Gov. Polis convenes special legislative session to curb spiraling property taxes
Governor Jared Polis called a special session of the state legislature on Thursday after voters overwhelmingly rejected Proposition HH and, with it, a property tax relief plan backed by Colorado Democrats and the governor himself.
Lawmakers will convene at the statehouse starting on Friday, November 17, and will have just a few weeks to come up with a new plan to curb next year’s projected property tax spike before local governments lock in their tax rates for next year in early December.
“We can, and are, and will provide immediate relief,” Gov. Polis said after signing the order to officially call lawmakers to Denver. “That's what the legislature can do. They can't come in and fix the long term issue right now, but they absolutely can get the money out the door for property tax relief.”
Proposition HH Defeated
To keep taxes from rising too quickly, Proposition HH would have reduced property valuation rates - one part of the formula used to calculate property taxes - starting next year and would have allowed property owners to exempt part of their property’s value from taxation altogether.
The ballot measure would have also reduced tax refunds under the Taxpayer Bill of Rights, or TABOR, to help the state pay for losses in tax revenue - something critics, including most Colorado Republicans, zeroed in on.
“When [Proposition] HH failed, to me, that was the voters saying, ‘Look, we want property tax relief. We don't think we have to give our Tabor refunds up to get property tax relief, however, and we don't think government should be growing so much,’” GOP State Sen. Barbara Kirkmeyer, one of the leading opposition voices to Proposition HH, said.
Voters rejected the measure by about twenty percentage points and the race was called within an hour after polls closed. The proposal never garnered enthusiastic support among liberals, while conservative groups campaigned ran a loud and visible opposition campaign.
Gov. Polis and other Democrats have said Prop HH was too complex and included too many moving parts for voters to properly understand.
“We need to be able to clearly communicate our values in the future on how we want to actually save people money on health care, gas, groceries and property taxes, and make sure that message is crystal clear,” Colorado Democratic Party Chair Shad Murib told KUNC on election night, after Proposition HH failed. “We need to work with Coloradans to find initiatives that are not only easy to understand, but also get them the results that they want in their daily lives.”
Sen. Kirkmeyer pushed back on the assertion that voters didn’t understand the ballot measure.
“Coloradoans know what's going on with their property taxes,” Kirkmeyer, a former county commissioner, said. “Then they also know about TABOR.”
While Proposition HH would have provided property tax relief, it would have also allowed the state to retain more of the funds that it pays back to Coloradans in the form of TABOR refunds, essentially expanding the state budget.
Part of Democrats’ pitch to voters was that the majority of that money would have gone to public schools. Some of the extra funds would have also helped backfill losses in funding for local services that rely on property taxes, like fire districts, ambulance services, schools and libraries.
Voters, however, were unwilling to sacrifice a portion of their TABOR checks, even with property tax relief and education funding as incentives. The measure’s failure was a major defeat for Gov. Polis and Democrats at the statehouse on an issue that could have immediate consequences for Coloradans.
What’s Next for Property Tax Relief?
Republicans have been calling on Gov. Polis to convene a special session around property taxes for months and accuse Democrats of excluding them from the policymaking process. The number two House Republican, Rep. Rose Pugliese is a tax policy leader in her caucus
“We've demanded a special session multiple times since May,” Rep. Pugliese, also a former county commissioner, said. “It does not sound like the Democrats have a plan, so we are willing to come to the table and really do what's right for the people. I mean, we're talking about property tax. Property tax is not a partisan issue.”
The legislation that put Proposition HH on the ballot was written by the governor’s office, sponsored by Democratic lawmakers, and passed on a partisan basis in the chaotic last hours of this year’s lawmaking term, drawing protests from Republicans.
Pugliese is hopeful Democrats will approach the process differently during the special session.
“I think they are trying to engage with the people who understand this issue to try to come up with a bipartisan solution. So, at this point, I'm optimistic,” Pugliese said. “I want to make sure that we do the proper stakeholding, get the local governments who actually depend on and develop budgets based on property tax together in a room to try to find some consensus.”
The special session will focus on coming up with a short-term solution to next year’s impending tax spike because local governments have to finalize their budgets, including their tax rates, by December 10.
“The voters had their say about a long-term, comprehensive approach,” Sen. President Steve Fenberg, a lead sponsor of Proposition HH, said. “Our caucus will now be laser-focused on providing short-term relief to those who are most vulnerable to the rising cost of living – which means working families, renters, and those on fixed incomes – while protecting our schools and fire districts.”
The time constraints of the special session doesn't leave much time to figure out how to keep property taxes down over time, so long-term solutions are likely to be hashed out during the general legislative session, which starts in January. Republicans’ announced their proposal for long-term solutions last month, which includes three draft bills they plan to introduce next year.
The first bill would expand property tax exemptions for seniors, disabled veterans and the families of servicemembers who lost their lives, also a priority for Gov. Polis. The second would reform the state tax assessment rate for residential and commercial properties, and the third would reduce income taxes with the goal of keeping more money in Coloradans’ pockets.
Democrats have not announced any specific proposals.
Conservatives outside of the state legislature have also put forward alternative ballot initiatives, such as Initiative 50, that would impose a statewide property tax cap, but those won’t be on voters' ballots until next fall. Rep. Pugliese and Sen. Kirkmeyer say those initiatives won’t be necessary if lawmakers are able to agree on a solution before then.
Right now, however, all eyes remain on next year’s looming tax spike and what lawmakers can do to avert its worst impacts on Coloradans. Taxes will be due in April .
“Provide immediate relief - that's all we can do right now and that's what we're going to do," Gov. Polis said. "Then during the general session, we hope that either we can take on the bigger issue working in a bipartisan way to constrain the growth of property taxes or establish a commission to come back with thoughtful recommendations about the best way to do that."
The special session will last a minimum of three days and starts less than a week before Thanksgiving. The last time a special session was called in Colorado was in 2020.
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