Property taxes remain a hot topic in Colorado and rightly so. During COVID, economists expected home values to fall as the economy experienced a sharp recession. So in 2020, the legislature asked voters to eliminate a 40-year-old law that prevented property taxes from rising in unison with the value of that property. Voters agreed.
Then something strange happened: the COVID recession was brief and instead of tanking, home prices soared because few homes were offered for sale. Without the 40-year-old Gallagher amendment to limit residential property taxes, homeowners’ tax bills exploded along with rising home values.
In 2023, legislators offered voters a faux tax cut in Proposition HH. Smelling a skunk (and probably feeling swindled in repealing the old tax limitation), voters overwhelming rejected Prop HH and demanded the legislature do better. Instead, the legislature passed solely with Democrat support a teeny, tiny tax cut for one year only. That left in law an automatic tax hike starting next year.
Seeking a more permanent resolution, lawmakers created a property tax commission, and in the closing days of this year’s legislative session, a bipartisan group of legislators introduced an actual tax cut. Democrats, still hold overwhelming majorities in the legislature, didn’t need Republican votes. To their credit, Democratic leaders wanted a bipartisan resolution to put the issue to rest.
That’s not much leverage, but to their credit, Republicans made the most of it. It would have been easy for them to simply vote “no” and blame Democrats for soaking taxpayers. But why do that when they could help taxpayers instead?
Rep. Lisa Frizell (R-Castle Rock) and Sen. Barbara Kirkmeyer (R-Brighton) offered to join as sponsors of a permanent reduction in tax rates in exchange for key improvements to benefit taxpayers. Notably, they achieved:
- An end to the illegitimate practice of raiding taxpayers’ TABOR refunds to reimburse local government for lost tax revenue. The TABOR raid was a poor decision two years agreed to by even the most conservative Republicans.
- A permanent reduction in the homeowner property tax rate, rather than the temporary adjustments the legislature has relied on since 2022. No longer can the legislature use the threat of a snapback to higher tax rates to try to seduce voters into accepting a puny tax cut in exchange for massive growth in government spending (as with last year’s Prop HH).
- A larger and permanent tax rate cut for business and agricultural properties for the first time in 40 years. Under Senate Bill 233, those taxpayers will see a 14% reduction over the next three years.
Republicans recognized this as an important, permanent gain for taxpayers. In the end, they overwhelmingly supported the gains won by Frizell and Kirkmeyer.
The resulting law doesn’t cut property taxes all the way back to pre-COVID levels. That wasn’t an option for the obvious reason that school districts, cities, counties and special districts have experienced inflation-driven cost increases requiring at least some additional tax revenue to maintain existing services to their taxpayers.
Republicans would certainly agree that many local governments could tighten their belts more. However, majority Democrats consistently err on the side of more funding for government at taxpayer expense. Even today, nothing more clearly separates the two parties than the question of increasing or decreasing government spending and citizens’ taxes.
This long-term tax cut ends the annual drama of legislative brinksmanship that treats taxpayers like yo-yos. That’s why most Republicans ultimately backed the change.
Come November, voters may have options to further reduce property taxes. But thanks to Republicans’ willingness to roll up their sleeves and work on good policy, voters for once find themselves in the enviable position of knowing they can count on a certain tax cut already with the option to vote for another.
Thanks to Republicans who were willing to do the hard work of negotiating, taxpayers finally come out ahead.