DENVER — With homeowners across the state bracing themselves for high property taxes this year, Colorado lawmakers are searching for short and long-term solutions to provide some relief.
Last year, as home values skyrocketed, state lawmakers provided some short-term relief by dropping the residential property tax rate for 2023 from 7.15% to 6.77% and the assessment rate for commercial properties from 29% to 27.9%. Those rates will increase slightly in 2024.
The law also offered waivers on the first $15,000 in taxable value on homes and the first $30,000 in taxable value on commercial properties.
However, a state economic forecast has projected that residential assets valued this year will increase by 26.5%, which is more than originally thought.
As a result, Gov. Jared Polis called for lawmakers to offer $200 million in additional relief from property taxes in his budget proposal.
So far, there have been no bills introduced by Democratic lawmakers in either chamber to make that wish a reality. In the meantime, Republicans have proposed a series of bills to address property taxes in one form or another.
Senate Bill 23-108 is one such bill. It would allow local governments to provide temporary property tax relief to residents through tax credits or mill levy reductions.
“They have a balanced budget, they're debt free, they're being managed very well. They don't want to just keep leaning on the residents to keep coughing up more and more of their money,” said Sen. Mark Baisley, R-Woodland Park. “They see this kind of windfall that's going to come from the new property tax rates that are on the way because that's the formula that we all follow, and they say, 'We're not going to need that much.'”
While it’s true that the counties could keep rates the way they are to collect more revenue, Baisley says at least two in his district have expressed interest in offering their own form of temporary relief at a time when residents and businesses are struggling with costs.
“The incentive is just being good stewards and not being money-grubbing counties,” Baisley said.
Bailey hopes that by offering these temporary savings, people will be able to spend their money elsewhere and spur the economy.
Currently, counties could take this step on their own, but they wouldn’t be able to increase the mill levies again without going back to the voters to ask for permission to return to their previous rates. Increasing mill levies can be a challenging and expensive idea to get voters to support.
“I think if we can give districts the ability to temporarily lower their bill, then we're giving them a little bit more flexibility when we don't have to worry about one-size-fits-all solutions at the state level,” said Scott Wasserman, president of the left-leaning Bell Policy Institute.
Nothing in SB 23-108 prevents the state from taking additional measures to offer property tax relief.
But this bill is another short-term solution, and lawmakers on both sides of the aisle acknowledge that a long-term solution to some of the property tax questions in the state needs to be reached, particularly after the Gallagher Amendment was repealed by voters in 2020.
For Wasserman, Gallagher’s repeal left three looming questions.
“How do we lower the nonresidential assessment rate? Because we have the second highest gap between the residential assessment rate and the commercial. How do we guard, appropriately, the property taxes of homeowners? And then third, how do we fund education?” he said.
From his perspective, there are also questions about what is fair and adequate versus what is sustainable, how much a local district really needs to survive, who should fund education and what should the appropriate safeguards on property values should be.
Rep. Rose Pugliese, R-Grand Junction, is one of the lawmakers starting the search for that long-term solution.
“We're calling for a permanent long-term sustainable, fixed property taxes and having some really great collaborative conversations about what that looks like,” Pugliese said.
She hopes that the short-term solutions lawmakers are debating will give a state task force time to work on some of these long-term solutions.
Still, Pugliese admits there are more questions than answers on how exactly to accomplish long-term solutions.
“There's still a lot of question marks. I don't know that all those question marks will be answered this session, but I think it will give us a foundation to be able to answer those questions for people moving forward,” she said.
Wasserman agrees that a long-term solution needs to be discussed by lawmakers, but warns that the current spike in home values could be a bubble, meaning the rates could come down as quickly as they rose. So he wants to be cautious about passing a long-term policy based on a short-term spike in prices.
“We want to make sure we don't do anything permanent that we're going to regret later,” he said.
For now, homeowners and businesses will have to hang tight while lawmakers work through the details of what short and long-term relief really looks like.
