In addition to local candidates and proposals, voters statewide in the Colorado 2023 Consolidated Election will decide on two issues affecting property taxes, shared revenues and tax refunds.
Proposition HH
One, Proposition HH, called “the most complicated ballot proposal facing voters in years”, has generated much debate and controversy, mainly over how it impacts the Taxpayers Bill of Rights (TABOR) which mandates voters approve tax increases, as well as its impact on property taxes and local government.
The complex measure would reduce property taxes and allow the state to retain certain funds for specific programs. It would also change the level of TABOR refunds to taxpayers as well as reduce the amount owed in property taxes.
This has taken on added significance this year, as a the state is seeing a major jump in property values, which could translate to major property tax increases.
It will also impact local governments by decreasing state revenue by at least $240 million in 2024, but increasing in subsequent years, depending on how much state revenue is collected over the Referendum C cap each year. It will further decrease property taxes depending on how many local governments waive the revenue limit.
Proponents say it will help reduce local property taxes and allow the state to retain some funds to be used for education and help local governments.
If passed, the measure would reduce Colorado’s property assessment rate from 6.76 percent to 6.7 percent for taxes paid in 2024 through 2032 on owner-occupied homes. It would also drop the assessed valuation of nonresidential property from 29 percent to 27.85 percent.
Opponents of the measure say it will eliminate certain taxpayer protections by reducing or eliminating TABOR refunds and say it could grow the state budget by more than two billion dollars by 2032. Those opposed say the nuanced measure adds state complexities to the property tax system that is best handled by local government.
The opposition, including an organization headed by Doug Bruce, the former legislator who created TABOR and saw it passed into law, has spent millions on negative campaign ads claiming the measure would end certain refunds for residents and be a windfall for politicians.
Proponents see the opposition ads as reactionary, pushing misinformation about its impact. They have spent millions to convince voters the measure is a reasoned approach to funding reforms.
The exact wording of HH:
“Shall the state reduce property taxes for homes and businesses, including expanding property tax relief for seniors, and backfill counties, water districts, fire districts, ambulance and hospital districts, and other local governments and fund school districts by using a portion of the state surplus up to the proposition HH cap as defined in this measure?”
Following the repeal of the Gallagher Amendment in 2020, which previously had moderated the growth in residential property taxes, one assessment of the measure said property owners face property tax bill increases that could rise as much as their home value has increased. Other factors include current higher property values and prices, higher demand, the state’s inadequate supply of housing, and overall inflation.
Recent survey results from county assessors showed home values across Colorado increased 40 percent on average over the last two years.
The Colorado Sun explains HH won’t reduce current property tax levels, but would simply limit the increase in taxes starting in the 2023 tax year for what’s owed in 2024 and then continue relief through at least the 2032 tax year.
The state election blue book, (which all voters should read and review the tables concerning this issue) explains the tax revenue changes if HH passes this way:
“Proposition HH creates a new cap on the amount of money the state may retain over its revenue limit that is higher than the current cap established by Referendum C in 2005. Proposition HH allows the state to retain additional revenue up to the new cap, which grows by population growth and inflation, plus 1 percentage point, each year. The measure allows the state to retain an estimated $170 million in state budget year 2023-24 and $360 million in state budget year 2024-25. The state is allowed to retain increasing amounts through at least 2032, depending on revenue collections…”
The state election blue book also notes how HH could change tax refunds under TABOR.
“Under current law, TABOR refunds to taxpayers are typically distributed through the state income tax, based on the taxpayer’s adjusted gross income. Under Proposition HH, the refunds are distributed in an equal amount for each taxpayer, estimated at $898 for single filers and $1,796 for joint filers. Figure 5 shows the change in the refund amount projected for tax year 2023 under Proposition HH. The actual amounts refunded will depend on the final state revenue amount for the 2022-23 budget year.”
Proposition EE
Ballot question II, proposition EE, appears to be much less complex and controversial and reads:
“Without raising taxes, may the state retain and spend revenues from taxes on cigarettes, tobacco, and other nicotine products and maintain tax rates on cigarettes, tobacco, and other nicotine products and use these revenues to invest twenty-three million six hundred fifty thousand dollars to enhance the voluntary Colorado preschool program and make it widely available for free instead of reducing these tax rates and refunding revenues to cigarette wholesalers, tobacco product distributors, nicotine products distributors, and other taxpayers, for exceeding an estimate included in the ballot information booklet for proposition EE?”
Simply stated, the measure would allow more than $20 million already collected in nicotine and tobacco taxes for Colorado preschool programs, instead of being refunded to tobacco and nicotine wholesalers and retailers.
The League of Women Voters, which urges passage, said the measure would maintain 2020 voter-approved tax rates for nicotine and tobacco products, and give educational, health, and economic benefits for children through the state’s free UPK (preschool) program. Some low-income parents of pre-schoolers got a surprise when they thought their low incomes would qualify them for 30 hours/week UPK, and retained revenues fell short to cover that number of hours.
The first-year tax collections exceeded the legislature’s estimates and Article X of TABOR would require the overage be refunded to the wholesalers and retailers and the rate reduced. Proposition II would allow the state to retain the tax revenue collected and maintain the current tobacco product tax rate.
Election officials urge voters to review the Legislative Council’s blue book for reliable information and pros and cons for each measure. It can be found online at https://leg.colorado.gov/sites/default/files/images/blue_book_2023_-_english.pdf
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