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Lawmakers unveil bill that would cut Colorado residential, property tax rates for 2 years

Sponsors say home assessed at $500K would see $274 in savings in 2023
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Posted at 2:08 PM, May 02, 2022
and last updated 2022-05-02 19:55:58-04

DENVER — Colorado lawmakers plan to introduce a bill this week that promises to save both residents and businesses about $700 million on their property taxes over the next two years and tries to get ahead of potential ballot measures this November that could affect assessment rates.

The bill, which will start in the Senate and have bipartisan sponsorship, will offer two-year relief for property owners in the form of a tax cut.

A home assessed at $500,000 is expected to see roughly $274 in property tax savings in 2023 and a bit less in 2024, according to the sponsors and governor.

“Very often incomes don't keep up with the assessment increase in your home and that's why we're acting to reduce property taxes,” Gov. Jared Polis said in an interview with Denver7 on Sunday.

Lawmakers unveil bill that would cut Colorado residential, property tax rates for 2 years

Businesses will also see savings. The bill will act in conjunction with SB21-293, something co-sponsors say will offer roughly $1.1 billion in property tax relief overall when combined with the residential property tax savings.

“Under this legislation, a small business owner with a commercial property valued at $500,000 will actually experience no increase in their property taxes,” said Rep. Mike Weissman, D-Arapahoe.

Sen. Chris Hansen, D-Denver, said the bill would reduce the taxable value on nonresidential properties by $30,000, and by $10,000 on residential properties, which would be taken out of the calculation of how much property tax is due for each type.

“That, we think, is a great way to target relief and small businesses and lower-income households,” Hansen said, because the flat rate would help people with lower incomes more than those with more valuable properties and higher incomes.

The lawmakers insisted Sunday and Monday that the reduction will not hurt schools or fire districts that rely on these types of taxes. Instead, the state plans to use a one-time surplus to cover the loss in revenue and backfill the K-12 expenses in the state.

The residential one-time reduction in assessment rates would drop it from 6.95% to 6.77%, while the one-time reduction for commercial assessment rates would be from 29% to 27.9% -– the first commercial rate reduction in four decades, proponents said.

The surplus comes from a strong state budget and economic conditions, which lawmakers were able to earmark to offer some financial savings for families.

But the new bill is being introduced with less than two weeks left in the legislative session and with hundreds of bills awaiting final action. Democratic leadership acknowledges there is no way to get everything done.

Nevertheless, House Majority Leader Rep. Daneya Esgar, D-Pueblo, insists this bill will pass this session, even if it means jumping ahead of other pieces of legislation in the priority process.

While the relief is only for two years, Polis and the sponsors said the goal is to look for more long-term mechanisms to prevent property taxes from going up in a way that prices people out of their homes or the housing market entirely.

The bill also comes as a number of property tax reduction ballot initiatives work their way through the titling process, including one being run by a bipartisan group of lawmakers in the House that would slow the rate of growth of assessment values that drive property taxes to 3% of inflation, whichever is less.

“It makes it a lot more likely that none of those dozen or so initiatives, we feel, need to move forward because we found a way to cut property taxes without jeopardizing funding for our schools or our special fire districts and others,” Polis said.

While the new bill does have some bipartisan support, Rep. Colin Larson, R-Jefferson, is not happy with some of the language in it. Larson and Rep. Alex Valdez, D-Denver, are behind one of the ballot initiatives. He's also running a separate one with former Arapahoe County commissioner John Brackney to cap property tax inflation.

Larson tells Denver7 he was having ongoing, good faith negotiations with the governor's office about the ballot question and found out about the proposed bill last week. At first, he says he was supportive of the move but says he later found out that some of the money is coming from TABOR refunds.

"It looks like, upon further reading, $200 million of that is actually just repurposed TABOR refund from what taxpayers were already slated to get back in 2023," Larson said. "We're not actually delivering $700 million of relief, we're delivering $500 million of relief."

Larson called the move to use TABOR money disingenuous and accused the bill's co-sponsors of playing election year politics to take credit for a tax refund that was already coming homeowners' way.

Larson firmly believes that the bill is a direct response to his ballot question and while he's pleased to see some temporary relief potentially coming to homeowners and businesses, he wants to see the language changed to include more money from the state surplus to help with financial relief.

"It's probably the most craven political move I've ever seen. It's also really interesting because the people that are that are proposing and proponents of it are some of the biggest anti-TABOR folks in the Capitol," Larson said.

He hasn't decided yet whether he will pull his ballot initiative quite yet.

Michael Fields, who is behind another one of the ballot initiatives to offer property tax relief for homeowners, told Denver7 that he does not plan to pull his ballot initiative until the bill passes and is signed.

Fields maintains that the state still needs some sort of long-term property tax relief solutions and says he may run a different version of this ballot initiative in the future with a property tax cap. For now, though, he supports the idea of temporary relief for both businesses and homeowners.

Even before the bill has been introduced, however, it is facing some skepticism from the Colorado Fiscal Institute and others, who insist that the bill will disproportionately help special interests.

“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,” said United for a New Economy Executive Director Carmen Medrano and Colorado Education Association President Amie Baca-Oehlert in a statement. “This is just another reason why more and more people are calling for a smarter, fairer tax code that asks the wealthy to pay their fair share to fund education, affordable housing, and an economy that works for all of us.”

Sen. Bob Rankin, R-Carbondale, said the bill, if passed would balance out some of the disparities seen between rural communities and the Front Range, as it has a tiered reimbursement formula for counties not seeing their assessment rates on properties explode like those in urban areas.

Polis and the lawmakers agreed that this two-year relief would be a jumping off point for further discussions on how to keep Colorado’s near-lowest-in-the-nation residential property taxes from becoming an increasing burden on Coloradans should housing prices continue to skyrocket.

“We think this is the start of a really healthy, bipartisan process about where to go next,” Polis said.

And Hansen said should the measure pass, renters of both residential and commercial properties should also see relief, as the measure is designed so that increased taxes don’t get passed on to them.

“We think it’s going to benefit both categories directly,” Hansen said.