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Late last month, Colorado’s bipartisan tax commission took an informal poll among its 19 members to gauge support for the dozen or so ideas they’d been discussing to deliver tax relief to homeowners.
One emerged as a clear loser: a cap on property tax growth.
The concept ranked among the lowest of any proposal among the committee’s members, garnering strong opposition from Republicans and Democrats alike.
“Hard caps are a terrible idea,” Sen. Chris Hansen, a Denver Democrat, and chair of the commission, told The Colorado Sun in an interview.
But with last week’s announcement of an alliance between an influential business group, Colorado Concern, and a conservative political nonprofit, Advance Colorado, the idea may have moved a step closer to becoming reality.
The groups have introduced three statutory measures for the November ballot that would enact a 4% limit on property tax revenue growth. The limit would apply to the statewide total of property taxes collected at the local level by cities, counties, schools and other local agencies —a little over $12 billion in 2022.
Advance Colorado previously gathered enough signatures to bring a similar proposal, Initiative 50, which would put such a limit into the state constitution, making it harder to repeal. Voters could still override the cap in any given year and allow the government to collect additional tax revenue through a statewide referendum.
If the goal is to scare policymakers into cutting taxes more than they otherwise would, it remains to be seen if it will work. But there’s no doubt the commission is taking the threat seriously.
In public discussions, commission members have held the 4% growth cap up as a boogeyman that awaits them if they fail to come up with a plan that can appeal to the public.
“Whatever solution we come up with has to sound simple and understandable or we’re gonna end up with a 4% cap,” Republican Brenda Dones, Weld County’s tax assessor, said at a meeting in January.
Welcome to The Unaffiliated, the politics and policy newsletter from The Colorado Sun. Twice a week, we take you inside the political arena to deliver news and insights on Colorado politics. Keep reading for even more exclusive news. Today’s edition is a bit shorter than normal because of the Presidents Day holiday.
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CORRECTION: An item in Friday’s edition misreported the year Republican Peter Yu ran for U.S. Senate. He ran in 2022, but did not make the GOP primary ballot.
MORE: The commission has heard presentations on California’s Proposition 13 — perhaps the poster child of property tax caps nationwide — and Indiana’s tax caps, both of which limit the taxable value of people’s homes and have led to unequal tax burdens among homeowners.
But neither one is a close match for what the Colorado ballot proposals would do. Two better comparisons are New York and Massachusetts, which limit how much a local government’s property tax revenue can grow from year to year.
The results in each state have been dramatic.
In New York, school tax increases dropped to 1.9% annually from 6.6% under the property tax cap, saving taxpayers over $25 billion from 2012 to 2018, according to a study from the Rockefeller Institute of Government.
Likewise, a Massachusetts property tax limit adopted in the 1980s reduced taxes substantially, cutting their property tax rates from among the highest in the country to close to the national average.
There are a few problems, as opponents see it.
When New York adopted its property tax limit, state support for schools increased to compensate for the drop in local funding. But Colorado is falling short of its constitutional obligations to fund K-12 schools as it is. Next school year is expected to be the first time since before the Great Recession that the state will meet its minimum funding obligations under Amendment 23.
“The only reason we’re paying down the budget stabilization factor this year is because property tax revenues are up,” said Scott Wasserman, executive director of the Bell Policy Center, a liberal think tank. Wasserman’s group has offered a ballot measure of its own to counteract potential tax cuts.
Another issue: The Massachusetts and New York caps apply to individual local governments and still led to disparities in public services between wealthier districts that voted to override their tax limit and poorer ones that have tended not to.
In Colorado, those disparities could be even larger. The limit applies to total property tax revenue statewide. As a result, property value growth in wealthy mountain communities and Denver would trigger cuts in rural areas where property values are growing more slowly.
The phenomenon of Front Range home values affecting public services in rural communities should sound familiar to close followers of Colorado tax policy. It was one of the biggest problems with the Gallagher Amendment, the tax-limiting constitutional provision that voters repealed in 2020.
PROPERTY TAXES
How often could a 4% limit kick in? A lot.
Here’s something to keep in mind over the coming months:
Statewide property tax revenue has grown by less than 4% just 15 times in the past 60 years, a Colorado Sun analysis of Department of Local Affairs data found.
That means the proposed statewide limit wouldn’t just cut taxes in times of historic home price growth like we’ve experienced since the pandemic. It could trigger tax cuts more years than not.
Since 2000, the state fell below 4% growth only eight times since 2000 — mostly in the wake of the housing crisis, when residential and commercial real estate were in a historic funk.
But there are two caveats worth noting. Unlike Initiative 50’s blanket 4% cap, the growth limits contained in the Colorado Concern proposals would have exceptions for properties whose taxes go up due to a “substantial change of use” from one year to the next. The limits also exempt local mill levy increases approved by voters in the future.
One sign of how it could be received by local governments and their constituents: The Taxpayer’s Bill of Rights generally limits local governments to 5.5% annual growth in property tax revenue already. But voters in most of Colorado have waived their local limits.
Bottom line: A 4% limit may not sound like a big deal. But it could have a massive impact on what home and business owners pay in property taxes, and how we fund public services in the future.
WHAT TO WATCH THIS WEEK
CHART OF THE WEEK
Colorado companies, governments and nonprofits spent $59 million lobbying at the federal level in 2023, up slightly from 2022.
That’s a drop in the bucket relative to the $46 billion total spent to influence Congress and the rest of the federal government last year.
Fifteen Colorado groups accounted for 44% of the lobbying spending by entities based in the state.
Palantir Technologies, a software company that specializes in big data platforms, topped the list at nearly $5.5 million. Some $3 million of that spending came in the final three months of 2023, as the company tried to influence defense spending and other issues. Defense contracts are a major part of the company’s business. For instance, Palantir was awarded a $250 million Army contract in the fall.
Nutrien, a Canadian-based fertilizer company whose U.S. headquarters is in Loveland, was second on the list after spending about $2.8 million.
Four space-technology companies — United Launch Alliance, Maxar Technologies, Ursa Major Technologies and Ball Corp. — also made the top 15 list. The 2023 list includes 13 of the top 15 federal lobbying spenders from Colorado in 2022.
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THE POLITICAL TICKER
COLORADO LEGISLATURE: There are 78 days left in Colorado’s 2024 legislative session, but who’s counting? We are. Bookmark our new countdown clock.
ELECTION 2024: The Democratic presidential primary ballot mailed to Denver voters has a typo in its Spanish translation of “uncommitted delegate.” Instead of “delegado no comprometido,” the ballot says “delgado no comprometido.” “Delgado” means thin in English, while “delegado” means delegate. “We sincerely regret the error,” the Denver Elections Division said on social media.
POLIS ADMINISTRATION: Dannette Smith, who most recently served as the CEO of the Nebraska Department of Health and Human Services, has been appointed by Gov. Jared Polis to serve as the new commissioner of Colorado’s Behavioral Health Administration. “Throughout her 30-year career, Dannette has been a fierce advocate for accessible behavioral health care, a well-respected problem-solver, and a steady leader,” Polis said in a written statement. “I am confident that under her leadership, BHA will continue helping Coloradans access the high-quality care they deserve.” Smith begins her role leading the organization on March 18 and replaces Michelle Barnes, who will return to leading the Department of Human Services. Barnes took over for Morgan Medlock, who left the position in April under a cloud of controversy.
4TH CONGRESSIONAL DISTRICT: The Wall Street Journal on Monday profiled Lauren Boebert and her reelection bid in the 4th Congressional District. Former state Sen. Josh Penry, who is also a political consultant, was quoted in the article calling Boebert a “fringe conservative” and saying the contest “is a horse race.” Penry was identified in the story as a supporter of former state Sen. Jerry Sonnenberg, one of Boebert’s Republican primary opponents. At least one political firm tied to Penry — Ascent Media — is working for Sonnenberg.
MORE: Penry said his first encounter with Sonnenberg was in 2006, when Sonnenberg first ran for the legislature. Penry was a state senator at the time and was asked by Rob Fillion, a friend, to nominate him at the House District 65 Republican assembly.
“My friend gave a great speech — we thought he was in good shape,” Penry said. “But then Jerry got up and knocked the cover off the ball and kept my friend and one other candidate completely off the ballot. Race over.”
While driving back to Grand Junction from Sterling, Penry said his phone rang. It was Sonnenberg, saying he respected a guy who fights for his friends and that there were no hard feelings.
“Pure class,” Penry said. “Jerry and I have been friends ever since. I’m not personally involved in his campaign, but eagerly support him and have encouraged everyone I can to jump on the bandwagon.”
THE DENVER POST: Colorado Democrats want to use TABOR refund money to fight child poverty, help care workers with new credits
THE DENVER POST: Antisemitic trolls test the limits of free speech at city council meetings — with Lakewood the latest target
COLORADO PUBLIC RADIO: Bereft of Boebert, 3rd Congressional District Republicans chart new path
THE BIGGER PICTURE
Corrections & Clarifications
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