Gov. Jared Polis on Thursday called state lawmakers into a special legislative session to cut property tax rates and blunt the impact of large increases in home values on tax bills awaiting homeowners next year.
The session will begin Friday, Nov. 17, and last at least three days.
Polis’ announcement comes just two days after voters overwhelmingly rejected his preferred solution, the sprawling property tax relief and school funding measure known as Proposition HH. The initiative, authored by the governor’s office, was aimed at combating a 40% increase in property values that would cause a corresponding jump in property tax bills next year.
The General Assembly is working under a tight timeline if it hopes to curb the state’s rising cost of living. If no tax cut is approved before early December, a sharp increase in Colorado property tax bills due in April will be locked in.
The timing — less than a week ahead of Thanksgiving — puts pressure on lawmakers to reach a deal quickly or risk interrupting their holiday plans.
“We need to act for short-term property tax relief now,” Polis said at a Thursday announcement at the governor’s mansion.
“Whatever savings we can provide — and I hope they’re extensive — need to be done by Thanksgiving,” he added.
The governor’s call for a special session comes despite the lack of a clear proposal that a majority of lawmakers can agree upon. Progressives are now pushing for more targeted relief to low- and middle-income Coloradans, while Republicans are seeking “clean” tax cuts that avoid a long-term reduction in taxpayer refunds under the Taxpayer’s Bill of Rights, or TABOR.
Caught in the middle of the debate are school districts and local governments, which stand to lose out on hundreds of millions of dollars in revenue each year if the state cuts property taxes without increasing financial support for local services.
Polis, a Democrat, kicked off a news conference at the governor’s mansion Thursday by swinging a baseball bat at a clear case labeled break in case of emergency — the failure of Proposition HH.
But while he said the special session has long been plan B, he offered little guidance for lawmakers at Thursday’s announcement.
“Our plan is to try to assemble a legislative majority for providing the maximum amount of property tax relief that we can,” Polis said, when asked what specifics he would like to see in a bill.
Polis said the special session would be limited to short-term solutions for the current property tax year, but urged lawmakers to take up long-term changes when it reconvenes in January. He proposed a blue ribbon commission to study a broader overhaul that he said should include an annual cap on property tax growth.
In the meantime, Polis offered three potential sources of funding for lawmakers to fund reimbursements for schools and local governments. Two of them come straight from Proposition HH, which voters just rejected by a 60-40 margin.
When lawmakers approved the ballot measure, the legislature set aside $200 million in general fund money to offset some of the financial impacts to local services. Proposition HH also would have tapped the state’s TABOR surplus, which funds state taxpayer refunds in years when the economy grows faster than the state spending cap.
Polis offered a third option Thursday: taking as much as $200 million from the state’s reserves, which today holds 15% of general fund spending.
The abbreviated session could lay bare the stark differences between Polis and the progressive wing of his own party on taxes.
On Thursday, some Democratic lawmakers said they’d push for changes to the across-the-board property tax cuts found in Proposition HH, which would disproportionately benefit wealthier homeowners.
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.
“I pledge to do everything in my power to fight for equitable tax relief that is targeted at those who actually need it,” Rep. Javier Mabrey, D-Denver, wrote in a social media post.
“Those who own $5 million homes shouldn’t benefit the most from what comes out of special session,” he added.
Colorado already has the third-lowest property tax rates in the nation as a share of home prices, according to the Tax Foundation, a conservative think tank. But it may not feel that way to homeowners with moderate incomes who bought their houses when prices were far lower.
Local government advocates, who opposed Proposition HH because it offered relatively little compensation for lost tax revenue, told The Colorado Sun they have been working to come up with proposals of their own.
Ann Terry, the executive director of the Special District Association, told The Sun this week she was “thrilled” voters rejected Proposition HH.
“We recognize there is more work to be done, and we have a coordinated stakeholder process to provide real property tax change going forward,” Terry said.
Looming over the discussions is a measure conservatives placed on the 2024 statewide ballot that would cap annual property tax increases statewide at 4%.
But while Republicans support property tax cuts, they will be a tough sell on an interim fix that reduces state taxpayer refunds to fund local services as Proposition HH did. The conservative ballot measure, Initiative 50, would provide no new funding to offset the financial hit to local services, such as schools, fire districts and libraries.
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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Senate Minority Leader Paul Lundeen, R-Monument, said the TABOR surplus should be off-limits for lawmakers — particularly after voters just rejected Democrats’ attempt to redirect it to schools and local services through Proposition HH.
“Democrats thought they could hoodwink the people of Colorado into doing something contrary to their own interests,” he said of the ballot measure. “The TABOR surplus should go back to the people of Colorado, it’s their money.”
Local governments, he added, don’t need the money — “property taxes are going through the roof,” he said — while schools should be funded by cutting state spending on other programs.
The hastily called session comes as local government officials are scrambling to meet December deadlines to set their budgets for next year. Tax bills go out in January and are due in April.
The last time state lawmakers in Colorado convened for a special session was in 2020 to approve stimulus spending during the coronavirus pandemic. Before that, then-Gov. John Hickenlooper called lawmakers back to the Capitol in 2017 to fix a bill-drafting error that was costing local districts millions of dollars in marijuana revenue.