The promise was simple — “property tax relief is coming” — but the mechanism through which elected officials in conservative Douglas County made the $28 million break for homeowners happen was anything but.
State officials are now mulling whether to intervene and potentially reverse Douglas County’s decision to reconsider its property values. There are concerns the move will be repeated across Colorado, which could have tens of millions of dollars in consequences for homeowners and local government revenues.
The situation isn’t happening in a vacuum. It comes as voters across the state will decide Nov. 7 on Proposition HH, a 10-year property tax relief plan created by Gov. Jared Polis and Democrats in the legislature aimed at blunting the effect of skyrocketing property values during the pandemic. But Republicans say the initiative doesn’t offer enough of a break.
Meanwhile, in 2024 Colorado voters will consider an even further-reaching property tax measure put on the ballot by a conservative group. Democrats warn the initiative would have disastrous consequences for state and local budgets.
What happened in Douglas County was that its three commissioners voted last month to reduce the county’s latest valuations of single-family homes, townhomes and condominiums by 4%.
Property valuations, which are done every two years in Colorado, are one of the key factors in determining how much a homeowner pays in property taxes. A lower property valuation means a lower property tax bill.
The commissioners were acting as the county’s board of equalization, which is supposed to correct errors in property valuations. But the commissioners said they also acted in the name of tax relief after home values rose by an average of 48% in 2022 for calculating tax bills in 2023 and 2024.
“We absolutely did it on behalf of tax relief,” said Douglas County Commissioner George Teal, a Republican.
A news release announcing the tax relief also included a quote from Commissioner Lora Thomas urging residents to reject Proposition HH.
That drew the attention of the State Board of Equalization, which is controlled by Democrats and is charged with reviewing the Douglas County Board of Equalization’s decision. The concern is what the effects of the valuation reduction will be on the 300-plus local districts in Douglas County, which set their own tax rates but will be forced to contend with the consequences of the across-the-board valuation reduction.
West Metro Fire Rescue, for instance, will be affected by the change. The district is mostly in Jefferson County but stretches into a portion of Douglas County. Chief Don Lomardi told The Colorado Sun that Douglas County’s commissioners didn’t consult with him before making the reduction, which comes as he’s contending with a sharp increase in labor costs and more expensive firefighting equipment.
“I don’t have a money making machine in our basement,” he said. “I don’t know how they think that we’re going to be able to stomach all of these losses long term because they end up compounding.”
There will also be consequences for the state if Proposition HH passes. The measure requires that local districts be reimbursed for their revenue reductions caused by the initiative. The Douglas County decision increases that financial burden.
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State Sen. Chris Hansen, a Denver Democrat who sits on the state board and is one of the lead proponents of Proposition HH, said he thinks Douglas County’s commissioners may have misused their power to reduce property valuations.
“This is the wrong mechanism (to offer property tax relief),” Hansen said. “This is a math exercise. This is an accounting exercise. If the county wants to reduce mill levy, it can do that. That’s tax relief.”
The Douglas County decision, under rules that apply to county board of equalization changes, will automatically be reviewed by a third-party auditor hired by the state. The auditor will determine whether the reduction runs afoul of a state law requiring that valuations be within 5% of properties’ market value. If the county is found to be out of compliance, the auditor can recommend that the State Board of Equalization issue a revaluation order and force Douglas County to take a second look at its valuations.
The state board, made up of five people, three of whom are Democrats, can also unilaterally reverse the Douglas County reduction partially or entirely if it finds the decision was unwarranted. The board did a similar reversal in recent years when Dolores County tried to cut its agricultural land values to offer owners relief.
Hansen said he wants to see what the audit shows before he decides whether to try to reverse the reduction. He’s also expecting to hear protests from local districts in Douglas County.
Douglas County’s commissioners say they are within the law and that they made sure not to run afoul of the 5% restriction.
“If it wasn’t for intervening Colorado code established by the legislature, we would have absolutely cut more — we would have absolutely reduced valuations more,” said Teal, adding that the county may also reduce its mill levy rate to offer more relief. “Everything we did we believe was legal and is defensible in court.”
Douglas County Assessor Toby Damisch, a Republican who was one of the architects of the plan, said that while he’s happy to offer relief to homeowners, the 4% reduction was also based on market conditions. He said on June 30, 2022, when the valuations were dated, the housing market was shifting rapidly in Douglas County as mortgage interest rates increased and inflation pinched Coloradans’ budgets.
“The market was changing as of the appraisal date,” Damisch said. “That gave us the space to dive into this more and (ask) could we justify a different answer for these residential properties? And the answer is ‘yes.’”
Damisch said his office determined that residential property values could have been between 2% and 8% lower than what it initially calculated.
“There’s no error that was made,” he said. “It doesn’t mean that we can’t look at it and say ‘there’s something that we can do better.’”
Damisch said that he hopes the State Board of Equalization takes into consideration that the 4% reduction is on a much bigger increase in property values — up to 60% for some homes. He said Douglas County’s average increase was the highest in the metro area.
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.
“If we had cut our values in half, I’d understand,” he said. “If we cut our values by 20%, and he put ourselves from the highest increase in the Front Range to the lowest I would understand questions coming from the State Board of Equalization. But for the life of me I cannot possibly understand why they would doubt what really amounts to a very small step that, yes, provides relief, but also is done in a justified and analytical manner.”
However, critics of the Douglas County reduction worry that if the move is successful, it could prompt other counties to follow suit with big effects on local government revenues. That could complicate the broader statewide property tax conversation.
“I think there’s a lot of ‘let’s see if they get away with it,’” Hansen said.
State Rep. Bob Marshall, a Highlands Ranch Democrat who also sits on the State Board of Equalization, said that he’s not immediately worried about the Douglas County reduction.
“If the county thinks they can provide the same level of services and they can knock it down 4%, I’m not going to fight them over it,” he said. “No constituents have brought concerns to me about it at this point.”
Scott Wasserman, who leads the Bell Policy Center, a liberal-leaning fiscal nonprofit, said the State Board of Equalization should “nip this in the bud.” He said even if the Douglas County decision was based on market conditions, “the legal department didn’t talk to the PR department” and the state needs to determine if the reduction was political or not.
“If this were to break out and multiple counties were to do it, I think it would really confuse voters and cause all kinds of mischief for local districts that are waiting to see what happens on Election Day,” Wasserman said.
So far, no counties appear to have copied the Douglas County reduction. But Teal said he’s fielded calls from commissioners in other counties interested in replicating what Douglas County did.
“Many were very curious, wondering how we did it,” Teal said.
Douglas County Commissioner Abe Laydon, another Republican, said he’s been having similar conversations.
“We’re the first county to do it,” he said, “but hopefully not the last.”
The State Board of Equalization is likely to review the Douglas County valuation reduction in December.