RBC | Ballots are expected to be mailed to Colorado residents next week. The 2023 ballot asks voters to decide on two Propositions — HH and II.
PROPOSITION HH
Proposition HH is complicated. Backed by Democratic lawmakers at the State Capitol, the bill survived a challenge from Republicans at the state Supreme Court as to its constitutionality, who claimed the bill violated the requirement that bills only cover one subject. Claiming precedence, justices said they could not rule on the bill’s constitutionality unless it is passed by voters in November.
If approved, Prop. HH would lower property taxes (which are collected by local governments and special districts) for homes and businesses for at least 10 years by reducing a property’s taxable market value, and by minimally reducing property tax rates. The bill also allows seniors who have qualified for the senior homestead exemption to receive the same property tax benefit if they move, beginning in 2025. Local government’s property tax revenue growth would be limited.
For example, a primary residence with a $350,000 property value, annual property taxes would be reduced by about $200 in 2023 and by about $300 in 2024. Commercial properties would also see some limited reductions, with the exception of oil and gas and mining property. The 2023 State Ballot Information Booklet includes a QR code and link to see how the changes would impact local residents. Visit https://hhcalc.apps.coleg.gov/ for more information.
In exchange for reduced property valuation and tax rates, the second part of Prop. HH would allow the state to keep money it would otherwise be required to refund to taxpayers under the Taxpayer’s Bill of Rights (TABOR). That refund is generally seen on state income tax returns, but last year the state issued flat refunds to all taxpayers by check.
Prop. HH would create a new, higher cap on the amount of money the state can keep in its coffers. Part of TABOR includes the requirement for voters to approve the state keeping money in excess of the TABOR limit. In 2005, voters passed Referendum C that established the current cap. Prop. HH raises the cap set by Referendum C according to population growth and inflation, plus 1 percentage point each year, for an estimated increase of $2.2 billion per year over the Ref. C cap by 2031-32.
TABOR refunds for 2023 would be higher for people with an adjusted gross income of less than $99K. Refunds for those making more than $99K would be reduced. In subsequent years, all refunds for all income levels would decline.
According to the bill, up to 20% of the retained funds would be returned to local governments by the state to make up for lost property tax revenue; up to $20 million would be available for rental assistance; and the remaining funds would go to schools to make up for reduced property tax revenue and to put toward education-related programs.
PROPOSITION II
Proposition II is simpler than Prop. HH. If passed, it would allow the state to keep and spend $23.65 million in tax revenue collected from the sale of nicotine products, and continues the current tax rates on nicotine products. The excess revenue will primarily go toward the preschool program fund ($18M) with $5.6M to the state’s General Fund. Additional revenue will be generated from the increased tax rate in future years.
If Prop. II fails, the $23.65 million will be returned to wholesalers and distributors of nicotine products and the tax rates on nicotine products — previously approved by voters in 2020 with the passage of Prop. EE — will be reduced.