It's been a busy weekend for lawmakers in the Centennial State. Governor Jared Polis called the special session, which convened on November 17, to bring property tax relief to homeowners for the 2023 tax year. This is only the second time that Polis has called for a special session - the first time was during the COVID-19 pandemic in 2020. This session was convened in response to ballooning property taxes, and was supposed to be over by Monday however ongoing wrangling promises to delay that into next week. So let's take a look at the concerns of Coloradans and why the Governor felt the need to take such an unusual step.
The Property Crisis
Photo by Johanser Martinez on Unsplash
Colorado is a popular place to live. If you've ever visited you'll understand why - natural beauty, a thriving economy and its attractive climate has led to people flocking there to set up home. This has in turn led to a building boom as new neighborhoods are constructed, but has also driven up property prices. In parts of Western Colorado, according to analysis by Colorado Public Radio (CPR), the taxable value of the average home is 55 percent higher that just a couple of years ago. In Pitkin County that's 80 percent. On average, across the state, Colorado homes gained 37 percent in value over two years. While increasing property prices are generally a boon for homeowners, it can also lead to headaches in the shape of increasing property taxes. As the CPR analysis explains, how much tax bills will rise is complicated but most homeowners are looking at significant rises following a county government reassessment which completed this year. It could mean rises of more than $1,000 a year for the more expensive properties. This is a nasty surprise for homeowners and they are looking to their government to do something about it, along with widespread concerns that housing is simply becoming unaffordable.
Attempted Solutions
The Democrats began the 2023 legislative session in an almost unprecedented position of control following recent electoral successes. They have a 46-19 super majority in the Colorado House and a near super majority in the Senate, which they control 23-12. So they sought to capitalize on this with an ambitious agenda, introducing a range of legislation to address gun violence, criminal justice and environmental protection as well as affordable housing and property tax. They introduced dozens of housing bills, some of which were successful such as SB001 which provides money to the Public-Private Partnership Office to encourage affordable workforce housing on state-owned land. However, they struggled to pass the key landmark legislation such as SB213 which sought to provide more affordable housing through changes to zoning laws. The Polis-backed bill ping ponged back and forth between the the House and Senate and eventually died in the Senate, with strong concerns among some lawmakers that the bill effectively gave the state control of local land use planning. It was a bruising defeat for Polis, but he has pledged to bring the legislation back in future sessions.
Fast forward to November 7, and Colorado Proposition HH which was on the ballot. Prop HH sought to reduce property tax rates and so should have proved popular, but it also sought to offset lost revenue by allowed the state to retain and spend revenues that would otherwise be refunded to residents under Colorado's Taxpayer's Bill of Rights (TABOR). This proved unacceptable to the electorate, and prop HH was defeated by almost 20 points, 59% to 41%.
The Special Session
Which brings us to the special session. Democrats want to use the session to deliver the same property tax relief but avoid the TABOR refunds issue. A tricky proposition. So let's take a look at the bills. This stakeholder page sets out all 14 bills introduced so far. You'll see 7 bills have already been killed, as Democrats act swiftly to block Republican legislation and fast track their own.
The Senate briefly descended into chaos on Friday as Senate President Steve Fenberg called a voice vote on a procedural vote that would allow the fast tracking of bills, and then declared that the motion had passed the required two-thirds majority. It caused outrage from Republicans, who had voted against, and led to an eventual floor vote which went along party lines (23-12) and therefore failed the threshold. This means the Senate's work is unlikely to wrap up this weekend and may extend through Tuesday.
The Senate did go on to pass a number of bills through committee. SB001 provides property tax relief by increasing the tax thresholds and reimburses local government and school districts for the lost tax revenue. SB003 creates a new temporary TABOR refund mechanism to effectively give all taxpayers a check for about $800 instead of the amount being dependent on their income level. The Senate also quickly passed SB002 to create a nutrition program for students on summer break.
Meanwhile, in the House matters proceeded more calmly as lawmakers quickly used their committee majorities to advance a number of bills. HB1001 establishes the Emergency Rental Assistance Grant Program to protect low-income tenants from eviction. HB1002 temporarily increases the state earned income credit from 25% to 75% (reduced to 50% in the Appropriations Committee), allowing the state to refund extra revenue in a way that favors working lower and middle income earners, to provide some immediate relief. HB1003 creates a Property Tax Task Force (try saying that after a few ales) to explore longer term solutions.
What's to Come
Both chambers will use the rest of the weekend to try to push these bills into law. Stay tuned to see what happens, and how long it takes. Regardless, property prices and property tax promise to be an ongoing issue for Coloradan homeowners for years to come and challenge the Democratic majority to deliver the relief the electorate is demanding.
UPDATE: November 21
The Special Session finally came to an end on Monday afternoon. And the final result was HB1001, HB1002, HB1008 and SB003 being sent to the Governor for his signature. Taken together, these bills will cut property taxes by $434m, redirect $185m of tax to expand a tax break for low-income workers, provide $30m in rental assistance and authorize a summer meals program for low-income children. The taskforce will get to work straight away and report its findings in March, at which point longer term solutions should be introduced. So, overall a successful session for Polis but he will be judged in the longer term on more comprehensive solutions to the rising housing costs and associated tax.
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Cover photo by Shelby Smith on Unsplash