Property value hikes should be met with tax relief

Property taxes are complicated. The state Legislature, counties, special districts and voters all play a part in determining just how much a property owner might pay.

Generally speaking, though, property taxes are based on the assessed value of a home, which is why the recent news that a state forecast projecting an average increase of 26.5% in the assessed value of residential properties has left many homeowners feeling nervous. Especially in Boulder, where expectations are that if something goes up by 26.5% across the state, it will go up by much more in Boulder.

On the surface, the numbers are shocking. A homeowner with a house valued at $1.1 million dollars could, in a worst-case scenario, see a spike of more than $1,400 per year on their tax bill.

And Boulder, for all its incredible affluence, is still home to many people for whom such an increase would be crushingly onerous. Many Boulderites bought their homes decades ago when they were worth a fraction of the bounty they would now fetch. Since then the homeowners may have retired and settled into life on a fixed income. A sudden surge in the value of their home and a corresponding increase in taxes could be ruinous.

The same holds true for local businesses. With a nonresidential assessment rate of 27.9% in 2023, a spike in property values could force some of our most cherished shops and restaurants that are already running on fine margins out of business.

(The relationship between the assessed value of a property and property taxes is not linear. Still, everyone the Camera spoke to for this story said it was reasonable to expect increased 2023 property tax bills.)

So, as we face the uncertainty inherent in waiting, it is important to understand why our property values are expected to increase so sharply and what we can do about it.

First, Colorado stipulates that property values are reassessed every two years.

This year’s assessments will be based on the value of your home on June 30, 2022 — when home prices, driven by pandemic-related demand and a severe supply shortage, saw home prices near their peak.

Next, we must remember that we voted for our property taxes. The mill levies that determine how much we pay to the city, the county, the school district, the library district — and the services provided therein — were all voted upon.

Still, an increase of a thousand dollars or more on a property tax bill is enough to make someone forget why the Northern Colorado water allotment contract, for which a 1 mill levy was approved by voters in 1938, is worth more than $60 on the tax bill of a median-priced Boulder home. (Northern Colorado water allotment contracts are not to be confused with the 1922 Colorado River Compact.)

But before we go and demand relief from an increased tax bill, it’s imperative we recognize that inflation has gone up for everyone, including for the special tax districts we have voted to support, which means the cost of funding them must rise accordingly.

Housing costs, though, have far outpaced even our soaring inflation numbers. This means that while our tax districts may need more money to keep up with inflation, they could wind up with a windfall of cash well beyond what they asked for from voters.

It is this potential funding discrepancy paired with the need to protect the housing status of low- and fixedincome residents that should spur us into action to do what we can to try to make our property tax increases proportionate.

First things first: Our Legislature must act. Our representatives have already taken some steps to offer relief — knocking $15,000 off the assessed value of homes and temporarily lowering the residential assessment rate to 6.76% — but more can and should be done to make certain property owners aren’t hammered with excessive taxes.

Senate Bill 23-108 would allow tax districts “to provide temporary property tax relief through temporary property tax credits or mill levy reductions and later eliminate the credits or restore the mill levy,” something which is currently complicated by TABOR.

Beyond the Legislature, we can all endeavor to involve ourselves more in our tax districts. Our school boards, county commissioners, city councils and special districts hold budget hearings every fall to determine how much revenue will be required to operate during the coming fiscal year.

Of course, voters have already approved these mill levies and our special districts have the right to collect this money, thus we cannot attend a budget hearing and shame them into not collecting their due taxes. But what we can do is let them know we are paying attention and show our desire that they use our hardearned tax dollars wisely.

Next, for those who feel like their homes were inaccurately appraised, there is a formal appeal process. Appeals are accepted from May 1 to June 8.

Lastly, there are a handful of relief programs that can and should be used by all who qualify.

The state’s Homestead Property Tax Exemption provides those 65 and over who have lived in their houses for at least 10 years and veterans with disabilities with an exemption equal to 50% of the first $200,000 of the actual value of the property.

One local program is Broomfield’s Property Tax Refund Program, which aims to refund the difference between last year’s property tax amount and this year’s for qualifying seniors, veterans and disabled homeowners.

“We (Broomfield’s City Council) don’t want homeowners to have to make choices between health care, or food or making their tax payments,” Broomfield’s director of development finance Jeff Romine said in an interview.

Boulder should consider implementing a similar program to help guarantee no residents have to face a similar choice.

Other programs offer exemptions, rebates and deferrals. More information about them can be found here: https://tinyurl.com/2ttrvrxa

The “slow-motion crisis” we are heading toward doesn’t have to uproot our seniors or close our local shops. Options for relief exist, but there is a needle to thread. In finding relief from burdensome tax bills that may balloon beyond necessity, we can still strive to provide the critical funding necessary to see our cities and counties and schools and libraries flourish.

And in all the mess of this tax and policy talk, we must remember the role the housing crisis plays in all of this. Scarcity of stock lays the groundwork for demand to drive prices ever higher — dragging property taxes up with it.

Gary Garrison for the Editorial Board