Even supporters of Proposition HH can’t say exactly what the November ballot measure will do over the long term.
It’s “kind of incalculable,” Democratic state Sen. Chris Hansen says. If voters approve the 10-year tax and spending overhaul, many of its provisions depend on future unknowns, like the economy and how policymakers across the state will govern in years to come.
So when Hansen talks to voters about the property tax-limiting ballot measure he helped author, he tries to simplify it to a couple things: Immediate relief from rising housing costs. And improved funding for schools.
But that’s not the message many voters are hearing from the political campaigns.
“The primary purpose of Prop. HH is to avoid a cost of living crisis where Coloradans, especially seniors on a fixed income, could be pushed out of their homes,” Nico Delgado, a spokesperson for the Yes on HH campaign, said in a statement.
The public fight over Proposition HH has been dominated by taxes. In reality, however, the long-term financial impact on public services could rival or even exceed that of the property tax cuts.
For schools, in particular, Proposition HH has a chance to be “gigantic,” said Hansen, of Denver.
Over the first three years alone, the measure is projected to generate over $400 million in new money for schools, according to the estimates of nonpartisan legislative staff. That’s on top of the state fully replacing the $800 million that schools would otherwise lose due to the measure’s property tax cuts.
Local governments, on the other hand, stand to lose large sums if the measure passes — $240 million statewide next year, and more than $500 million in 2025. Unlike for school districts, the funding spigot to replace the losses to local governments and special districts is designed to slow to a trickle within a few years.
“If it (Proposition HH) was really for the sole purpose of helping property owners with their property taxes, all the General Assembly had to do was adjust the residential assessment rate,” said Kevin Bommer, executive director of the Colorado Municipal League, which opposes the initiative. “But they didn’t do that.”
Instead, he argues, the measure’s true purpose is to increase school funding, with the “bright shiny distraction” of cutting people’s property taxes.
“I think everyone supports greater education funding,” Bommer said. “But it’s not done in any kind of transparent way.”
Meanwhile, the Yes on HH campaign’s central selling point — tax relief for Coloradans who need it most — is undercut in part by the measure itself. The tax provisions that benefit low- and middle-income Coloradans the most fade immediately, tilting the financial rewards toward the wealthy.
Further complicating matters, virtually all of the impacts come with an asterisk. They depend on where you live, what your home is worth, how much you make and what the crystal ball holds for Colorado over the next decade.
Complications, uncertainty cloud the financial impact
Proposition HH is classic Colorado ballot politics — an outgrowth of the Taxpayer’s Bill of Rights, or TABOR, which gives voters a say in how the government collects and spends public money.
But it’s unusually convoluted even by Colorado standards.
For the specifics, you can read our full explainer here. But generally speaking, it would reduce people’s property tax bills by cutting the statewide residential assessment rate and increasing a tax exemption for homeowners.
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Proposition HH doesn’t just cut taxes, though. To pay for the increased state funding for schools and local governments, it would raise the TABOR cap on government spending by 1 percentage point, or an estimated $2.2 billion a year by 2032, according to legislative analysts. That allows the state to spend more of the money it already collects on public services, rather than return it to taxpayers through annual refunds.
Some of this money would be set aside for renters, but not much. The rental assistance fund tops out at $20 million a year. But most of the expected benefit for renters would come via their landlords, whose lower taxes will be baked into future rent prices, Hansen says.
Some provisions are temporary. Proposition HH redistributes TABOR refunds away from high earners and toward low- and middle-income residents, but only in the first year. A flat tax exemption on homes decreases after the first year, too.
Other effects depend heavily on the economy and political factors.
Take school funding, for example. If there’s a recession, the money tapped by Proposition HH to fund schools — TABOR refunds — could dry up. If the economy keeps humming, the measure could eventually generate over $1 billion in new annual revenue.
Even then, school districts would have to trust future state lawmakers to follow through. The legislature has broken school funding promises before, even some that were constitutionally required by voters.
“It could be helpful. It could be a game-changer,” said Madi Ashour, director of Youth Success Initiatives for the Colorado Children’s Campaign, which supports the measure. “It could, it could, it could. It’s just so hard to make promises in education funding that we don’t know we can keep.”
There are so many uncertainties that nonpartisan analysts can’t say for sure what dollar figure will be bigger 10 years from now: the property tax cut, or the reduction in state taxpayer refunds that Democrats are relying on to increase funding to schools.
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
Far from clarifying matters for voters, the message coming out of the campaign’s most prominent supporters has in some cases added to the confusion.
Gov. Jared Polis, whose administration designed the measure, has downplayed the effects on schools. In a previous interview with The Colorado Sun, he avoided direct answers to questions about the benefits for public education. The Yes on HH campaign website, too, plays down the potential benefits to schools across the state.
The mixed messaging has opened the door for opponents to argue that supporters are misleading voters on purpose.
“The long-term goal is to end TABOR tax refunds and redirect it to education,” said Michael Fields, who leads Advance Colorado, a conservative political group that opposes the measure. “This is why it’s so confusing. They’re trying a clever way to do what they’ve been trying to do for years.”
If schools win big, others could lose
Uncertainties notwithstanding, schools are widely expected by analysts to come out ahead if the measure passes. Public education funding advocates, including state and national teachers unions, have donated to the campaign.
For other local governments, the situation is less clear cut.
In high-growth areas, property values are rising so fast, they’re likely to see a revenue windfall even with the tax-limiting cuts. But other districts’ finances are more tenuous — and their costs are going up, too.
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.
The state’s promise to fully replenish the lost tax revenue ends once a district’s assessed values have grown by 20% from 2022 levels. That means even if growth slows in the future, the state would soon withdraw its financial support. Faster growing areas may never receive any repayments at all.
Some agencies, like ambulance and fire districts, will receive additional help, but it would still represent a fraction of their losses. By 2026, even local governments still owed reimbursements from the state could receive less than 30% of their lost funding, a legislative staff analysis found.
“This payback is just a fallacy,” said Don Lombardi, chief of West Metro Fire Rescue, who said his agency is struggling to afford the rising costs of fire trucks and other equipment. “It’s not what they think it is. We’re not going to get all of our money back.”
To supporters, the counterargument is what could happen if Proposition HH fails. Public pressure for tax cuts will only grow from here, and there’s no guarantee the next proposal will include any local reimbursements at all.
A conservative tax plan teed up by Fields’ group for the 2024 ballot, Initiative 50, would limit statewide property tax growth to 4% annually, without generating new state funding for local agencies. The limit could only be exceeded with voter approval.
“We had to respond to this moment,” Sen. Hansen said, alluding to the 40% statewide jump in property values. “But we wanted to do it in a way that’s not going to harm firefighters and schools and important local services.”
Colorado Sun staff writer Jesse Paul contributed to this report.