Millions of Coloradans have not yet voted on Proposition HH, the far-reaching ballot measure aimed at the immediate property tax spikes facing the state while lifting the Colorado’s revenue cap for the foreseeable future.
The complexity of the ask is indisputable, subject to a flurry of ads and contradicting messages.
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Here’s an at-a-glance look for those still making up their minds.
What does it do?
Proposition HH, if it passes, would affect the formula used to calculate property taxes. It also proposes changes to the senior property tax exemption, state tax refunds, education funding and local government funding. It also would generate money for rental assistance.
In a nutshell, the proposition would tamp down the increase in property taxes owed without hamstringing local governments that rely on property tax revenue for their budgets. To pay for state aid to those local governments, proponents want to increase the amount of money the state can keep under the Taxpayer’s Bill of Rights, which would mean lower tax refunds.
Beyond that aid, the lion’s share of the revenue — and nearly all of it by the end of the decade — would go to education programs.
Taken piece-by-piece:
New property tax formula: For single-family residential property, it lops off $50,000 from the property’s actual value for tax purposes this year, and $40,000 in future years. This has a more significant effect on lower-value properties than higher-value. It would also lower the assessment rate — the percentage figure used in calculating taxes owed — to 6.7%. That figure is otherwise set to fluctuate between 6.765% this year and 7.15% in 2025. It also makes other rate changes for non-residential properties.
Transportable homestead exemption: Beneficiaries of the senior homestead property tax exemption would be able to keep the benefit if they move.
Equal TABOR refunds: For a single year, all Coloradans would receive equal refunds due under the Taxpayer’s Bill of Rights, an estimate of $898 per taxpayer. For people reporting incomes up to $50,000, that equals an estimated increase of about $270; for incomes of less than $99,000, that equals about a $60 increase. Higher-income taxpayers would receive less than they would otherwise — a loss of up to $1,086 for the highest income tier.
The state keeps more money: It would gradually ratchet up how much tax money the state can keep by 1% a year. Starting next year, that would be about a $170 million increase and increase to an estimated $2.2 billion per year by 2031. That is money that would otherwise be returned to taxpayers under TABOR.
Money for local governments: That extra money would go to many local governments to make up for property tax revenue they would have otherwise collected without changes. It excludes governments that meet certain growth and population thresholds, eventually phasing out the money for most of the state.
Limits on future property tax growth: It would cap property tax revenue collections for non-home-rule governments to the prior year plus inflation, unless the governing body adopts an ordinance or resolution to exceed it.
Rental assistance: Up to $20 million in the new money would go to rental assistance for renters affected by hikes due to passed-on property tax increases.
Big money for education: The vast majority of the extra revenue kept by the state if HH passes would go toward education funding specifically — an estimated earmark of $125 million starting in 2024, and up to $2.16 billion in 2031.
Will property taxes still go up if HH passes?
Yes. Property taxes are largely tied to property values, which have skyrocketed in recent years, though values — like underlying property tax factors — depend on location. Legislative backers of HH estimate property taxes are set to increase by an average of 40% statewide without HH. Proposition HH aims to knock down that increase, though it won’t erase the total increase.
A home that saw its valuation increase from $300,000 in 2022 to $405,000 in 2023 would, for example, see a property tax increase of about $100 if Proposition HH passes, according to the Colorado Fiscal Institute, which has endorsed the measure. If it fails, and nothing is done to allay the increase, the tax bill would be about $415 more, according to the left-leaning think tank’s analysis.
Will I lose my TABOR refund?
It depends. TABOR refunds have been the subject of the most contentious HH fights, with backers downplaying the effect and opponents warning it will steal them away.
TABOR refunds, however, depend on how much money the state collects versus how much it is allowed to keep based on a formula that sets a cap while accounting for population growth and inflation. The economy writ large, and whether it booms, chugs or busts, will be determinative for future refunds, regardless of HH’s future.
But if the measure does pass, the increase in the cap will mean less money to refund in boom years. If the increase in tax revenue falls in the gap between the current cap and the HH cap, it would zero out refunds that people would otherwise receive.
For context, non-partisan budget analysts expect billions of dollars in total refunds through the 2025-26 tax year — far beyond the extra 1% increase HH would allow annually, though predictions become murkier each year into the future.
How does this all affect renters?
A third of Colorado households rent their home, a share that increases in metro Denver, according to various estimates. Rents have been shifting up, as well, including a double-digit percentage point increase in 2022. But, outside the rental assistance budget, Proposition HH doesn’t directly aim at keeping rents in check.
Instead, backers argue that lower property tax increases mean less cost for property owners to pass on to tenants. An economist with the otherwise supportive Colorado Fiscal Institute said there were too many variables to properly model the possible effect of the measure on renters, though he also said supply and demand likely play a larger role in rent-setting.
Opponents have seized on the lack of direct support for renters, arguing that they’re giving up future TABOR refunds to give property owners a tax break.
A Proposition HH calculator put together by nonpartisan legislative staff doesn’t address the measure’s possible effect on rents, but does lay out the effect on TABOR refunds — the most direct change HH would have on people who don’t own property.
To use an example, a renter in Fort Collins who makes $62,000 a year would net $60 more in TABOR refunds next year if HH passes with its one-year equalization of refunds. They’d receive $42 less in 2025, however, as the measure cuts into how much total money is refunded, and assuming the state reverts back to the six-tier refund system that sends more money back to higher-income Coloradans on the basis they paid more taxes.
How did HH end up on the ballot?
Colorado Democrats placed the measure on the ballot in the closing days of the 2023 legislative session.
Keeping residential property taxes in check has been an emphasis for lawmakers following the repeal of the Gallagher Amendment, which did away with some safeguards that had shifted more of the burden for property taxes onto commercial property owners.
HH’s sponsors told the media they were working on a proposal much earlier in the session, but didn’t disclose details until the bill was introduced. Colorado Republicans — at a historic low point of power in the state — walked out in protest during the final debate instead of voting against it.
A simple majority of the electorate will determine if it passes or fails.
What happens if HH fails?
If the proposition fails — and nothing more is done — property taxes will go up as projected. Legislative supporters have said they don’t have a backup plan to tamp down property taxes due next year, given the tight time crunch after Tuesday’s election.
They’re also concerned about unilaterally taking money from local governments without making up for the lost local tax dollars.
Legislative Republicans, however, have introduced a slew of proposals they’d urge lawmakers to pass during a special session. The party holds no power to compel a special session and lacks majorities to pass any legislation on its own, however.
Updated Nov. 6, 2023, at 5:25 p.m. Because of an error by a reporter, an earlier version of this story inaccurately identified where the $50,000 deduction would apply.
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