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A measure appearing on next month’s election ballot provides the best — and probably only — way to lower your property tax bill this year, say proponents, while opponents of the ballot question are arguing that the immediate savings and long-term funding for schools are another example of out-of-control government.
The measure, known as Proposition HH, is designed to address the dual crises in Colorado of 1) a spike in residential property taxes resulting from a steep increase in home values, and 2) insufficient state funding of community services like schools, libraries, and fire and water districts, say proponents.
Because schools and other public services rely on property taxes, legislators had to find a way to lower property taxes without gutting schools, say proponents. They proposed, via HH, two long-term changes: lowering property tax rates and ensuring that lower-income property and older property owners benefit most, while also tweaking the TABOR law to increase the revenue cap rate by 1% annually, which will keep schools and other public services funded by property taxes from having their budgets slashed.
The initiative also provides another immediate benefit for most Coloradans: a hefty $832 TABOR refund check for those earning less than $100,000 per year. This component of HH, referred to as “flattening” the refunds from their previous six-tier income-based levels, repeats an action taken by the legislature last year by allocating the same amount to all Coloradans, to the benefit of everyone not making six figures. After next year, refunds would revert to the income-based system, unless the legislature and governor decide to continue the popular “flattening” law.
Opponents counter the property-tax reductions offered by Proposition HH (the average homeowner would get $1,336 over the next three years) aren’t high enough and that the proponents’ goal of providing tax relief without cutting funding for schools — and backfilling a longstanding deficit in Colorado’s funding for education — is not needed in Colorado, despite the state ranking 32nd for per pupil funding in America.
“Colorado voters have consistently shown, to the frustration of legislative liberals, they embrace real tax relief and reject state tax increases and proposals to dismantle TABOR,” wrote state Sen. Barbara Kirkmeyer (R-Weld County) and state Rep. Rose Pugliese (R-CO Springs) in a recent The Denver Post column. “…The reality of Proposition HH’s attack on Colorado taxpayers is a far cry from the rosy statements of its supporters. Instead of providing the property tax relief Coloradans need now, it opens a bottomless Pandora’s Box of higher taxes and increased government spending – all at your expense.”
They cite a scenario involving a mix of “economic conditions and other factors” under which TABOR refunds “could go away entirely.”
These are scare tactics, say backers of HH, pointing to a Colorado Fiscal Institute (CFI) studyshowing that the average homeowner would save $600 in taxes next year while the average TABOR refund would decrease by $46. The total TABOR refund for the average homeowner over three years is projected to be $1,690.
“Colorado families, still dealing with historic inflation, can’t afford a 40% increase in property taxes,” says CFI’s Senior Economist Chris Stiffler. “Proposition HH responsibly cuts property taxes while still preserving funding for critical local government services that rely on property tax revenue, like our schools.”
For CFI’s report, Stiffler created two different models to estimate Prop HH’s impact over the course of its ten-year lifespan. The pair of models capture both ends of the state’s economic fate: One is a “strong growth” model built on the assumption that our steady economic growth continues for the next decade. The other imagines a recession grinding Colorado’s commerce to a crawl.
“In the optimistic scenario with a strong economy over the next decade, Prop HH gives Colorado homeowners a sizable tax break now, a much larger TABOR check next year, and then in subsequent years everyone can still expect TABOR refunds on revenue over the HH cap, while also funding schools and road and police and fire departments,” says Stiffler. “It’s an investment in our growing state. If the economy slows down, the state won’t take in enough revenue to reach the refund level anyway, and yet property taxes will still be lower than without HH.”
Support from the Center-Right
While most of the focus is on residential tax breaks for homeowners, HH also lowers the tax rate for commercial property.
It’s that aspect that led Colorado Concern, a center-right business advocacy group founded by prominent GOP donor Larry Mizel, to also endorse the measure.
Testifying in support of SB23-303, the bill that put HH on the ballot, Colorado Concern’s public affairs director Annaliese Steel said it will “keep Colorado competitive” and “affords breathing room for family and business budgets.” She added that the group “appreciates the 10% property tax reduction over the next eight years…and that if passed it will bring commercial property taxes to their lowest rate in forty years.”
TABOR refunds, which have been substantial in recent years, are by no means guaranteed, explains Scott Wasserman, executive director of the Bell Policy Center, which also supports Prop HH.
“The TABOR surplus is a function of the economy,” says Wasserman. “It only exists when Coloradans are making money and spending money. This year, thanks largely to corporate revenue, the surplus is huge: $3.57 billion.”
“Colorado still owes our public school system almost ten billion dollars,” says Wasserman, referring to the massive shortfall in funding approved by voters via Amendment 23 back in 2000, that since 2010 has been used for other purposes. “Local communities need money to keep not just schools but roads and police and fire departments functioning. Direct democracy [legislating via statewide vote] requires that voters understand how these systems work, and it’s complicated.”
“If you’re someone who believes the text of TABOR is written in stone, then we won’t convince you,” says Wasserman. “But most Coloradans don’t bow at the feet of [TABOR author] Douglas Bruce. They deserve an honest conversation about the facts and figures and trade-offs involved.”
Editor’s note: This story first appeared on the Colorado Times Recorder website.