The Colorado Legislature wrapped up its four-day special session focused on property taxes on Monday with some drama, ushering through a relief plan that closely resembles the core of a failed ballot measure and additional bills with targeted relief for low-income Coloradans and renters.
“The call for this special session gave us a clear directive for the past few days, but the policies we passed mark the start — not the finish line — for the progress we’ll make next session. In just a few short weeks we’ll be back at the Capitol to build on this work and continue taking bold action to improve the lives of all Coloradans,” Senate Majority Leader Robert Rodriguez, a Denver Democrat, said in a statement following the end of the session.
Democratic Gov. Jared Polis called the special session in the wake of Proposition HH’s defeat at the ballot box earlier this month. That proposition, referred to voters by lawmakers earlier this year, would have reduced property tax rates over 10 years and exempted part of a home’s value for its assessment. To pay for the cuts, the government would have been allowed to keep more tax revenue than currently allowed under the Taxpayer’s Bill of Rights, in turn reducing the amount owed back to taxpayers through annual refund mechanisms.
The TABOR issue was central to lawmakers’ weekend debate on how to move forward to reduce the sharp increase in property taxes expected next year. Republicans contended that by rejecting Proposition HH, voters sent a message that they do not want the TABOR surplus to be used to pay for any policy, tax relief or otherwise. While the property tax plan passed by Democrats will not use TABOR surplus, another bill to expand an income tax credit will dip into the surplus money.
On the other hand, Republicans’ plan for property tax relief relied on using general fund reserve money, which was a non-starter for Democrats as they worried that depleting reserve money would put the state in a bad spot during an economic downturn.
“At the end of the day, this is real relief done in a way that doesn’t do it on the back of our future teachers, our future students, because there will be a downturn somewhere in the future. We’ll need to use our reserves to make sure we get through those headwinds,” Senate President Steve Fenberg, a Boulder Democrat, said Monday evening.
Republicans criticized the special session at its conclusion, saying it did not provide the “honest” property tax relief and TABOR protections they called for.
“The result is tragically similar to the approach that was offered in Proposition HH, which was so soundly rejected by the voters in the recent election,” Senate Minority Leader Paul Lundeen, a Monument Republican, told reporters after the session ended.
Democrats command substantial majorities in both chambers of the Legislature.
Polis applauded the work accomplished during the special session as he signed four of the session’s seven bills Monday night, yet he emphasized that there is significant work to be done on a long-term property tax plan and lowering the cost of housing in the state overall.
“Of course, the actions we’re taking today can’t solve the real affordability crisis we have in housing. For that work, the General Assembly will return in January,” he said.
Here is what the Legislature passed, almost entirely on party lines, in addition to an appropriation to the Treasury Department to boost staffing for a tax deferral program:
Senate Bill 23B-1: Property tax relief for Colorado homeowners
The Democrats’ main bill from the session will reduce the residential assessment rate for the 2023 tax year to 6.7% from 6.765%. Additionally, homeowners will be able exempt $55,000 of their home’s value from taxation. That amounts to about $430 million in property tax relief.
“We’re talking hundreds of dollars for the average homeowner. That’s real money for a lot of people who are struggling — for people on fixed incomes, for seniors,” Fenberg said.
Those numbers are very similar to the ones from Proposition HH. Property taxes will still rise next year for homeowners, though by not as much.
To pay for the rate cut, the bill uses $200 million in general fund money that was already set aside for this purpose. School, fire, hospital and ambulance authorities will be repaid completely for the revenue they will miss out on due to lower tax rates. After that, local governments will be partially repaid depending on how much their assessment values have grown, so areas with slower growth, under 15%, will see more money and areas with bigger growth will see less, if any.
SB23B-1 was sponsored by Fenberg, Sen. Chris Hansen of Denver, House Speaker McCluskie of Dillon and Rep. Chris deGruy Kennedy of Lakewood, all Democrats.
Polis signed it into law on Monday evening.
Senate Bill 23B-2: Opting into a federal food assistance program
Colorado will be part of the new federal Summer Electronic Benefits Transfer program next summer, which will provide up to $120 to children at risk of food insecurity when school is not in session. Bill sponsors estimate that about 300,000 children in Colorado will benefit.
Senate Bill 23B-3: Making TABOR refund checks equal for every taxpayer
Colorado taxpayers will all get the same amount in their TABOR refund checks next year. When the state collects tax revenue over the constitutional cap, which is adjusted annually by inflation and population growth, it must return the extra money back to taxpayers. There are a variety of refund mechanisms, including direct checks based on income level. That means higher earners who pay more in taxes generally get a larger refund check.
Instead, all filers will get the same amount of $800.
If Proposition HH had passed, this policy would have gone into effect, so Democrats brought it forward for the special session.
Republicans argued that flattening the TABOR refund checks is unfair to people who pay more in taxes, while Democrats see it as a move towards equity and making sure wealthy Coloradans don’t benefit at the expense of others.
“It’s not helpful for either side to be talking about haves and have nots and who is winning and who is losing. It’s about whether it’s a win for the entire state and our entire society, and I say it is,” Rep. Bob Marshall, a Highlands Ranch Democrat, said on the House floor Monday.
Most Coloradans will get higher refund checks, but higher earners will get lower checks.
“Those on the lowest income scale are going to see $426 extra dollars. That’s meaningful. That means more gas to get to work, food on the table, part of a rent payment. This matters,” Rep. Javier Mabrey, a Denver Democrat, said ahead of the bill signing.
Polis signed it into law on Monday evening.
House Bill 23B-1001: Providing $30 million more for rental assistance
The Legislature added $30 million in emergency rental assistance during the special session, bringing the total amount it has invested to $65 million. That is targeted relief for people who make up to 80% of the area median income and are at risk of eviction.
It can go towards rent, utility bills, late fees, court costs, reasonable attorney fees, and any other costs associated with eviction prevention. The grants will be administered through the Division of Housing within the Department of Local Affairs.
If the money isn’t distributed by next July, it will head back to the state to spend elsewhere.
House Bill 23B-1002: Expanding the state’s earned income tax credit
The largest relief measure the Legislature passed that wasn’t tied to homeowners doubled the state’s earned income tax credit for this year. Right now, the state gives 25% of the federal benefit amount to those who qualify. Next year, the state amount will be 50% of the federal amount.
The earned income tax credit largely benefits low-income working families.
House Bill 23B-1003: Creating a task force for a long-term property tax plan
The Legislature formed a 19-member task force to study and develop potential long-term “permanent and sustainable” property tax plans to consider. The task force will include members of the Legislature, local elected officials, an assessor and members representing education, firefighting and business interests.
The group’s makeup was amended in the Senate to represent more political viewpoints and parts of the state.
The task force will meet twice a month until March next year and, ideally, will come up with legislation for the General Assembly to consider next year or a measure to put on the 2024 ballot.
“This bill, in some ways, is not going to have any immediate impact on anyone’s life or anyone’s property taxes. It’s about the long-term conversation,” Fenberg said on the Senate floor. “This is acknowledging that there is a bigger, long-term issue that we still need to wrestle with.”
NOTE: This article has been shortened from the original version for space constraints.
BY SARA WILSON
Colorado Newsline
