Politicians want more property tax relief
Republicans have introduced bills to cap increases while Democrats look to blunt bite
The question of how to blunt the edge of rising property taxes is again echoing in the halls of Colorado’s Capitol.
The answer to that, however, is a work in progress. No proposal has been released by legislative leaders, though they say it’s a problem that’s top of mind this session — especially with looming spikes in tax bills and the everpresent possibility that activists could circumvent lawmakers in favor of the ballot box.
Conversations about long-term fixes to the state’s property tax system and its short-term shoring up are underway, said Senate Majority Leader Dominick Moreno, a Commerce City Democrat. Property values skyrocketed over the past several years, which could loom equally large at tax time.
Moreno, like Gov. Jared Polis, has previously noted that many people’s incomes haven’t kept pace with property values, meaning corresponding property tax increases will eat a larger chunk of their incomes. Democrats control both chambers of the legislature and Polis is also a Democrat.
A state economic forecast projects a 26.5% increase in residential property’s assessed value statewide this year. The increase varies from region to region in the state, but with increased values, residents can expect increased property taxes.
“For many folks, especially seniors on fixed incomes, that’s untenable,” Moreno said. “So we have to do something on property tax.”
Colorado voters repealed the Gallagher Amendment to the state constitution in 2020. The amendment cemented a residential-to-business property tax ratio. As home values went up, the residential property tax rate would be cut to keep homeowners’ share below the threshold. Commercial property owners would then end up shouldering more of the tax burden.
Removing the amendment untethered the tax rates and the strongest moderating force on residential property taxes.
Moreno said leaders intend to find a Gallagher replacement to slow the growth of property taxes and are in talks with agencies reliant on property taxes about solutions. Property taxes are the largest source of local government taxes, while also the first source of money for public schools.
Option to go to voters
But, in the meantime, activist organizations can always ask voters to pass their own solutions. In 2021 and 2022, lawmakers introduced and passed legislation specifically to head off initiatives aimed at voters. The 2022 law led to $700 million in property tax relief spread over this tax year and the 2024 tax year.
“The desire is to move beyond creating policy in response to possible ballot measures, and instead create something slightly more permanent, more sustainable in the long term that could be more Gallagheresque in the sense that it would moderate the growth of property taxes,” Moreno said. “It’s a big conversation, but we have to move beyond (Colorado Concern) or other groups possibly looking at putting things on the ballot.”
Anneliese Steel, senior director of public affairs for the pro-business Colorado Concern, said the group is working on the issue but that it’s too soon to elaborate.
“Thanks to good work by the governor and legislature last year, property-tax payers will see nearly three-quarters of a billion dollars in relief over a two-year period,” Colorado Concern President and CEO Mike Kopp said in a statement. “But permanent property tax relief is needed. So are tax assessment reforms. The truth is, we simply do not have to make the choice between adding more taxpayer protections and allowing local governments to grow with the economy. They can happen simultaneously.”
Michael Fields, president of Advance Colorado, which advocates for fiscally conservative policies and backed successful ballot measures in the past, said they are not planning a measure this year because state law restricts odd-year ballot initiatives to things like tax rate increases or policies that lead to a net revenue gain. But without a long-term solution to property tax imbalance and the threat of drastic increases for homeowners, a future ballot measure isn’t off the table, he said.
Fields, like others, noted that the next round of property tax assessments will include this past summer’s peak of sold property values. He questioned if Democrats will have “the political will to limit how much government can grow,” though he noted property taxes go to things like schools and special districts.
“There’s a lot of people acknowledging there’s a problem, but there’s no sense of a solution as far as caps to how much property tax grows,” Fields said.
State Rep. Lisa Frizell, of Castle Rock, and Sen. Byron Pelton, of Sterling, both Republicans, introduced a bill to cap property tax increases, though it doesn’t have any Democrats signed on initially. Pelton is also working to create a task force to look at long-term solutions, an idea Moreno said he hopes to incorporate.
Pelton, a former county commissioner, said finding a replacement for Gallagher isn’t a partisan position. It’ll take both sides of the aisle in both legislative chambers and the governor to find a solution, he said.
“I realize how much property taxes are needed for the services, but we also can’t break the bank, we can’t break the citizen,” Pelton said. “There has to be a fine line where local governments can provide service, but also it can’t be too expensive for the citizens to live here.”