AURORA | Proposition 120 asks Coloradans a twin-tipped proposal that would reduce property taxes for certain landlords and lift revenue caps to backfill state funds used to pay counties that offer tax cuts to older residents and disabled veterans.
But how the measure could play out in the years to come is in limbo due to a new law passed earlier this year that rejiggered the definitions of property across the state.
At its core, the proposal backed by conservative groups originally sought to lessen taxes on all property assessed in the state, though bipartisan legislation signed by Gov. Jared Polis earlier this year means the proposition would now only affect owners of multi-family homes and hoteliers.
Under current law, the measure would cut the property tax assessment rate for multi-family dwelling owners from 7.15% to 6.5% starting next year. Similarly, owners of hotels, motels and bed and breakfasts would see their rates dwindle from 29% to 26.4%.
Without the measure, state law stipulates that tax rates will dip for the next two years but rebound by 2024. The proposal before voters this Election Day would keep the rate flat for years to come, and backers have threatened to take legal action to toss the new law that watered down the measure. If successful in court, that would mean vast tax reductions for all property owners in Colorado, and losses of hundreds of millions of dollars for various districts and counties.
Statewide, the proposed cuts would reduce local government revenues by about $50 million annually in the coming years, with higher reductions down the line due to scheduled increases in the multi-family assessment rate, according to state budget analysts. That translates to losses for counties, school districts, fire protection networks and other special districts across the Centennial State.
In Arapahoe County, estimates show revenues would be down nearly $17 million next year, according to calculations from the Common Sense Institute. Similarly, losses would total about $13 million in Adams County and $7 million in Douglas County.
Without the state law passed earlier this year — known as SB21-293 — those losses were originally projected to be 10 times higher, surpassing $1 billion statewide.
The ballot language that will be sent to voters includes details on those 10-figure cuts, though they are outdated because the verbiage was certified before the new law was passed.
At the same time, the measure being sent to voters Nov. 2 would temporarily lift the seal on up to $25 million in annual TABOR caps for the next five years, freeing up more state funds to hand to counties that offer breaks to vulnerable populations through the so-called homestead exemption.
The relief valve allows people over 65 years old and military veterans disabled during their service to lop off 50% of up to $200,000 of assessed property value from their tax payment.
The average exemption last year was $584, according to state budget analysts, and the state handed local governments $160 million to account for the lost valuations that county coffers depend on.
Just like with Amendment 78 on this year’s ballot, conservative groups Colorado Rising State Action and Unite for Colorado are underwriting the effort to pass this year’s property tax proposal.
With another $50,000 from the Apartment Association of Metro Denver, the two groups have raised some $1.1 million in support of their venture.
There are no formal issue committees on file with the Secretary of State’s Office set up to raise funds to combat the proposal.
Overall, the right-leaning groups that brought the measure to fruition argue that the tax breaks will encourage more investment in an air-tight market, ideally leading to more multi-family construction.
“Colorado property tax bills are skyrocketing, hurting families and businesses,” Colorado State Rising Action wrote on its Facebook page last month in support of the measure. “(Proposition 120) will deliver critical relief that will fuel economic growth and make Colorado more affordable.”
Opponents fear it will hobble local governments’ ability to pay for services, particularly as the region grapples with expanding and intensifying wildfire seasons.
“In particular, critical fire protection needs are increasing rapidly, and not all areas of the state are able to generate the funding needed to support these local services,” nonpartisan budget analysts wrote.”
The measure marks the second year in a row that residents will be tasked with mulling the state’s property tax formulas after long standing scaffolding was nixed when Amendment B killed the Gallagher Amendment in 2020.
Because the measure would not alter the Colorado constitution if passed, it could be written into the books with a simple majority vote.