To hear Colorado’s political campaigns fight over Proposition HH, the 10-year property tax relief plan on the November ballot, one would think they were describing alternate universes.
In one telling, Proposition HH would lead to the largest property tax hike in the state’s history, and take away state tax refunds owed under the Taxpayer’s Bill of Rights to boot.
In another, the ballot measure would save the average homeowner $600 every year, directing more help to working families and seniors who are struggling the most with the state’s rising cost of living.
The reality is that Proposition HH would cut property taxes, not raise them. But a Colorado Sun review found that voters are unlikely to feel as much relief from the state’s rising cost of living as supporters say.
Read on for our fact check of the campaigns’ competing property tax claims:
A historic tax hike?
Mailers sent out this month by opponents claimed “Prop. HH will create the largest property tax hike in Colorado history.”
What Proposition HH would actually do is cut tax rates. The statewide residential assessment rate, which helps determine how much property taxes homeowners owe, would fall to 6.7% from 6.765% today. And homeowners would automatically receive an additional tax break that chops $40,000 to $50,000 off the taxable value of their home. Add them together, and most Coloradans would pay hundreds of dollars less than under current law.
Michael Fields, who leads Advance Colorado Action, a conservative political nonprofit that’s opposing Proposition HH, phrased his criticism more carefully in an interview with The Sun. He says it “green lights” the largest property tax hike in state history. That’s also the language that appears on the opposition campaign’s official website.
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.
We still consider Fields’ line misleading, but there are some semantics involved.
The term “tax hike” is typically reserved for when tax rates go up, and that’s not happening. The amount people actually pay on their tax bills will go up next year, but that’s because property values are rising faster than the rate cut HH provides.
There’s no doubt the 40% rise in property values over the past two years is unheard of in Colorado history. Large property value jumps in the past were limited by the Gallagher Amendment, which triggered billions of dollars in property tax cuts from its adoption in 1982 until its repeal by voters in 2020.
At the time the amendment was eliminated, policymakers promised to replace Gallagher. But they never did, leaving homeowners to bear the full brunt of the state’s rising housing costs.
Proposition HH doesn’t fill the void Gallagher left. If anything, it suffers from some of the same flaws that led to Gallagher’s repeal in the first place, applying a statewide property tax cut that would affect different communities in different ways.
But even if Colorado homeowners experience large increases in their property tax bills next year, Proposition HH won’t be the reason. Blame the state’s limited housing stock and growing population for rising costs — and state policymakers for never providing the Gallagher replacement voters were promised.
$600 in savings “every single year?”
Proponents of Proposition HH have made questionable claims of their own.
The Yes on HH campaign website recently promised that “the average homeowner will save $600 every single year and will get an increased TABOR refund of $820 this year.”
It goes on to say that the measure would bring “extra relief to those who need it most, like seniors and working families.”
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.
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In reality, two separate nonpartisan analyses show that wealthier Coloradans would see greater tax savings than low- and middle-income Coloradans. Moreover, “the average homeowner” is unlikely to see a $600 property tax cut until years in the future. Even then, the tax cut would be blunted somewhat by declining state tax refunds.
So how much would the average homeowner save? No one can say for sure. It depends on a number of factors, such as how local government officials adjust their mill levies in response to the rise in property values and how much home values increase in the future.
The state voter’s guide, known as the blue book, published by nonpartisan Colorado Legislative Council economists, estimates that a homeowner with a house worth $500,000 would save $186 to $276 next year, and $314 to $396 in the following tax cycle. Only homes worth over $1 million reach $600 in savings by year two, under their estimates.
The Colorado Fiscal Institute, a liberal think tank that supports Proposition HH, expects the average savings would fall short of the campaign estimate, too. For the median Colorado home worth $560,000, they figure a tax savings of $377 next year and $496 the year after that.
So where did the $600 figure come from? For starters, the Yes on HH campaign used an average home value of $723,000. That was the mean home sale price from a one-month sample in June 2022. The median sales price that month was $589,000.
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The campaign also used the current average statewide mill levy of 83 mills as the starting place for its calculations. (Mill levies are the actual local tax rates people pay school districts and other government agencies to fund public services in their communities.) Using 83 mills ignores the political reality that many local governments are likely to lower their local tax rates in future years, whether Proposition HH passes or not.
The Legislative Council and Fiscal Institute estimates use 69 mills and 75 mills, respectively. (But actual property tax rates vary wildly from one community to the next.)
After The Colorado Sun questioned the $600 estimate, the campaign quietly edited its website to say the average homeowner would save “$500+ every single year.”
As for the TABOR refund, Proposition HH would lead to taxpayer refunds of $833 next year for everyone, regardless of income level. But the expected increase for the average taxpayer making between $50,001 and $99,000 is just $63, or $126 for joint filers. The refunds for households making more than $99,000 would decrease next year.
The increased refund for the majority of taxpayers is also temporary. In future years, higher earners would receive larger refunds than lower income Coloradans, whether voters approve the measure or not. But over time, Proposition HH would reduce tax refunds for everyone, likely wiping out the initial benefits for low- to moderate-income households.