Colorado lawmakers spar over property tax relief in special session

A flurry of bills is making their way through the special session at the Capitol as lawmakers convene to find an emergency, short-term solution for rising property taxes in Colorado. Just minutes ago, the Republican’s plan for tax relief died in committee.

Republican and Democratic leadership unveiled their dueling plans in the days leading up to the special session that began Friday where each made their sticking points clear. While Republicans are open to using General Fund reserves and opposed to using TABOR [Taxpayer Bill of Rights] refunds, Democrats have agreed not to use the surplus dollars intended to be returned to taxpayers to support the main components of their plan but remain adamantly opposed to tapping reserves.

The special session was called by Gov. Jared Polis following the failure of Proposition HH, a ballot initiative designed to offer a discount on rising property taxes. The session is aimed at finding temporary solutions for the property tax dilemma in the next year. Proposition HH would have allowed the government to keep more money, reducing or potentially eliminating TABOR refunds over time, and using TABOR surplus to reimburse schools and local communities for lost revenue.

The issue is a persistent one for the state. With the 2020 repeal of the Gallagher Amendment and skyrocketing assessment values, property owners saw an average increase of 40% on their tax bills this year.

Prop HH lost 60-40 Nov. 7.

“The voters had their say but that doesn’t mean that the problem went away. It just means that now we need to set our sights, for the time being, on a short-term solution to the short-term problem at hand and provide relief to those that are most vulnerable to the rising cost of living,” Senate President Steven Fenberg said in a Nov. 16 news conference.

Fenberg and Sen. Chris Hansen are two lawmakers leading the main property tax relief bill Democrats brought forward on Friday. Senate Bill 23B-001 as introduced would increase property value exemptions from $15,000 to $50,000 and reduce the assessment rate from 6.765% to 6.7% for the 2023 fiscal year.

The bill also appropriates $200 million already set aside within the General Fund for property tax relief. The bulk of that funding would go toward 100% backfilling for schools and fire districts. Anything left over will backfill local government and districts but be narrowed to those with growth rates less than 13.5%.

In a finance committee hearing on Friday, Fenberg said the bill does not use reserves or TABOR surplus dollars and supports people who “are feeling the pinch (of rising property taxes) most right now.”

“This is a responsible bill that provides meaningful relief and stays within the budget allocation that we have provided ourselves,” he said.

Multiple representatives of local counties and communities urged backfilling for all districts during the Senate’s Finance Committee hearing, citing increased costs of doing business and providing residents with services.

Republican voices on the committee were critical of the bill, saying it does not do enough to address the challenge facing Coloradans and maintained that the issue constitutes an emergency for which it is worth using reserves.

It advanced out of the Finance Committee and now heads to Appropriations.

Democratic leadership further planned to increase the Earned Income Tax Credit, or EITC, from 25% of the federal level to 75%, according to a fiscal note for HB23B-1002. It passed by a 7-4 vote in the Finance Committee. The majority’s tax plan does not address non-residential properties during the special session.

Republican lawmakers put forward their own plan [SB23B-004] to lower the tax rate to 6.5% and offer an $80,000 discount for residential properties. The commercial property rate would be lowered from 27.9% to 25%. The bill would allow local governments to be backfilled with Reserve Fund dollars.

“We have gone to great lengths to get local government associations and other stakeholders involved in the process while remaining focused on delivering real property tax relief,” House Minority Leader Mike Lynch, R-Wellington, said in a news release. “We have shared our plan with the Democrats and hope they are sincere in bridging the divide and bringing real property tax relief to the people of Colorado.”Fenberg was critical of the Republican’s proposal, calling their approach irresponsible for raiding General Fund reserves to support deep cuts and infeasible.

Republicans countered in a press conference shortly before the special session began, saying they had spent months working with local communities to put together a plan that provided real tax relief and that the special session could have been avoided.

The bill died in committee just before 3 p.m. on a 4-3 vote.

Additionally, Republicans earlier this week announced their goal was bringing income tax down to 4% in addition to providing nearly $1.4 billion in property tax relief for citizens.

>>>>See the first day of the Colorado General Assembly’s special session here.

The Colorado Legislature met for the first day of a special session to address property tax relief on Friday, November 17th.

A separate bill geared toward helping renters was still moving through committees as of early Friday. HB23B-1001 would provide an additional $30 million in emergency rental assistance for tenants who are making at or below 80% of the median income and at risk of eviction for a total amount of $65 million.

Democrats are still eyeing flat TABOR refunds, distributing refunds to all Coloradans equally instead of basing them off income. A bill to provide equal refunds advanced out of committee on Friday morning and will head to the floor.


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