Gov. Jared Polis has called the state legislature into a special session aimed at building on recent property tax cuts and heading off a pair of ballot measures that opponents warn would be disastrous for government services, he announced Thursday.
The special session is set to begin Aug. 26. Lawmakers will need to meet for at least three days to pass any bills — and in the dog days of summer, with many soon leaving office, limiting its length will surely be the goal. Officials in recent days have outlined a potential $270 million property tax cut they hope will head off Initiatives 50, which has qualified for the ballot, and Initiative 108, which is under petition signature review.
Those measures are being run by the conservative advocacy group Advance Colorado, and they would cut taxes by billions of dollars and put a strict cap on property tax growth at the local level. Opponents warn they would have devastating consequences for government services.
Polis said he would not sign any legislation from the special session until the measures are formally pulled from the November ballot, as Advance Colorado’s leader has agreed to do. The call comes after a week of building momentum for the special session, as opponents to the ballot measures weighed the devastating risk they see in them against their chances of passage by voters.
“Whatever the level of risk is — whether it’s a 50/50 chance it passes, or a 30% chance it passes — (these initiatives) would result in immediately reestablishing the budget stabilization factor (for schools), defunding higher education, gutting local transportation funding and much more,” Polis said in an interview with The Denver Post Thursday morning. “If we can find a way to provide a property tax cut that we can afford, that protects funding for our schools and special districts, we should certainly take the opportunity to do that.”
This will be the second special session Polis has called in the past 10 months to address property tax policy. In between, the legislature also met for its regular 120-day session during the winter and spring, in which property tax negotiations also played a defining role.
The regular session resulted in the passage of Senate Bill 233, a $1.3 billion cut that elected leaders hoped would lead to an armistice in the ongoing property tax wars.
But that deal broke down in the final days of the legislative session, leading to lingering distrust and sour feelings.
If passed, the initiatives filed by Advance Colorado would lower property tax rates across the state and strictly cap how much property tax revenue can grow in the future. Advocates argue those moves would stop runaway property tax bills if Colorado goes through another boom in home values.
In the spring, the ballot proposals hung over the legislature as a threat: Find a long-term solution to property tax reform, or let the voters decide in November.
Many lawmakers thought they’d reached that solution with SB-233, a $1 billion cut to property tax rates that was signed into law and celebrated across political divisions. But negotiations with the initiatives’ backers, Advance Colorado and business group Concern Colorado, broke down in the 11th hour of the session.
Advance Colorado’s Michael Fields has promised to pull the measures if lawmakers pass new reforms his group finds agreeable — but they would have to do it by the Sept. 6 deadline for petitioners to pull their measures, as the state’s ballot is set.
A commission on property tax policy, comprised of lawmakers, local elected officials, and others close to the issue, met Monday in the hopes of doing just that. Mark Ferandino, the governor’s budget director, outlined proposed revisions that would reduce property tax collections statewide by about $270 million, versus the estimated drop of more than $2.1 billion under Initiative 108.
Strong growth in property values would go a long way toward effectively erasing the deficit local taxing entities would see, Ferandino said.
The special session proposal would push down residential assessment rates, which determine how much of a property’s value is considered in tax calculations, by about three-tenths of a percentage point. That’s worth a savings of about $100 a year for a $500,000 home with an average mill levy, on top of cuts already signed into law.
The new proposal also would limit the growth of property tax revenues to 10.5% every two years for taxing districts besides schools. The law that was passed in May had capped growth at 5.5% per year, or 11% per two-year cycle. For school districts, the new proposed cap is 12% per two-year assessment cycle, or 6% per year, though districts would be allowed to grow faster if inflation and population growth reach certain levels.
The measure would take effect for property tax year 2025, which taxpayers generally would be billed for in 2026.
Initiative 50, a constitutional amendment that requires 55% support from voters to pass, would cap property tax revenue increases at 4%, including for local school districts. Initiative 108 would lower the assessment rate, or the percentage of a property’s value that’s used to determine the taxes owed by the owner, for both residential properties and commercial properties.
The initiatives could save property owners hundreds of dollars per year — at the cost of potentially billions of dollars from state services as the state backfills some of local entities’ and schools’ lost revenue.
So far, the ballot measures have been polling poorly in surveys released publicly. Neither broke 40% support in a series of polls released by Aspect Strategic, a data firm that serves liberal groups.
But opponents see the danger of crippling government as too great to risk them passing.
The mayors of the state’s three biggest cities — Aurora, Colorado Springs and Denver — signed a letter Monday supporting a special session to stop the initiatives. Shortly after, a group of widely varying advocacy organizations, including associations representing hospitals, builders, and social and economic justice groups, issued a similar letter calling for a special session.
“This seems like a good path forward to both hopefully end … the property tax battles and de-risk the budget,” Ferrandino said Monday. “… With these initiatives, I may even be more worried about what the impact is in the long term. It’s not just a one-year impact. These reductions will be significant and long lasting and not something easily rectified, even through voter initiatives across the state.”
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Several lawmakers have said they want some guarantee that any new deal comes with more than a handshake promise that the ballot box would stop being a battleground for property tax policy. The state plays a key role in setting assessment rates, but property taxes otherwise are distinctly local, with cities, counties and taxing districts setting their own mill levies.
State Rep. Cathy Kipp, a Fort Collins Democrat who was filling in on the state’s property tax commission Monday, gave voice to what several policy makers have grumbled about privately: Many in her caucus had felt there was a deal already in the spring, and now they’re being squeezed by moneyed interests.
“We do feel like someone is going back on a deal, and that frankly is not how we operate in this building,” Kipp said of the Capitol. “I am less agreeable, personally — I know different people in my caucus have different opinions — to letting this deal be continually revived to the detriment of our state and our citizens.”
Polis said Thursday that he generally would be open to some kind of statutory language aimed at preventing future “divisive measures” on the ballot.
This is a developing story and will be updated.
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