DENVER, Colo. (KRDO) -- Colorado lawmakers said they “aren’t optimistic” at the start of a legislative special session to reduce 2023 property taxes as proposed legislation from Republican and Democratic lawmakers are millions of dollars apart.
Shortly after Proposition HH failed by nearly 20% in early November, Colorado Governor Jared Polis called a special session to come up with a solution to bring 2023 property tax relief to Coloradans, as property tax bills have increased by 40 to 50% for homeowners.
But the start of Friday’s special session began with gloomy remarks from Republican leaders.
“Everyone in my caucus is going to have a very hard time getting behind what we believe is a disingenuous effort to bring true property tax relief for folks,” said Republican Representative Mike Lynch. “That's a long-winded way of saying not likely.”
The Democrats proposed property tax relief legislation, which passed the finance committee Friday, is very similar to Proposition HH, without touching your TABOR refunds. It would increase the property value exemption for residential properties from $15,000 to $50,000 and decrease the assessment rate from 6.765% down to 6.7%. However, the legislation doesn’t include tax breaks for commercial properties.
“If we do nothing, I think thousands of Colorado families, especially those on fixed incomes, would be at risk of being unable to stay in their homes,” said Democrat Senator Steve Fenberg. “We have to acknowledge that we have limited tools at the state level and we do not have the tools that would have been available to us if they had passed.”
To reimburse local governments for lost property tax revenue, the Democrats propose using $200 million from the state’s general fund to backfill local governments. However, this comes with a caveat. Only entities with less than 13.5% of growth would receive the reimbursement.
“This is all one big math problem,” Fenberg said. “We are trying to provide the relief that we can, given the constraints of how much money we have for backfill. If we do much deeper cuts in tax relief, we need to find the money for backfill or we just don't do backfill.”
Republican lawmakers said this proposal doesn’t go far enough. Their proposed legislation, which already has been indefinitely postponed after losing in both House and Senate committees, would have brought nearly $1.4 billion in property tax relief.
“What the people said on election night is keep your hands off our TABOR refunds and give us meaningful and real property tax relief,” Lynch said.
Their proposal would have reduced the assessment rate to 6.5% for residential properties and 25% for commercial properties. It would have also reduced the state’s income tax rate to 4%. However, the proposal wanted to use more than $600 million to reimburse local governments, with the majority of it coming from the state’s reserves. This was the main reason Democrat lawmakers voted against the bill in committee.
“If and when we hit a downturn, we are going to need those reserves,” Fenberg said. “If we don't have them because we have used it all for backfill, then we essentially are just creating more problems for ourselves as a state.”
This special session was only called to address 2023 property tax relief. One area both sides agreed on is forming a "Property Tax Task Force" to address rising property taxes statewide beyond this year.
"This is about providing short-term property tax relief for one year and making sure that local communities aren't bearing the brunt of that tax relief," Fenberg said. "It does not do anything for the long-term situation. That's why we're going to put together this commission to study it and hopefully provide bipartisan input from many levels of government on something that can be more of a long-term solution."