Proposition HH: What you need to know about the Colorado property tax relief plan

Property values across Colorado rose sharply during the pandemic, causing a spike in how much property taxes are owed next year.

Proposition HH would blunt those rising property taxes in Colorado for at least the next 10 years. It would also grow the state budget, place new limits on local government spending and rework how taxpayer refunds are distributed.

All told, Proposition HH would limit the increase in Coloradans’ property taxes each year by hundreds of millions of dollars, if not more than $1 billion. But over time, Coloradans could get billions less in tax refunds as the state government redirects those dollars to schools and other local agencies.

Here’s what you need to know about Prop. HH to cast your vote on the measure: 

What the property tax relief would be

Proposition HH would not lower Coloradans’ property taxes below what they currently pay. It would simply limit the increase in property taxes starting in the 2023 tax year for what’s owed in 2024 and continue that relief through at least the 2032 tax year. 

To understand how Proposition HH would work, it’s important to understand how property taxes are tallied in Colorado. 

Colorado property taxes, which are collected on the local level and fund services like schools, fire districts and parks, are calculated by multiplying the statewide assessment rate by the value of a property as determined by a county assessor. That number is then multiplied by the local mill levy rate. 

Property taxes aren’t rising in Colorado because the statewide assessment rate is rising or because local governments are increasing their mills. They’re going up because home values have risen by a median of 40% statewide since 2021, the last time they were assessed.

Here’s how the relief under Proposition HH would work for homeowners:

• The residential assessment rate would be reduced to 6.7% from 6.765% in 2023, for taxes owed in 2024, a roughly 1% cut. The rate would remain at 6.7%, down from 6.976% in 2024 for taxes owed in 2025, and persist through the 2032 tax year. 
• Note: If Proposition HH fails, the residential assessment rate would go up to 7.15% starting in tax year 2025 once a separate property tax relief measure passed by the legislature in 2022 expires.
• In addition to the assessment rate cuts, homeowners would get to exempt the first $50,000 of their home’s value from taxation in the 2023 tax year. That exemption would drop to $40,000 for the 2024 tax year. The break would persist until at least the 2032 tax year, except for people’s second or subsequent single-family homes, like rental or vacation properties, which would stop being eligible for that benefit for taxes owed in 2026 and beyond.
• Homeowners who want to claim the $40,000 exemption after 2026 would have to attest to their county assessors that it’s their primary residence. Lying about whether your home is your primary residence would be a Class 2 misdemeanor punishable by a jail sentence of up to 120 days and/or a fine of up to $750.

It’s difficult to generalize how much any individual homeowner would save under Proposition HH. That’s because mill levy rates vary wildly from city to city, and even neighborhood to neighborhood, depending on how each of the state’s 3,000-plus local districts are drawn.

The average statewide mill levy rate is about 70 mills, so if you don’t know your mill levy rate — you can look it up on your county assessor’s website  — you can use that number to get an idea of what your savings would be. 

There’s another calculator linked below where you can plug in your personal property information to determine your potential savings.

Here’s how Proposition HH would work for nonresidential property:

• For commercial properties, the assessment rate would be reduced to 27.85% through 2026, down from a rate of 27.9% after a $30,000 reduction in value is exempted from taxation. (If Proposition HH fails, the rate will be restored to 29% in 2024 and the $30,000 exemption will go away.) Under Proposition HH, the rate will remain at 27.85% through 2026 and drop to 27.65% in 2027 and to 26.9% in 2029. If there is a substantial enough increase in property values, that rate would be reduced to 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%. (Agrivoltaics is the use of land for both agriculture and solar energy production.)

Nonpartisan legislative staff estimates that the lower assessment rates and value exemptions would reduce property taxes statewide by a cumulative $400 million 2024, $960 million in 2025 and more than $1 billion in 2026.

Fact check: Would Proposition HH really eliminate Coloradans’ taxpayer refunds?

No, Proposition HH doesn’t raise property taxes. But it’s unlikely to cut them as much as supporters say.

Senior homestead exemption would become portable

Under Proposition HH, the senior homestead exemption could be transferred starting in 2025 if someone over 65 who receives or received the benefit moves or has moved. 

The exemption lets people 65 and older who have owned their primary residence for at least 10 years exempt 50% of their home’s value up to $100,000 from taxation. But currently, the exemption is forfeited if someone who claims the break moves out of a property they’ve lived in for a decade or more, such as to downsize. 

The $100,000 exemption would be in addition to the other exemptions offered under Proposition HH.

The truth-in-taxation provision in Proposition HH

The proposal would also prevent many local taxing authorities from collecting more property tax revenue each year above the rate of inflation without holding a public hearing and passing an ordinance or resolution.

Local taxing districts that don’t override the limit must temporarily lower their mill levy rate or refund taxpayers any revenue collected over the limit.

It’s modeled after a similar system in Utah.

School districts, which account for the majority of Coloradans’ property tax bill, and home-rule jurisdictions would be exempt from the limit. 

Making up for the cuts at the expense of TABOR refunds

To account for the cuts, Proposition HH would increase the state’s Taxpayer’s Bill of Rights cap on government growth and spending, which is calculated by annual growth in population and inflation, by an extra 1 percentage point each year. 

That may not sound like a lot, but the extra percentage point is expected to allow the state government to spend an extra $2.2 billion in the 2031-32 fiscal year. The TABOR cap growth proposed under Proposition HH is expected to let the state keep an additional $170 million in the current fiscal year, which began July 1, and $360 million in the next fiscal year. 

Since any money collected over the cap must be refunded to taxpayers, the change would reduce the amount of money available for refunds in years in which the cap is exceeded. It also may prevent the cap from being exceeded altogether, meaning no refunds at all.

The extra revenue made available by increasing the cap would be distributed to local governments, mainly schools, to make up for all or some of the money they would have received had Proposition HH not blunted the increase in property taxes across the state. 

Here’s how the dollars would be distributed: 

• Schools would be reimbursed for all of the revenue lost due to the reductions in Proposition HH.
• Ambulance, fire and health districts would be completely reimbursed for their revenue reductions until their area assessed property values rise more than 20% above their 2022 levels. After that threshold is reached, the state will only reimburse half of their lost funding.
• All other local districts funded by property taxes would be completely reimbursed until their area assessed property values rise more than 20% above their 2022 levels, the repayments from the state stop. (In 2023, however, all districts will receive reimbursement for separate property tax reductions adopted by the legislature in 2022 even if their property values grow by more than 20%.)
• County governments with more than 300,000 people will only get partial backfill unless their areas assessed property values grow by less than 10%.

If there’s money left over after the payments to schools and local districts are made, it would be sent to the state education fund to serve as a rainy day pool of money in case of a future economic downturn. If the TABOR cap isn’t exceeded in a given year enough to backfill schools, however, the other districts affected by the Proposition HH relief would be cut out of the reimbursements. 

The TABOR cap is expected to be exceeded by more than enough to cover the reimbursements in at least the next three fiscal years. 

Even with the reimbursements, Proposition HH is estimated by nonpartisan legislative staff to cost local districts at least $240 million in 2024, $510 million in 2025, and $650 million in 2026.

Finally, Proposition HH would eventually set aside up to $20 million each year to go toward a state renter relief program. Those dollars would be directed toward helping renters contend with any property tax increases their landlords pass on to them. 

Proposition HH would affect your TABOR refunds in another way

If Proposition HH passes, it would trigger a bill state lawmakers passed in the final hours of the 2023 legislative session changing how TABOR refunds are distributed next year for the $3 billion-plus in revenue above the TABOR cap collected during the 2022-23 fiscal year, which ended June 30.

Under the default system, refunds are distributed based on six income tiers, with higher earners receiving bigger refunds (about $1,850 for single filers in the top tiers) and lower earners getting less (about $580 for single filers in the lowest tiers). If Proposition HH passes, however, every Colorado taxpayer would receive checks of $832 for one year, regardless of their income.

The amounts are doubled for joint tax filers. The exact sums could still shift slightly depending on the state’s accounting methods for tax revenue collected in the 2022-23 fiscal year, which ended June 30 and on which the TABOR refunds are based. The checks will be sent out next year after people file their 2023 tax returns.

If you make $99,000 or less — which is 62% of Colorado taxpayers — your TABOR refund will be larger if Proposition HH passes. If you make more than $99,000, your refund will be much smaller. The checks are set to be mailed out in April after people file their 2023 tax returns.

This chart breaks down how big your refund would be whether Proposition HH passes: 

*Note: The numbers here are different than the ones in the state ballot guide — also known as the blue book — because the amounts changed after the guide was printed. These reflect the most up-to-date refund estimates from nonpartisan Legislative Council Staff.

Keep in mind that the change in the refund method would be for one year only.

Will Proposition HH actually save me any money?

The exact impact on your wallet depends on how much money you make, if you own a home, how much that home is worth and where you live. It also depends on whether your local taxation authorities vote to exceed the new inflationary cap on property tax revenue. Other local districts may temporarily cut mill levy rates to provide additional tax relief.

If you’re a wealthier Coloradan who owns a home, the initiative may actually cost you a lot more money in its first year. That’s because while your property taxes would be lowered, the TABOR refund amount you receive in 2024 would shrink.

If you’re in the top tier and a joint filer— making more than $278,000, which is 7% of Colorado taxpayers — that reduction in TABOR refunds will be about $2,000. The property tax relief you receive over the 10 years of the measure, pared with the long-term reduction in TABOR refunds because the TABOR cap is being raised, may not make up for that initial loss. 

If you’re a Coloradan who makes $99,000 or less and doesn’t own a home, you’ll get a bigger TABOR refund under Proposition HH in the first year the measure is in effect. That being said, your refunds will shrink over the next nine years.

What happens when the 10 years are over?

Proposition HH expires after 10 years, but the legislature can extend the policy indefinitely with a simple majority vote.

Who is supporting and opposing the ballot measure?

Proposition HH was placed on the ballot by Senate Bill 303, legislation that was drafted by Democrats in the legislature with input from Gov. Jared Polis’ office. Republicans at the statehouse fought the bill, arguing that any property tax relief shouldn’t be tied to any TABOR changes. 

Property Tax Relief Now is the group supporting Proposition HH. It had raised more than $1.1 million through Sept. 27, much of it from an education group and a national teachers union. 

Education Reform Now Advocacy Inc. has given $300,000 to Property Tax Relief Now, while the National Education Association, a national teachers union, has given the committee $200,000. The Colorado Education Association, the state’s largest teachers union, has given $50,000.

Boldly Forward Colorado, a nonprofit associated with Polis, has given nearly $70,000 to Property Tax Relief Now, while Gary Advocacy LLC, a local philanthropy group, has given $250,000. The committee has also received $100,000 from Colorado philanthropist and Democratic donor Pat Stryker and $60,000 from the Sixteen Thirty Fund, a national, liberal political nonprofit. 

The Colorado Sun refers to the Sixteen Thirty Fund and Education Reform Now Advocacy as dark-money groups because as political nonprofits they don’t have to reveal their donors. 

No on HH is the group with the deepest pockets fighting the ballot measure. It had raised more than $1.5 million through Sept. 27. Almost all of its money has come from two conservative political nonprofits — also known as dark-money groups. 

Advance Colorado Action has donated $1 million to No on HH, while Defend Colorado has given $500,000 to the committee. 

The Colorado branch of Americans for Prosperity, a national conservative dark-money group, created an issue committee to fight Proposition HH which has spent more than $200,000 fighting the measure so far. 

The measure is opposed by the Colorado Municipal League, Colorado Counties, Inc., and the Special District Association of Colorado, which represent local governments across the state, as well as the Colorado Association of Realtors and the state branch of the National Federation of Independent Businesses.

Proposition HH is supported by AARP Colorado, the Colorado Association of School Boards, Colorado Professional Firefighters and Colorado Concern, a nonprofit made up of CEOs in the state.