Colorado's property tax relief package mirrors first year of failed Proposition HH plan

Following the failure of Proposition HH in the November election, the Colorado General Assembly's four-day special session resulted in passage of a new property tax relief bill with the promise of protecting TABOR refunds.

That bill — Senate Bill 23B-001 — proposed changes to property tax assessments, reimbursement mechanisms for local governments, and a transfer of funds to the state education fund to offset associated reductions in funding received by the state's public school district schools.

For property taxes paid in 2024 for the 2023 taxing year, the bill reduces the statewide assessment rate from the current 6.765% to 6.7%. Under the bill, a home’s taxable value is determined by taking a home’s actual value, subtracting $50,000, and multiplying the remaining value by the new statewide assessment rate of 6.7%.

That's identical to the first-year property tax reduction offered by Proposition HH, which was defeated by nearly 60% of a statewide vote.

The passed bill also requires the state to reimburse local governments for any property tax revenue they lose due to the reductions in property valuation, without impacting the TABOR tax refunds that became a rallying point against HH. Fire districts will also be reimbursed for any property tax revenue loss under the bill.

Additionally, the state treasurer is required to transfer $135 million from the general fund to the state education fund to offset reductions in property tax revenue for school districts.

The new bill is one that some Senate Republicans still question, including Sen. Kevin Van Winkle, who represents Douglas County. Van Winkle believes property assessments should have been reined in from the beginning.

“We are in this mess because assessment rates were allowed to skyrocket," Van Winkle said.

Colorado House Speaker Julie McCluskie believes the special session was fruitful in delivering property tax cuts while protecting funding for schools and critical services.

“This responsible package delivers real results for the people who need it the most — hardworking families, Coloradans on fixed incomes and the people feeling the greatest impacts of our affordability crisis — without jeopardizing our state’s reserves or impacting Coloradans’ TABOR refunds," she said.

In all, Coloradans will benefit from $434 million in property tax relief related to the bill's passage, but in order to achieve this amount while also maintaining funds to school districts and other essential services, Colorado Democrats proposed the advancement of additional tax policies passed during the special session.

Additional bills passed during the Colorado legislature's special session:

• Emergency Rental Assistance Grant Program, HB23B-1001: This House bill provides an emergency assistance grant program of $30 million for rent and utilities help through June 2024 for residential tenants who have an annual household income of 80% or less than the area median income and are at risk of eviction or displacement.

• Summer Electronic Benefits Transfer Program, SB23B-002: The bill creates an electronic benefits transfer to provide meals for students in low-income households during the summer months when students are not in school.

• Identical TABOR Refund, SB23B-003: This bill grants equal TABOR refunds to all taxpayers next year. All taxpayers will get $847, or twice that for joint-filing households, which is a gain of hundreds of dollars for the lowest-income Coloradans and a loss of nearly $1,000 for the highest-earning taxpayers.

• Property Tax Task Force, HB23B-1003: This bill creates a task force to convene by June 2024 to draft a long-term plan for property taxes. The tax force that will include a mix of state lawmakers and other officials from around Colorado.

• Increased Earned Income Tax Credit 2023, HB23B-1002: This bill is an expansion of the state’s Earned Income Tax Credit for the 2023 tax year only. Under the bill, the state will match 75% of the federal EITC’s value to triple what the state currently provides, which could potentially add up to thousands of dollars of tax credits for families with lower incomes.

This article originally appeared on Fort Collins Coloradoan: Colorado property tax relief plan mirrors first year of failed Prop HH