Colorado lawmakers begin to advance compromise to further reduce property taxes
In its second special session in less than a year, Colorado lawmakers convened on Monday to pass a deal aimed at providing more tax relief to residents and businesses — and less revenue to local governments — but whose failure in the special session would guarantee a bitter and expensive fight over property taxes at the ballot box.
This session centers on a deal struck between legislative leaders, the governor and the groups behind a pair of ballot measures that seek further property tax cuts than Gov. Jared Polis and other policymakers enacted earlier this year.
The groups promised to withdraw their initiatives if the deal becomes law.
While several other property tax-related proposals were introduced during the first day of the special session, lawmakers quickly shut them down in their initial committee hearings, aware of the risks that exist at multiple levels.
Notably, the failure to pass the compromise would mean voters will decide whether to adopt deeper tax cuts this November, with repercussions for local governments’ revenue and residents’ pockets.
Here’s a brief overview of the bills and resolutions coming out of the special session’s first day.
The Senate put to an end two bills introduced in that chamber on Monday, both designed to go to the November 2024 general election but weren’t part of the agreed-upon deal crafted by the parties.
In the House, 11 bills were on the agenda at the day’s beginning, but all but four were defeated by day’s end.
Here are the four left standing, with three to be debated by the full House Tuesday:
House Bill 24B-1001 is the main “deal” bill, and witnesses testified for five hours in the House Appropriations Committee, almost all in favor but with requests for changes.
The bill as introduced would
Cut the effective residential property tax rate to 6.3% or 6.4%, depending on assessment growth
Reduce the commercial property tax rate to 25%
Cap growth to 5.25% for local governments and 6% for inflation growth, whichever is greater, for school districts. This is a major sticking point for fire districts, which would be under the 5.25% cap.
Ensure a “clear and non-biased ballot language” in the required vote of the people to opt out of the local cap
The bill won support from higher education officials, school districts and fire districts, with the latter pushing to get carved out of the 5.25% growth cap.
Former Lt. Gov. Joe Garcia, now the president of the state’s community college system, said the state’s colleges and universities can deal with the effects of HB24B-1001, but Proposition 108 would force deep cuts.
The testimony did not include comments from Advance Colorado’s Michael Fields nor Colorado Concern’s Dave Davia, although they submitted a letter early on Monday that pledged to pull Propositions 50 and 108 if HB24B-1001 is signed into law — in its current form.
Prior to the start of Monday’s special session, Democrats hinted the special session would go longer than the three days’ minimum it takes to pass a bill through both chambers.
And they were right.
While HB24B-1001 won a bipartisan 8-3 vote from the House Appropriations Committee late on Monday, the “no” vote from two progressive Democrats suggested the measure has a long way to go to reach the governor’s desk.
That prompted House leaders to cancel a second reading debate that could have taken place later on Monday to have more time to negotiate with lawmakers and other stakeholders.
The bill is expected to go to the full House for debate on Tuesday.
Also approved was House Concurrent Resolution 24B-1001, which is sponsored by Rep. Mike Weissman, D-Aurora, and Sen. Chris Hansen, D-Denver, who is one of the sponsors of the compromise bill.
The measure won a party-line 8-3 vote from the House Transportation, Housing and Local Government Committee Monday and is ready for full debate in the House.
But the version adopted Monday is considerably different from a draft that was circulated among lawmakers and other interested parties last week.
That version would have asked voters to ban any statewide citizen-initiated ballot measures on property taxes, as well as permit citizen initiatives at the local government level.
The bill introduced on Monday dropped the ban on statewide ballot measures, which had drawn complaints that it might be unconstitutional, since it effectively would limit the public’s policymaking powers expressly allowed by the state Constitution.
As approved by the committee Monday, the measure now states that a statewide voter initiative that affects or limits property tax revenue or spending at the local government level can only go into effect if it is approved by voters in that local government district.
In her testimony, Natalie Menten of the TABOR Foundation said state law prohibits citizens from submitting local government initiatives for school and fire districts and for county governments.
As introduced, the measure is nearly identical to a ballot measure proposed earlier this year by the Bell Policy Center — Initiative #95, which was filed in late 2023 and did not make it through the ballot initiative process.
The other bills that survived on Day One are:
The House Transportation and Local Government unanimously greenlighted the bill sponsored by Rep. David Ortiz, D-Centennial, to reduce state education revenue by $900,000 in its first year and by double that the following year. It also reduce assessment rates by up to 2% for accessible housing properties built after Jan. 1, 2025.
It now awaits a hearing from the House Appropriations Committee, but the committee did not take it up during Monday’s business.
The measure would make permanent a business personal property tax exemption for agricultural equipment and machinery used in controlled agricultural facilities. It would also extend that business personal property tax exemption to greenhouses, when used solely for planting or growing crops in “a raw or unprocessed state.”
Rep. Judy Amabile, D-Boulder, said she believes the bill did not fit under the special session call, although Rep. Matt Soper, R-Delta, said the bill drafter had assured him it does.
The House Appropriations Committee approved the measure introduced by Soper, Rep. Junie Joseph, D-Boulder, and Sen. Kevin Priola, D-Henderson, on a 7-3 vote. It now goes to the full House for debate.
House and Senate lawmakers promptly put to an end to the rest of the bills introduced on Monday.
Senate Concurrent Resolution 001
The Senate Finance Committee voted unanimously to indefinitely postpone the resolution, but several members expressed interest in discussing land value tax during next year’s regular session.
Sponsored by Sen. Nick Hinrichsen, D-Pueblo, and Rep. Steven Woodrow, D-Denver, the constitutional amendment would allow local governments to implement land value taxes, contingent upon voter approval.
Land value taxes are based on the value of the land itself rather, not any improvements made to it, such as the building of homes or commercial property. Under the resolution, local governments would have the choice to implement land value taxes, rather than the currently used ad valorem taxes, which is calculated based on the total value of a property, including both the land and any improvements made.
Senate Concurrent Resolution 002
The resolution, which included a constitutional amendment, was also postponed indefinitely by the Senate Finance Committee on a 3-2 vote.
Sponsored by Sens. Mark Baisley, R-Woodland Park, and Kevin Van Winkle, R-Highlands Ranch, SCR 002 proposed a new way to calculate the assessed value of special districts and one that would require voter approval.
Currently, special district assessments are calculated by multiplying the actual property value by the assessment rate and multiplying that by the mill levy. Under the resolution, valuations would instead be calculated by dividing the actual value by the total actual value of all taxable property in the district, then multiplying that figure by the special district’s budget. That budget, according to the resolution, would be based on the district’s 2021 spending plan, plus the annual growth in inflation and the percent change in valuation for the previous year.
House Bill 1005
This bill would have made changes to the valuation reductions for residential property within non-school local government entities starting next year. It was postponed indefinitely by the House Finance Committee via an 8-3 vote. It was sponsored by Rep. Lorena Garcia, D-Denver, and Sen. Lisa Cutter, D-Littleton.
Sponsored by Rep. Chad Clifford, D-Greenwood Village, this bill aimed to adjust the reduction in valuations for residential properties within non-school local government entities starting in 2026. The House Finance Committee postponed it indefinitely on a 10-1 vote.
This bill, sponsored by Rep. Ken DeGraaf, R-Colorado Springs, would have increased the amount of property tax exemptions for qualifying seniors, veterans with disabilities and Gold Star spouses starting next year. It was postponed indefinitely by the House Finance Committee on a 7-4 vote.
Sponsored by Rep. Stephanie Vigil, D-Colorado Springs, and Sen. Faith Winter, D-Westminster, this bill would have authorized certain special districts to seek voter approval for exemption from statutory limitations on collecting, retaining or spending property tax revenue. The House Finance Committee voted 7-4 to postpone it indefinitely.
Sponsored by Rep. Stephanie Luck, R-Penrose and Baisley, this bill would have created a task force to study eliminating all taxes in the state except for sales and use taxes. It was postponed indefinitely by the House Transportation, Housing, and Local Government Committee on a vote of 8-3.
House Concurrent Resolution 1002
Sponsored by Rep. Brandi Bradley, R-Roxborough Park, this bill would have referred a constitutional amendment to voters in the November election to require periodic adjustments be made to the residential property tax assessment rate in order to keep it proportional to other taxable properties. The vote would have basically restored the 1982 Gallagher Amendment that voters repealed in the 2020 election. It was postponed indefinitely by the House Transportation, Housing and Local Government Committee on a 8-3 vote.
Sponsored by Reps. Javier Mabrey and Steven Woodrow, both Denver Democrats, the bill delved into what Mabrey described as one of the problems with the compromise legislation — they claimed it benefits wealthy homeowners and leaves nothing for those at the lower end of the income scale. The bill would have sent a referral to the 2025 ballot that would have created a new residential property class, as well as remove a subtraction for determining assessed value for other types of residential property beginning with the 2026 property tax year.
County assessors, while not taking a position on the bill, said it would saddle them with additional workload and costs not covered in the bill.
It died on a 7-3 vote in the House Appropriations Committee, which included comments from lawmakers that it wasn’t urgent given that it wasn’t intended for this year’s ballot and could wait until next January’s regular session.
