A Clearer Picture: Colorado’s Property Tax Debate

Four approaches to housing affordability and property taxes are headed to your ballot

Last Friday was the deadline for submissions to the legislative council and there are now over 20 proposals for how to change our fiscal systems. We now have our clearest picture yet of the issues that we’ll be debating in the 2022 election and at the center is the issue of our property taxes and housing affordability.

This focus is an inevitable consequence of repealing the Gallagher Amendment in 2020. After years of contending with fixed ratio requirements between our residential and commercial rates, policymakers have new flexibility to make changes to a system that has been frozen for over 30 years. For example, last year the state legislature temporarily reduced certain assessment rates, including residential rates, for a two-year period. They also began to develop more targeted assessment categories.

It is worth reminding Coloradans that our residents pay the 47th lowest residential property tax burden in the nation, at an effective tax rate of .54% on their total home value. Non-residential assessment rates, however, remain quite high.

In the absence of clear direction from within the State Capitol, various forces have filled the vacuum. As of today, four major approaches are on the table.

Approach 1: Cap property tax growth at a fixed rate

Initiatives 74 & 75 – Colorado Concern’s first attempt at a property value cap. Their title clearly spells out the $1.3B hit to local communities that this 3% cap on home values has in the first year. By disconnecting communities from their housing markets, teachers, service professionals and the people who serve the community can’t live there. Importantly, this approach is modeled after California’s infamous Prop-13, which forever changed that state’s funding landscape and did nothing to improve housing affordability.

Initiative 110 – Republican-allied Colorado Rising Action, funded by anonymous donors like the Koch brothers, has proposed a hard 2% cap on property taxes (not just values). It’s an unserious, draconian attempt to make Concern’s proposal look moderate.

Initiatives 140 – 151 – These are Colorado Concern’s newest proposals. They include a few changes to the original version, but include fixed value caps and will still be a hit to local schools and a bigger school bill for the state to cover over time.

Approach 2: Stop putting statewide measures that lower our property taxes on the ballot. Let local governments and the legislature figure it out. 

Initiative 55 – Advanced by former Secretary of State Bernie Buescher and other local government advocates, this constitutional amendment would clearly state that any effort to reduce local government revenue by a change in the property tax formula cannot be put forth to voters. Only local governments or the state legislature can make these changes.

Initiative 103 – This updated version was submitted in response to Colorado Concern’s measure and includes “actual value” as a property tax input that cannot be changed by statewide vote.

Approach 3: Tax luxury homes valued over $2M tacked to inflation and use the revenue to lower property taxes and fund affordable housing

Initiatives 104 – 106Proposed by the Bell Policy Center President Scott Wasserman, these measures put a whole new tool on the table. Without new revenue, there’s no way to lower commercial and residential rates and not hurt schools and public safety. In two different approaches, one constitutional and another statutory, we propose that owners of homes valued over $2M chip into a statewide fund that can be a part of any housing affordability solution, including a change to property taxes.

View our new fact sheet on these proposals here. (4/15/2022)

Approach 4: Use some of our TABOR rebates to start a housing affordability fund

Initiative 108 – A simple and reasonable question in all of this is whether we want to divert .10% of this year’s $2B in TABOR rebates toward an affordable housing fund. This accompanies another proposal by Great Education Colorado to divert TABOR rebates to our already underfunded schools.

As we all know, not all of these proposals will make the ballot. It is also clear from past cycles that the proposals backed by the most money are often the ones we end up voting on. That is no way to run a state.

We need our legislature to step up to this moment and expand the conversation about our tax code in ways that move us from a zero-sum debate between the status quo and defunded communities. Otherwise, we are simply moving deck chairs.

There’s a lot at stake in the process. Colorado has learned the hard way that constitutional formulas can wreak havoc on our communities in ways we never even imagined. We have learned that early action is critical in these situations. Now is the time to weigh into the discussion. Now is the time to urge the legislature to disrupt this discussion. Now is the time to educate fellow advocates about the choices lining up at the title board and ensure that the right questions come before the ultimate policymakers in our state, the voters of Colorado.

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