A legislative session called by Colorado Gov. Jared Polis to pass a specific brokered property-tax-cut bill is likely to include consideration of at least a dozen other bills as well, adding complexity and ideological jostling to what was conceived as a simple agenda.
Those bills include several add-ons from majority Democrats unhappy about having been brought back to the Capitol by what they consider threats from the groups behind two more significant property-tax-cut initiatives, Advance Colorado and Colorado Concern. These bills would shift property-tax breaks more toward owners of lower-value homes, create higher assessment rates for second homes and limit future property-tax-break questions to those offered by local governments, among other things.
None of these or the other bills are part of the compromise that the Democratic governor hammered out with proponents of the ballot initiatives, and those proponents haven’t stated whether passage of any orbital bills would derail that deal. Under the agreement, Advance Colorado and Colorado Concern would pull Initiatives 50 and 108 from the ballot and not bring back similar initiatives in the future if the Legislature OKs the bipartisan bill at the center of this session and doesn’t upend it in subsequent years.
Thus, the potential success of some of these other bills, especially those sponsored by Democrats, could have major impacts on the success of the primary bill and on the shape of the November ballot. The special session is scheduled to convene at 10 a.m. today.
Bills aiming to help lower-income residents
Two bills seek to rewrite the residential tax breaks approved by the Legislature at the end of the 2024 session so that more of the savings goes to Coloradans with lower-value homes, who supporters of the bills say are more likely to be lower-income residents. Under Senate Bill 233, residential assessment rates to fund local governments will fall from 7.15% to 6.95% by 2026 and homeowners will be able to subtract 10% of the real value of their property before the tax rate is applied, up to $70,000 in exclusions.
Jonathan Cappelli, a Commission on Property Tax member and executive director of the affordable-housing-focused Neighborhood Development Collaborative, said that formula grants a much bigger break to deeper-pocketed individuals with more expensive homes. So, his group worked with different legislators to come up with a pair of plans that both allow for greater home-value discounts for lower-value properties and reduce the overall amount of the tax cut, thereby letting local governments keep more revenue.
The first bill, to be sponsored by Democratic Rep. Lorena Garcia of Adams County, gives larger tax exclusions to owners of properties that are 70% of a county’s median home value or lower and then tapers down the tax breaks until they go away altogether, typically when a home value reaches about $1 million. This would focus cuts on those who need them most and would reduce the tax-revenue loss about $20 million for a populated urban area like Adams County, Cappelli said at Friday’s commission meeting.
A second bill, to be sponsored by Democratic Rep. Chad Clifford of Centennial, would use the same exclusion formula in SB 233 — referred to by some as a “Homestead Exemption” — but would offer a 15% reduction in home value before applying the assessment rate, maximizing in a value discount of $50,000. This too would allow bigger breaks for lower-value homes and lesser breaks for million-dollar properties, Cappelli explained.
How those different from current law, proposals
The Polis-brokered bill would cap annual increases in statewide property-tax revenues at 5.5% for revenues going to local government and 6% for money going to school districts. And it would lower residential assessment rates for local-government purposes to 6.25% and 7.05% for school-district purposes
“It feels like because the assessment-rate reduction preserves so much tax relief, the Homestead Exemption is less of a big deal,” Cappelli said in explaining why owners of higher-value homes should not feel slighted by his proposals. “In other words, $70,000 off of a $2 million home is not that big of a decrease.”
JoAnn Groff, Colorado property-tax administrator and a commission member, said, though, that the Garcia bill could be a logistical nightmare for county assessors who would have to re-assess properties and then determine median home value before applying tax breaks. She and Rep. Lisa Frizell, R-Castle Rock, both cautioned too that home value does not equate to income — both in terms of wealthy individuals who may live in lower-value rural homes and fixed-income residents in areas where home value has skyrocketed.
“Also, we have been tasked coming into special session to provide additional property tax relief,” Frizell added, noting Polis’ executive order that called the special session. “And I am very concerned that for those properties that land above a median, this is a property-tax increase for them.”
Limits on future property-tax-cut efforts
Sen. Chris Hansen, the Denver Democrat who will co-sponsor the Polis-brokered bill, also is set to sponsor with Democratic Rep. Mike Weissman of Aurora a concurrent resolution that could aggrieve conservatives and, if passed, might scuttle the agreed-upon deal.
Their effort would put onto the November ballot a question that prohibits the use of future statewide initiatives to impose limits on local property-tax revenue and specifies that only local governments have that power. Thus, the state no longer would be allowed to consider property-tax-cut measures, meaning that only cities, counties, school districts and special districts could determine their property-tax rates and be able to lower or raise them, the latter action still needing a vote of the people.
Alluding to that proposal at Friday’s commission meeting, Hansen said that could give added weight to the portion of the agreed-upon deal to not bring back future property-tax initiatives — by essentially making it illegal for anyone to do so. However, several Republican legislators have implied that they believe such an effort would be an unconstitutional restriction of residents’ ability to petition the government.
Another crack at bills on short-term rentals
Another special-session proposal, from Democratic Reps. Steven Woodrow and Javier Mabrey of Denver, would rewrite existing law to deny homeowners the ability to take the 10% reduction on real property values for anything but their primary residence. This would nix the residential tax breaks granted in SB 233 to second homes as well as to rental properties, particularly those offered for short-term rentals.
That bill is likely to reopen the thorny debate from this past session, when legislators overwhelmingly rejected a bill that would have assessed short-term-rental properties at commercial rates — about four times the tax rates they currently pay. Mountain-town leaders said this could wallop them economically by having the effect of removing from their inventory many places where visitors can stay, while proponents have said that short-term rentals are commercial businesses and should be taxed as such.
Some of the other bills that are expected to be introduced this morning as the special session convenes include:
- A concurrent resolution from Sen. Nick Hinrichsen, D-Pueblo, allowing local governments to move from the current property-tax system, which considers values of the buildings, to a land-value tax that considers only the value of the land. Polis asked officials to consider the change in the past, as proponents believe it would incentivize owners of vacant land and low-value parcels like parking lots in urban areas to develop them into multi-story buildings and help to alleviate the state’s housing shortage.
- A bill from Rep. Stephanie Luck, R-Penrose, that would create a legislative task force to examine a rewrite of the state tax code in a way that would eliminate property taxes altogether — and income taxes — and restructure the tax burden around sales and use tax.
- A bipartisan bill that would expand the business personal property tax exemption for agricultural equipment to include greenhouses.