The fate of property tax policy will likely be in the hands of Colorado voters this November as lawmakers and the governor try for long-term solutions to the state's skyrocketing property values.
Gov. Jared Polis and the members of the Democratic majorities in the state Senate and House of Representatives unveiled Monday a proposal that would chop $40,000 off the valuations that steer total property taxes owed, reduce the overall residential assessment rate and expand and enhance the senior homestead exemption, among other changes.
In all, the owner of a $600,000 house who just saw their valuation increase by about 30% — the state average is 33% — would see their expected tax increase drop from about $834 next year to about $406, according to an analysis from the governor's office.
The spike in property valuations, which topped 60% in some pockets of the Front Range, set off alarms among some assessors in the Denver metro area last week.
"As people get their notices in the next week or two and they freak out, as long as this passes in November, those increases will be much less," Polis said.
To pay for the caps, the proposal would bite into predicted revenue surpluses the state otherwise needs to return under the Taxpayer's Bill of Rights. Now, the state's tax collection is capped at a formula based on inflation, plus population. This proposal would add 1% to that formula. That money would keep local districts that rely on property taxes from feeling a pinch, sponsoring Sen. Chris Hansen, a Denver Democrat, said.
"That is our pay-for. That is how we create sustainability in this package," Hansen said. "We take a little bit of extra retention, and that gives us the money we need to do all the backfill mechanisms that are in the bill and make sure we don't have negative impacts on school districts and the other important local services."
The bill, which has not yet been introduced, will need to speed through the legislature in its final week of session.
The Taxpayer's Bill of Rights, or TABOR, is a source of criticism from progressives who say it unnecessarily hampers the state's growth and praise from conservatives for its limits on government growth. The Constitutional provision also leads to the occasional boon for taxpayers when they get hundreds of dollars of tax dollars rebated. Touching it can ignite bitter political fights in the state. Polis expects those tensions will be dampened because it'll be voters who get to decide.
"We're doing what TABOR contemplates, which is going to the voters," Polis said.
He noted that "bits and pieces" of the proposal could be accomplished just with legislative authority, but this broader approach helps reduce property tax rates while helping to contain growth over a longer term. The proposal would have a 10-year sunset.
This story will be updated as The Denver Post continues to learn details about the proposal.
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