Residential and commercial property tax spikes in 2023 sent shock waves throughout Colorado. These spikes were prompted in part by skyrocketing house prices after the COVID pandemic but also partly by the 2020 repeal of the Gallagher Amendment, which mandated a 45/55% split in revenues raised between residential and commercial property tax rates. As property values increased, keeping that ratio meant that residential property tax rates went down while commercial property tax rates went up.
That 2023 property tax “sticker shock” prompted the now canceled ballot initiatives 50 and 108 for the November 2024 election. If passed, they would have lowered property taxes by $2.4 billion, as well as putting strict limits in place on their growth. While it might have been good news for property owners, critics of the initiatives pointed out the possible disastrous effects on tax-funded public services. In particular, school funding would have been affected, which is only just recovering from the “ratchet effect” prompted by the noxious interaction of the repealed Gallagher amendment, Amendment 23 (mandating full funding for schools), and TABOR, or the Taxpayers Bill of Rights, which puts its own limits on local and state governments’ ability to raise taxes. The repeal of the Gallagher Amendment meant that schools were fully funded for the first time in years, but also put squeezes on homeowner budgets that exacerbated the squeezes already felt by a general rise in the cost of living.
In order to forestall ballot initiatives 50 and 108 at the ballot box, Governor Jared Polis called in August for a special session of the legislature to address the property tax problem, and on September 4, he signed House Bill 24B-1001 into law; but only after receiving assurances from the political groups that had advanced the initiatives – namely, Advance Colorado and Colorado Concern – that they had rescinded them from the ballot.
HB24B-1001 was a bi-partisan effort sponsored by Speaker of the House Julie McCluskie, (D-Dillon), Chair of the Commission on Property Tax, Senator Chris Hansen, (D-Denver), Representative Rose Pugliese (R-Colorado Springs) and Senator Barbara Kirkmeyer (R-Weld County). It builds on a previous bill, SB24-233, to limit the rate at which property taxes can be raised. According to the Governor’s official newsletter, which was released on August 30, HB-24B-1001 will:
1. Reduce the assessment rate for all residential property from 6.4% to 6.25% unless statewide value growth exceeds 5% from 2024 to 2025, in which case it would decrease to 6.15%.
2. Lower the assessment rate for schools district mill levies to 7.05% from 7.15%, unless statewide actual value growth exceeds 5% from 2024 to 2025, in which case the rate will decrease to 6.95%.
3. Set the assessment rate for school district mill levies at the 2025 level for all future property tax years. For all district mill levies, most nonresidential classes – except for oil and gas and producing mines – will be reduced from 29% to 27%.
In addition, the bill also allows voters to override the local government revenue cap at the ballot box and school districts to override the cap at the statewide level. The law also directs the Commission on Property Tax to evaluate the property tax changes made in SB24-233 and HB24B-1001 and issue a report on whether or not Colorado’s tax code deliver reliefs to the hardest-hit property owners..
Does all this mean immediate tax effects for regional property owners? According to Custer County Assessor JD Heinrich, the answer is “no effect for fiscal years 2024-25, but yes for 2025-26. We’re assuming it will lower taxes, but we’re not sure. I will be discussing it in January with the state and with fellow county assessors.”
– Elliot Jackson
(This article was originally published in October 2024. Subscribe to the print edition of the Tribune so you never miss out on timely news that impacts you!)