Property tax commission narrowing in on proposals that differ from ballot initiatives

Buildings like these in downtown Denver could be impacted by the proposals advanced by the Commission on Property Tax.

Members of a commission tasked with developing a long-term solution to Colorado’s spiking property-tax values heard from proponents of competing ballot measures on the subject Friday — and indicated that they’d prefer a solution different from what is being offered.

Legislators approved creation of the Commission on Property Tax during a November special session after voters rejected Proposition HH, an initiative that would have offered property-tax breaks in exchange for a raising of the Taxpayer’s Bill of Rights revenue cap. But while they are debating what might allow for less fluctuation than the 19% to 25% spikes in residential property-tax bills expected this year, a pair of ballot measures coming from different points on the ideological spectrum could blunt any efforts from the state.

Advance Colorado and Colorado Concern have submitted three versions of an initiative to reset property values to 2020 levels, permit maximum 4% annual increases in property taxes until a property is sold and lower residential and commercial assessment rates. The three proposals offer varying levels of state backfill to local governments to offset revenue lost by the property-tax caps and require the Legislature to determine how to pay for that.

Meanwhile, the Bell Policy Center has submitted a pair of counterproposals designed to prevent what President Scott Wasserman warned could be “Ballot Armageddon” if the property-tax-cap measure were to pass. One would require local governments to have to opt into any property-tax change taking place statewide for it to take effect within its jurisdictions, while the other, which soon will be submitted, would create a new tax on luxury residential properties worth at least $5 million to be given to local governments.

The pleas of initiative supporters

Advance Colorado President Michael Fields said polling done by his group has shown 77% support for a 4% cap on annual property-tax increases and suggested that the commission needs to consider an option similar to his to prevent his initiative moving ahead. Josh Penry, representing Colorado Concern, addressed concerns about how the Legislature could backfill a potential multibillion-dollar loss of revenue due to the caps, suggested that the state’s rainy-day fund for emergencies is appropriate for a time when homeowners and commercial property owners are struggling to pay rising tax bills.

“I hope this group will engage,” Penry told commission members. “But if you don’t, we’ve built a common-sense approach that gives people the relief they need.”

Wasserman spoke less about his economic-mobility policy organization’s proposals than he did about the danger of the competing ballot proposals, suggesting that the Legislature would have to cut 15% of its spending to backfill their local losses fully. He said he’d be willing to drop his measures in exchange for the commission advancing other proposals they are considering, such as an effort to smooth property-tax hikes over a multiyear period or to separate property taxes for education from other types of property-tax collection.

“The solutions are in front of us. We do not need to have Ballot Armageddon,” Wasserman said. “We do not need a draconian cap that leads the state government to have to make major cuts or close a college campus to find backfill.”

Property tax commission considering other ideas

Democratic officials and education leaders are not fans of hard caps on property-tax increases, while more fiscally conservative members of the committee particularly don’t like Wasserman’s suggestion for a new tax. As such, committee members leaned into their consideration of several alternative ideas on Friday.

One that seems to have gathered some modicum of consensus support is to decouple school property taxes and other property taxes, which was suggested by former Office of State Planning and Budgeting director Henry Sobanet at the group’s first meeting. Doing so could allow state and school leaders to preserve education funding while giving local government officials more flexibility in lowering their property-tax rates, noted Colorado Chamber of Commerce President/CEO Loren Furman, a commission member.

Another idea gaining steam is that of allowing property owners to pay bills in monthly increments rather than in one large sum that causes financial difficulty, said Mesa County Commissioner Cody Davis, an appointee of Gov. Jared Polis to the commission. The biggest pushback to that suggestion so far seems to have come from local government leaders, who question how that would delay the revenues they need to offer services.

A proposal cited by Wasserman has garnered support — that of “smoothing” property tax increases so that spikes in values can be added onto property owners’ bills over periods of two or three assessment cycles — four to six years — rather than all at once.

What happens next on property tax

Commissioners have talked several times about allowing for “circuit breakers” — tax relief specifically to residential property owners when their property-tax bills exceed a certain percentage of their incomes. But commission chairman Sen. Chris Hansen, a Denver Democrat who’s been a primary proponent of that idea, seemed to throw in the towel on it Friday after being told that the state did not have the technology to be able to compare property values and incomes in a way to make the plan work.

Finally, there was increased talk at Friday’s meeting about creating a tax break specifically for the primary properties of every Colorado resident, to ensure that homeowners could get a limited break on securing their homes but not on vacation or rental properties. Rep. Chris deGruy Kennedy, D-Lakewood, cautioned that before any idea involving tax breaks, no matter how good, can be advanced, the commission must consider how the Legislature will fund it.

“How you pay for this stuff is everything,” deGruy Kennedy said.

After more than two months of conversation about potential solutions, commission members are expected to start voting on March 8 on which ideas they would like to advance to the Legislature. The law that created the commission required that it offer a report on potential legislation to the General Assembly by March 15.