chris Hansen, a Denver Democrat and an architect of the proposal, calling the ruling “clear and decisive.”

Proposition HH was placed on the November ballot through a bill passed by the legislature in May. It’s meant to respond to massive increases in Coloradans’ property tax bills starting next year caused by a sharp spike in property values. The median increase in home values across the state in May when county assessors determined property values was 40% since June 2020, the last time assessors determined property values. 

Here’s how it would work for residential property:

  • The residential assessment rate would be reduced to 6.7% from 6.765% in 2023, for taxes owed in 2024, and to 6.7% from 6.976% for taxes owed in 2025. The 6.7% rate would remain unchanged through the 2032 tax year, for taxes owed in 2033.
  • In addition to the assessment rate cuts, residential property owners would get to exempt the first $50,000 of their home’s value from taxation for the 2023 tax year, a $10,000 increase made through an amendment adopted Monday. Residential property owners would then get to exempt $40,000 of their homes’ values from taxation for the 2024 tax year. The break would persist until the 2032 tax year, except for people’s second or subsequent single-family homes, like rental or vacation properties, which would stop being subject to that benefit in the 2025 tax year. 

Here’s how it work for commercial property:

  • For commercial properties, the assessment rate would be reduced to 27.85% through 2026, down from 29%. The state would be required to evaluate economic conditions to determine if the rate reduction should continue. If the rate reductions persist, the commercial assessment rate would be reduced to 27.65% in 2027, 26.9% in 2029 and 25.9% starting in 2031. 
  • For agricultural properties and properties used for renewable energy, the assessment rate would be reduced to 26.4% from 29% through the 2032 tax year. For properties that fall under both classifications, such as those used for agrivoltaics, the rate would be cut to 21.9%.

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. 

Property taxes in Colorado are calculated by multiplying the statewide assessment rate by the value of a property — sometimes referred to as a market value — as determined by a county assessor. That number is then multiplied by the local mill levy rate. 

(A mill is a $1 payment on every $1,000 of assessed value. So in order to figure out what your tax bill is you should multiply your mill levy rate by 0.001 and then multiply that number by the product of multiplying your property’s value by the statewide assessment rate. That’s how much you owe.)

So someone who owns a home valued at $600,000 and assessed at a 6.765% statewide residential assessment rate in a place where the mill levy rate is 75 would owe $3,044.25 in taxes each year. The formula to get to that number looks like this: $600,000 x 0.06765 x (75 x 0.001) = $3,044.25.

MORE: Use our calculator to determine what your new property tax bill would be under the Colorado legislature’s relief plan

The proposal would also prevent many local taxing districts from increasing property taxes above the rate of inflation, though school districts would be exempt and local governments could override the cap after giving notice to property owners. 

To account for the cuts, the legislature is planning to spend $200 million to repay local governments, including schools, for the additional revenue they would have collected. The plan also calls for using about $250 million of the $2.7 billion Colorado is projected to collect in the current fiscal year, which ends June 30, above the Taxpayer’s Bill of Rights cap on government growth and spending, to further account for local districts’ revenue reduction.

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.

Additionally, voters would be asked in November to increase the TABOR cap, which is calculated based on annual growth in population and inflation, by an extra 1%. (Any money collected over the cap has to be refunded.)

The change would reduce or eliminate the amount of money available for refunds in years in which the cap is exceeded. The change could mean voters won’t get billions in refunds over the next decade.

Finally, Proposition HH would set aside about $20 million each year for a state renter relief program — a late addition to the measure aimed at acknowledging the proposal mostly benefits property owners. 

If voters approve Proposition HH, that would trigger a change to how the state will distribute more than $2 billion in TABOR refunds next year. 

The money would be refunded through flat-rate checks of roughly $650 or $1,300, depending on whether someone is a single or joint tax filer, as opposed to a system where the refund amounts are tied to which of six income tiers taxpayers fall into, with higher earners getting larger refunds and lower earners receiving less. 

Advance Colorado, which is a dark money group, has already launched an ad campaign opposing Proposition HH. The Sun refers to political nonprofits that don’t disclose their donors as dark money groups.

The Colorado Sun —

Desk: 720-432-2229

Jesse Paul is a Denver-based political reporter and editor at The Colorado Sun, covering the state legislature, Congress and local politics. He is the author of The Unaffiliated newsletter and also occasionally fills in on breaking news coverage.

A Colorado College graduate, Jesse worked at The Denver Post from June 2014 until July 2018, when he joined The Sun. He was also an intern at The Gazette in Colorado Springs and The News Journal in Wilmington, Delaware, his hometown.

Jesse has won awards for long form feature writing, public service reporting, sustained coverage and deadline news reporting.

Email: Twitter: @jesseapaul