$700M property tax relief package unveiled by Gov. Polis, state lawmakers
Proposed law draws criticism from both Republicans and progressives
Gov. Jared Polis speaks at a news conference on property tax relief legislation held May 2, 2022, at the Colorado State Capitol building. To the governor’s right are state Sen. Chris Hansen, D-Denver; Stephanie Salazar-Rodriguez. a Denver homeowner; House Majority Leader Daneya Esgar, D-Pueblo; and state Sen. Bob Rankin, R-Carbondale. (Faith Miller/Colorado Newsline)
Gov. Jared Polis joined a group of state lawmakers to unveil a much-anticipated, last-minute proposal to provide temporary property tax relief for Colorado homeowners.
The legislation announced Monday would provide $700 million of relief over two years as Colorado homeowners prepare to see their property tax bills grow significantly. According to a recent analysis by the business group Colorado Concern, the average market value of a single-family home is expected to grow 30% between 2021 and 2025. The analysis found those increased valuations would result in an average property tax increase of more than 20% beginning in 2022.
“Property values have been going up, and if you’re fortunate enough to have been a homeowner, that’s a good thing,” Polis said. “The only problem is that your income might not be going up as fast as your property taxes based on the appreciation.”
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So, Polis and state lawmakers plan to pass a bill temporarily reducing the residential and commercial property tax assessment rates, resulting in savings for property owners. The bill would also reduce the taxable value of a home by $10,000 and the taxable value of a business property by $30,000. Under the proposal, someone owning a $500,000 house will save an average of approximately $275 on their tax bill in 2023 with additional savings projected the following year, Polis said at the news conference. Someone who owned a storefront or office worth $500,000 would save $1,200 the first year.
How property tax is calculated
Taxable home value X Assessment rate X (Mill levy*/1,000) = Property tax owed
*A mill levy is equal to $1 of tax owed per $1,000 in home value
The circumstances surrounding the proposal parallel those at the end of last legislative session, when lawmakers unveiled a bill intended to blunt a ballot initiative that would have cost the state a billion dollars in property tax revenues. While Colorado voters normally support tax cuts, that measure failed at the ballot box last year after the last-minute law prospectively limited its impact. Senate Bill 21-293 temporarily reduced assessment rates for most types of property, providing a total of $400 million in property tax relief. If the property tax cut had been approved by voters, SB-293 would have limited its impact to multifamily residential property and commercial lodging property only.
This year’s legislation grew out of talks among Polis’ office, bipartisan state legislators and members of Colorado Concern, a group of business executives that had proposed a ballot measure to cap annual growth in property valuations used for taxes at 3%. The legislation announced Monday represents a compromise among the parties that could put a stop to the ballot measure, about which some state and local leaders were worried due to the measure’s potential $1 billion-plus costs for public safety, schools and infrastructure. The tax relief package counts Sens. Chris Hansen, D-Denver, and Bob Rankin, R-Carbondale, as sponsors along with House Majority Leader Daneya Esgar, D-Pueblo, and Rep. Mike Weissman, D-Aurora.
2022 assessment rate reductions in Senate Bill 21-293
Multi-family residential: 7.15% to 6.8%
Single-family residential: 7.15% to 6.95%
Agricultural and renewable energy production: 29% to 26.4%
2023 proposed assessment rate reductions
Multi-family residential: 6.8% to 6.77%
Single-family residential: 6.95% to 6.77%
Commercial: 29% to 27.9%
“We commend the governor and legislators who announced some great steps in the right direction today regarding property tax assessment reforms and reductions in residential and business tax bills,” Mike Kopp, the president and CEO of Colorado Concern, said in a statement provided to Newsline. “While we are eager to get into the details of the proposals, it’s clear that a tremendous stride was taken today.”
According to Hansen, $400 million of the proposed tax relief would come from the state’s general fund. About half of that would come out of anticipated refunds that the state is required to issue taxpayers under the constitutional amendment known as the Taxpayer’s Bill of Rights, or TABOR.
The property tax cuts would not affect state funding for schools, according to bill sponsors. Next year’s budget includes the lowest-ever budget stabilization factor — the amount of funding that lawmakers owe school districts under a funding formula, but choose to spend on other priorities — and Hansen said lawmakers want to completely eliminate the budget stabilization factor, also known as the negative factor, next year. The negative factor amounts to $321 million under the 2022-2023 budget that Polis signed into law.
“We must ensure that we can continue to put more money into our classrooms,” Esgar said at Monday’s news conference. “At the same time, communities like mine in Pueblo need this property tax relief today.”
Not everyone involved in the negotiations is on board with the legislation. State Rep. Colin Larson, a Littleton Republican, told reporters after the news conference that it came at the “11th hour” and didn’t provide adequate relief.
“Today, the Governor and legislative Democrats introduced a bill that was supposed to reflect an honest compromise to deliver short-term tax relief to residents and businesses and work on a long-term deal to help taxpayers,” Larson said in an emailed statement from Colorado House Republicans later Monday afternoon. “The bill introduced today falls short. It repurposes the tax relief that Coloradans were already going to get for Democrats’ political purposes. All they are doing is robbing Peter to pay Paul.”
Together We Thrive, a coalition of progressive advocacy organizations in Colorado, issued its own statement of opposition.
“We’re disappointed Gov. Polis and legislators are working behind closed doors to cut a deal that would give some of the richest and most powerful special interests fiscally irresponsible, inequitable property tax cuts,” Carmen Medrano, executive director of United for a New Economy, and Amie Baca-Oehlert, president of the Colorado Education Association, said in a statement on behalf of the coalition. “Lawmakers and the governor should put Colorado families before the richest corporations and wealthiest people by rejecting unfair tax cuts, and instead provide real relief to families who need it by passing targeted, progressive tax policies that actually solve the problems that working Coloradans and their families face.”
Another part of the package proposed by Polis and state lawmakers is to allow homeowners to defer paying up to 4% in property tax increases, expanding a program established last year through SB-293.
The 2022 legislative session must conclude May 11, giving the General Assembly just nine days to hold public hearings, debate and vote on the property tax package along with other significant bills that remain on the docket.
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