Coloradans are set to vote on two ballot measures this November. If approved, they would reform the state’s property tax system and its rules around tobacco and nicotine taxation.
One of the measures, Proposition HH, comes in response to spiking property taxes fueled by rising property values and includes a 10-year tax relief plan backed by Gov. Jared Polis and Democratic state lawmakers. The measure was created through Senate Bill 303, which passed along party lines in the last days of this year’s legislative session.
Starting next year, this measure would reduce property valuation rates statewide over the following decade, which would in turn affect future property tax calculations and result in lower taxes. The new assessment rates apply to residential and commercial properties, as well as properties used for agriculture and renewable energy production, but the rates vary depending on the type. The measure would also limit local property tax increases to the rate of inflation. On top of that it would allow homeowners to exempt up to $50,000 of their home's value from taxation this year. That exemption will be reduced to $40,000 next year.
“Prop HH provides that relief for all types of property owners, whether it's a residential, a commercial property, added property, etcetera,” measure sponsor and Senate President Steve Fenberg said. “But it does it in a way that doesn't hurt our schools and services that rely on property tax revenue.”
In many Colorado communities, property taxes fund local services like schools, libraries, water districts, fire departments and ambulances. Less tax revenue means less funding for those programs. Proposition HH would make up for losses in that revenue by reducing the money available for refunds under the Taxpayer Bill of Rights, or TABOR.
At least five organizations have formed in opposition to Proposition HH. One of them, called No On HH, is run by Michael Fields, who also runs the conservative political advocacy group Advance Colorado.
Fields is one of the sponsors behind the conservative-backed Initiative 50, a competing ballot measure to Proposition HH that will appear on the 2024 ballot. Initiative 50 would create uniform property tax rates across the state and cap increases at no more than 4% statewide. Fields criticized Proposition HH in a recent YouTube video.
“They’re offering property tax relief, which is really just a rounding error for permanently giving up your TABOR refunds,” Fields said in a video posted to YouTube. “The solution to it is to cap property tax increases. We need to make sure that property taxes remain low so that people can stay in their homes - seniors, people on fixed incomes, everyday Coloradans.”
Proposition HH would not eliminate TABOR refunds, however, only curb them.
Fenberg pushed back on Initiative 50.
“Property taxes are administered, collected and largely spent at the local level. It's complicated, depends on the district, and there's a formula. And it changes slightly over time,” Fenberg said. “So a statewide cap - no one really knows how to implement that.”
Initiative 50 doesn’t offer any solutions to backfill funding for local services and Fenberg said its one-size-fits-all property tax cap could result in large-scale funding cuts for local services that Coloradans rely on.
Fenberg added that Coloradans don’t need to worry about major cuts to their TABOR refunds since Proposition HH would only allow the state to retain 1% of excess tax revenue. That comes to a reduction in refund dollars of about $33 per person. Refund checks last year were $750 for an individual and $1700 for joint tax filers, and those amounts are expected to increase this year.
TABOR refunds have never been a guarantee, anyway. They are typically only distributed in years when the state economy is strong and there is excess revenue. For many years since TABOR was established, Coloradans haven’t seen any refunds at all.
“This is a time period when we should be increasing our investments, not decreasing,” Fenberg said. “We talk a lot about TABOR. That's in the (state) constitution. There's something else in the constitution called Amendment 23. Amendment 23 requires us to be funding education fully, which we have not been doing for years. So we obsess over TABOR. Unfortunately, it doesn't seem like we obsess nearly enough over Amendment 23, which has a real impact on all of our lives.”
Colorado has the fourth lowest property taxes in the country, according to findings published in May by Bankrate, an outlet that monitors the real estate market for homebuyers.
The other measure on this year’s ballot, Proposition II, would allow the state to retain excess revenue from tobacco and nicotine products.
Currently, excess revenue from those sales has to be refunded to the products’ distributors and manufacturers. If approved, Proposition II would allow the state to spend that money on expanding access to the state’s free preschool program. The measure was created through Democrat-backed House Bill 1290, which was also passed this year, but has received far less attention than Proposition HH.
The deadline to submit ballot measures for this year's election was Monday, August 7. As always, election day will be on the first Tuesday in November, which falls on November 7.
