With home values soaring, many Colorado voters have the opportunity to significantly reduce their property tax bills in November.
But Proposition 120 is more complex than it appears.
Even Chris Brown, a non-partisan researcher who has spent many hours examining the economic effects of Proposition 120, jokes that it would take more than a beer to explain all the nuances of the initiative to the average voter.
It is billed as a permanent 9% property tax reduction for businesses and homeowners. But a state law passed by the legislature last spring complicates the picture.
“It may be that what voters see on their ballot and what they vote on may not be the end result in terms of the impact of their tax bill,” said Brown, who works at the Common Sense Institute. of Greenwood Village. “Very intentionally, the state legislature this year passed Senate Bill 293, which intentionally altered and altered some of the property tax classifications.”
This resulted in a temporary drop in property taxes. But knowing that Proposition 120 was in the works, the bill also had a side effect: limiting who would actually get further tax relief if the ballot measure was passed.
Republicans – including Sen. Ray Scott of Grand Junction – have expressed concern that lawmakers are trying to tone down a tax cut that voters want. They called SB 293 a “poison pill” against the electoral measure.
“If taxpayers – owners of single-family homes in particular – approve of it, only owners of multi-family homes get a 9% reduction,” Scott said at a hearing on the legislation in June.
But Sen. Chris Hansen, a Democrat from Denver, defended the legislation, saying owners of single-family homes should be treated differently as governments tend to spend more money on providing them with services, from garbage collection to firefighters.
Hansen says studies also show that governments don’t have to spend as much on infrastructure, including water and sewage, on higher density developments, such as apartment complexes.
This legislative back-and-forth is why Brown says the battle over Proposition 120 may not end on election day.
“If voters approve of this, the final impact will likely be determined by the courts through different legal arguments,” Brown said.
And that’s already in the mind of conservative activist Michael Fields. As the author of Proposition 120, he says he would likely be the one to sue the legislature if it passes.
“It’s money that is not in people’s pockets, so they spend on taxes,” he said. “What other things are they struggling with when the government has rebounded faster than expected?
Fields says property values rose rapidly during the pandemic and lawmakers did not go far enough with their tax cuts. But others – including local governments, fire departments and school boards – stand to lose millions of dollars if voters accept the ballot question.
Studies suggest that tax cuts would hurt the most in resort counties like Pitkin and Eagle. And educators fear it will have different impacts on schools across the state.
“This only exacerbates the inequalities that exist within our communities,” said Amie Baca-Oehlert, director of the Colorado Education Association. “There are those communities that were able to go to their constituents and ask voters to raise their taxes, to support their local school districts. And even when that happens in some communities, because they have a lower property tax base, it’s not the same as it happens, say, maybe in the neighboring community.
But many people are struggling with the pandemic, and campaigners like Fields say they need help now.
“I think of people on fixed incomes, of the elderly, of people who live paycheck to paycheck,” he said. “A sharp increase in property taxes can have a big impact on the maintenance of their home for the long term. “
If Proposition 120 is approved and the courts don’t overrule SB 293, researcher Chris Brown says the immediate impact of Proposition 120 would decrease dramatically, from $ 1 billion to around $ 150 million.
And only commercial, multi-family and lodging properties would benefit from tax breaks.
Either way, Brown says school districts would be somewhat protected by the billions of federal coronavirus relief dollars they receive.
“Now that’s not a perfect match in terms of being able to use those COVID dollars in the same way,” he said. “However, much of this money can be used to meet priorities and needs.”
Opponents of Proposition 120 counter that permanent tax cuts could reduce the state’s ability to respond to forest fires that are larger due to the ongoing drought. To cushion the blow, supporters included a provision allowing the state to keep up to $ 25 million a year that it might not otherwise be able to spend due to the Taxpayers Bill of Rights, or TABOR amendment, which was approved by voters in 1992.