On Friday the Colorado Legislature was called back into special session by Governor Jared Polis with an agenda to come up with an alternative solution to the property tax now looming after Proposition HH failed as a ballot question in the 2023 Consolidated Election.
The agenda included two potential refund agenda items designed to offset the pending property tax situation that has arisen after the expiration of the state’s Gallagher Amendment which kept property taxes artificially low even as property increased in value. Both passed on the respective House and Senate floors and are expected to be headed to consideration for formal votes.
Senate Advances Bill to Provide Equal TABOR Refunds
The Senate advanced legislation on Friday sponsored by Senator Nick Hinrichsen (D-Pueblo), and Janice Marchman, (D-Loveland), that creates a flat TABOR refund mechanism that will equalize refunds for thousands of working Colorado families.
SB23B-003 would put more money back into the pockets of Coloradans, and would increase TABOR refunds by about $500 for the majority of working families by creating a new temporary refund mechanism – identical to what Democrats provided last year – that replaces the sales tax refund mechanism for FY 22-23. Every Colorado taxpayer will receive an identical refund payment, making our tax code more equitable and providing enhanced support for working families.
“Middle-class folks in Colorado get hit particularly hard when it comes to taxes, which is why I am fighting to make our state’s tax code more just and equitable, because working folks deserve a break,” said Hinrichsen. “I am excited to deliver this badly-needed relief that will put money directly back into Coloradans’ wallets and make it easier for them to afford everyday necessities like rent and groceries.”
“Making life easier and Colorado more affordable is one of my top priorities at the Capitol, and equalizing TABOR refunds will do just that for our working families,” Marchman said. “This measure delivers relief for Colorado taxpayers and will make refunds more equitable while ensuring more support goes to the folks who need it most.”
Almost 90 percent of single filers and nearly half of joint filers will benefit from higher TABOR refunds under this proposal. In 2022, Hinrichsen sponsored SB23-233 which provided urgently-needed relief through flat TABOR refunds.
SB23B-003 will now be heard on third and final reading before moving to the House for further consideration. Track the bill’s progress HERE.
House Passes Bill to Put $185M Back into the Pockets of Hardworking Coloradans
Also on Friday, the House passed legislation to put more money back into the pockets of hardworking Coloradans by increasing the state Earned Income Tax Credit for tax year 2023. The bill passed the House by a vote of 39-20.
“The Earned Income Tax Credit helps hardworking families that are the most at-risk for housing insecurity and poverty due to the rising cost of living in Colorado,” said Rep. Jenny Willford (D-Northglenn). “Boosting this credit will put more money back into the pockets of the people who need it most right now, who are disproportionately people of color, women, and people with a disability. Our legislation will bolster the economic security of the Coloradans feeling the brunt of our affordability crisis and make it easier for all Coloradans to call our state home.”
“This bill will boost the incomes of over 400,000 hardworking Colorado families, making it easier for them to afford rent, groceries, childcare, and other costs,” said Rep. Mary Young (D-Greeley). “Getting $185 million out to hardworking Coloradans will help grow our economy, support local business owners, and enable more Coloradans to afford to live in Colorado.”
HB23B-1002 would expand the state Earned Income Tax Credit (EITC) for tax year 2023 to one of the highest state matches in the country. With the current state EITC at 25 percent, the average tax credit is $521. By increasing the EITC, families could see hundreds of additional dollars back in their wallets next year.
The bill builds on legislation passed by Colorado Democrats in recent years to make Colorado more affordable for working-class families. The General Assembly passed HB20-1420 and HB21-1311, which more than doubled the state’s EITC and funded the Child Tax Credit for the first time in Colorado, saving hundreds of thousands of Colorado families money.
Additionally, Colorado Democrats passed HB23-1112 last session to increase the Colorado EITC from 25 percent to 38 percent of the federal EITC for tax year 2024. The bill’s demographic note showed that EITC recipients were more likely to be women, people of color, and people living with disabilities.
Featured image: Colorado State Capitol. Image courtesy of Pixibay