A multifamily residential building on 13th Street in the Capitol Hill neighborhood of Denver on Sept. 1, 2021. (Quentin Young/Colorado Newsline)
Last-minute tax legislation passed by the Colorado General Assembly earlier this year would likely reduce by more than 90% the impact of a billion-dollar tax cut measure on the 2021 ballot, a Newsline analysis of state property valuation data shows.
Initiative 27, backed by conservative group Colorado Rising State Action, was officially certified to appear on the 2021 ballot last week, after supporters submitted more than the required 124,632 valid signatures to the secretary of state’s office. If approved by voters, the measure aims to reduce property tax assessment rates from 7.15% to 6.5% for residential property, and from 29% to 26.4% for non-residential property.
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But legislation passed by Democrats and some Republicans in the state Legislature has undercut the ballot measure by changing which kinds of property its rate reductions would apply to. Senate Bill 21-293, signed into law by Gov. Jared Polis in June, amends Colorado’s tax code so that the permanent cuts made by Initiative 27 would apply only to multifamily residential housing and commercial lodging properties, while only temporarily lowering rates for other property classes.
As a result, a tax cut that state analysts initially estimated would reduce local government and school-district revenues by more than $1.2 billion statewide would, if approved, only cause a fraction of those revenue impacts.
Nonpartisan analysts at the state’s Legislative Council Staff have not yet released an updated fiscal summary for Initiative 27 following the passage of SB-293. But based on 2020 valuation data released by the state’s Division of Property Taxation, the annual revenue impacts of the measure’s cuts to multifamily housing and lodging assessment rates would total roughly $70 million statewide. That figure could rise somewhat depending on future growth in property values.
Though they cried foul over SB-293’s passage, backers of Initiative 27 have made little reference to the legislation’s impact on their ballot measure in recent weeks. On the campaign’s website and in media appearances, supporters have continued to portray the measure as delivering a “9% property tax cut” to broad swaths of “families and small businesses.”
My concern about this measure is that it’s going to drive further inequities.
– Carol Hedges, executive director of Colorado Fiscal Institute
Colorado Rising State Action did not respond to requests for comment. As a 501(c)(4), “dark money” nonprofit, the group, which has backed a slew of tax-cutting and anti-government ballot measures in recent years, is not required to disclose its donors.
Michael Fields, the group’s executive director, has previously said that Colorado Rising State Action would seek to “legally challenge” SB-293, but state court records indicate that no lawsuit over the bill has yet been filed.
Carol Hedges, executive director of the left-leaning Colorado Fiscal Institute, said in an interview that in the event that Initiative 27 is approved by voters, a conservative-backed legal challenge is a possibility.
“I think the law is not on their side — I think the Legislature retains the authority to do what they did on (SB-)293,” Hedges said. “But whether or not the usual suspects will decide they want to sue, they may well. They tend to be fairly litigious.”
Critics say measure would worsen inequality
As it stands, Initiative 27 would impact some Colorado communities more than others, especially communities with high concentrations of apartment buildings and hotels. Nearly a third of potential revenue losses would come in the city and county of Denver, while mountain resort communities in Pitkin, Routt and Eagle counties would also face relatively high revenue losses.
Property taxes are collected by local governments, school districts, and special jurisdictions like fire protection districts to fund public services and are calculated based on a biennial assessments conducted by county officials.
Though Initiative 27’s revenue impacts will be much smaller than its backers initially proposed, critics of the measure say that such across-the-board tax cuts still worsen inequality by delivering the largest share of their benefits to the wealthiest property owners.
“My concern about this measure is that it’s going to drive further inequities,” said Hedges.
“There’s been acknowledgement that property taxes are challenging for some folks right now,” she added. “But the biggest benefits from those reductions are going to go to the people who need it the least right now. And then you multiply that by the dramatic loss of services for some people in the community, and reinforcing regional inequities — it just doesn’t seem like it makes a lot of sense to me.”
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