Plan to cut property tax in half for Coloradans on the table for voters to decide

COLORADO SPRINGS, Colo. (KRDO) -- On Monday, the same day that county assessors began posting increased home value reassessments for many homeowners and other property owners, a plan was announced to provide tax relief at the state capitol in Denver.

In a media briefing that started at noon, Gov. Jared Polis joined two Democratic senators and two Demopctatic representatives in announcing "a transformative plan to reduce property tax rates and implement long-term protections to prevent future property tax increases."

The plan, which will require approval by voters in November, is designed to save residents $1 billion annually in property taxes and ensure that they remain among the lowest in the nation.

Along with previously-approved reductions, the plan would reduce homeowners' property taxes in half, and result in a savings of $1,264 in 2023 and 2024 -- covering the latest reassessment period in which some analysts feared that homeowners would pay hundreds of dollars in higher taxes.

Other aspects of the plan revealed Monday:

• Reducing the residential assessment rate from 7.15% to 6.7% in 2023 and 2024, and continuing this reduction for primary residences (not second homes or investment properties) in future years.
• Reducing the taxable value of residences by $40,000 in 2023 and 2024, and continuing this reduction for primary residences (not second homes or investment properties) in future years.
• Capping the growth in district property tax collections excluding school districts at inflation and allowing local governments to override the cap after giving notice to property owners.
• Protecting funding for public education and backfill revenue to fire districts, water districts, ambulance, and hospital districts in areas of the state that aren’t growing as fast by dedicating a portion of the state's TABOR surplus to backfill.
• Providing seniors who currently receive the Homestead Exemption a larger reduction of $140,000 and allowing them to continue to receive this reduction if they move.

The governor's office said that in 2022, the Legislature passed a property tax relief package that provided $700 million to reduce Coloradans' property tax rates and decrease rate increases over two years; and In 2021, the state created the Property Tax Deferral Program which allows Coloradans to defer a portion of their property tax if they increase over 4%.

That deferral opportunity was expanded from previously being offered only to seniors and veterans, to be available to all state residents.

The plan seems to be a solution to the problem created by voters' repeal of the Gallagher Amendment in 2020 -- which resulted in shifting the property tax burden from commercial property owners to the state and did not create property tax reform or provide protection from significant tax increases.

"(Property taxes have) gone up at a rate significantly faster than inflation.," Polis said. "We need to provide to relief now, to make sure that people can afford to live in their own home. And that's a basic value. People should be able to afford to live in their own home, and shouldn't be forced out of where they live, just because the value of their home has gone up."

Republicans criticized the plan as being a "last-minute effort" because it wasn't revealed until the final week of this year's legislative session.

"The people of Colorado should be skeptical of the Governor’s hastily-introduced plan with only one week left in the session, said House Minority Leader Mike Lynch, R-Wellington. "He seems to want to convince us this plan will solve all financial shortfalls, such as school funding, teacher pay, fire and police, and resolve Colorado’s property tax issues for homeowners and businesses.  Given this sugar-coated plan must be approved by voters, it's concerning the Governor has no PLAN B if it fails.”

However, the plan does have the support of the Colorado Education Association, Democrats for Education Reform, the Denver Metro Chamber of Commerce and Colorado Concern.

Some local assessors have mixed opinion about whether the property tax situation will improve after the plan's term, when the next round of value assessments begin.

"I don't know if we'll see a real decrease like we did with the '08 recession, because the same factors aren't in place," said El Paso County Assessor Mark Flutcher. "We're not seeing record foreclosures -- at least at this point. But I would at least hope for a leveling off."

Pueblo County Assessor Frank Beltran hopes likewise, but...

"Homes are still selling very well," he said.

Brooke Surbato, a Denver-area realtor who attended the governor's announcement, said that she's thankful for the plan.

"in 2019, my family paid around $2,000 in property taxes, and just last year we paid $3,800.," she said. "Now, thanks to previous work by our leaders in combination with this proposal, I will be saving nearly $600 on my property tax bill. But we're having to cut back on our finances, and so are many of my clients."

Because of the state's red-hot housing market in 2012 and 2022 -- particularly along the Front Range -- median property values are expected to rise between 30% and 50%.

That increase, as KRDO reported last Thursday, will result in higher property tax bills that may be more difficult or impossible for property owners to pay -- especially for seniors, disabled veterans, and others on fixed incomes.

County assessors' offices began posting the reassessed values on their websites Monday, and began mailing notices of estimated taxes; actual tax bills, which could change based on several variables, will be mailed out in January.

Monday also starts a monthlong period during which property owners can appeal their new property values if those owners believe they are too high; a second appeal period starts after final tax bills are mailed in January.