EDITOR’S NOTE: An earlier version of this editorial, published late Tuesday, insisted that Polis call back legislators for a property tax fix. An update reflects that.
The unsurprising and colossal loss of statewide Proposition HH has turned Colorado’s bad-dream tax problem into a nightmare.
It was all but inevitable.
Voters statewide pushed back hard on the convoluted plan created by legislative Democrats and Gov. Jared Polis in their effort to reduce skyrocketing property taxes and protect critical state interests, like public schools.
At press time, the measure was being walloped by 20 percentage points.
The real problem for all of this, however, began in 1992 when Colorado voters were hoodwinked into approving the so-called Taxpayer Bill of Rights. It saddled the state Constitution with a tortuous and unworkable scheme promising to let only taxpayers decide tax hikes instead of legislators. Despite its puerile appeal, it’s an idea so bad that no other state has ever adopted it.
Harassing state residents and lawmakers for more than 30 years, TABOR became the ultimate complication in trying to push back on mushrooming property tax bills earlier this year.
Over the past few years, property values across the state have soared. While sellers, and even those just marveling at their home investment, have often been pleased, the reality is coming in the form of rocketing potential tax bills next year. It’s the “ultimate fun crusher,” the Sentinel Editorial Board said in May.
In short, property taxes are based on the “assessed” value of your home. That complicated effort estimates the market value of your property. Taxes are raised by multiplying that value times the tax rate, a mill levy. You don’t pay taxes on the actual value of your home, however, but on the “assessed” value. That’s the rate, set by law, that creates the much smaller base for your mill levy.
Regardless of how large or small that assessment rate is, when property values go up, so does the smaller, assessed, tax base, and so do property taxes.
Property values have risen so high, so fast, that average home tax bills are expected to increase upwards of $100 a month, for those who pay them with their mortgages on a home valued at about $700,000. The net tax increase is about double that in some mountain communities, according to state officials earlier this year.
Without the complication of TABOR, state lawmakers could either simply reduce tax levies across the board, or reduce the assessed property value rate, equitably reducing property tax bills while keeping state revenues the same.
Because of TABOR, the state is forced to not just reduce the assessment rate, but then move state money through a complicated procedure to protect things like already-too-small public school budgets and other local services, like sewer districts. All taxes are not equal in Colorado. Property taxes usually fund schools.
In May, when state lawmakers were looking at the problem and possible solutions, The Sentinel recommended asking voters for a clean break from TABOR, and addressing the property value dilemma directly and simply.
That’s a statewide political labyrinth Democrats can’t possibly navigate.
Instead, lawmakers asked voters to essentially lop $40,000 of value off of every residential property valuation in the state, and slightly reduce the assessment rate. At the same time, the proposal cartwheeled around TABOR to ensure some government budgets aren’t destroyed by the complicated changes.
The net effect was uncertain and could still have created substantial and widespread tax hikes, and at the same time deflated so-called TABOR tax rebates.
Our view? It was not enough of a discount to prevent serious property tax hikes for too many struggling residents.
Understanding how this all would work was hopelessly overcomplicated for just about everyone in the state to understand. That created an opening for critics to plant seeds of doubt and suspicion, which did the trick to kill voter support.
Now, the problem has become even more critical. Without a mechanism to dial back tax rates, mushrooming tax bills could be catastrophic for millions of Colorado property owners and renters.
Polis and state lawmakers were right to immediately call a special session to effectively reduce the tax levy on all property, working with counties and special districts to do the same. The session begins Nov. 17.
Polis and ruling Democrats must ensure that property taxes, already alarmingly high, do not create any kind of net increase for the vast majority of state residents.
Democrats say they’re in front of the parade in ensuring that the mushrooming cost of housing be contained and drawn down. Prove it.
Colorado has become a hodgepodge of governments that have “de-Bruced” themselves, allowing them to keep “excess” revenue. Many others, however, have not. Only the state can create a solution to ensure that the tax base remains stable, not grow, while at the same time ensuring that already struggling Colorado residents aren’t virtually evicted from their homes because of property-tax bureaucratic nightmare.
“Democrats say they’re in front of the parade in ensuring that the mushrooming cost of housing be contained and drawn down. Prove it.”
LOL, if they actually knew how to do that, they would have already put it into action. The astronomical cost of housing is a simple matter of supply and demand. While everyone was bragging about Colorado and the Denver metro’s population and business growth from 2010 to the pandemic, they forgot the little fact that those people all need a place to live (just like they’re doing by mandating that 82% or more of new car purchases by 2032 be electric vehicles, without having nearly the infrastructure in place to handle the load demand, much less address the little issue of working-class people who live in apartment complexes but still need cars to get around).
Even with all the new multi-unit housing being built now, the metro area is still about 100K units behind what it actually needs, which means it might never actually catch up short of a population exodus. So why didn’t the big-brained managerialist utopians in the state house figure out a way to incentivize that development while all this growth was going on? Were they stupid enough to tell developers, “oh, we’re not worried, we’re sure you’ll think of something,” and honestly believe everything was going to just spring up by magic?
And this increase in property taxes that everyone is wailing about was an ENTIRELY PREDICTABLE consequence of repealing the Gallagher Amendment. Anyone with more than two brain cells to rub together could figure out what would happen when that suppression mechanism was taken away. “Gawrsh, why are my property tax rates skyrocketing now?” What happened to “taxes are the price we pay for civilization”? Or does the burden of paying for “civilization” only need to be borne by a select few?
A fantastic consequence of having an overeducated voting populace with high intelligence and negative wisdom, foresight, and future-time orientation.
Prove it??? The only thing developed & offered is from Democrats. GOP incapable of any ideas on this . It will be the DEMs who understand all the pieces & ultimately try again, & who actually care about constituent finances & taxes but also care about programs funded by the taxes.
“Don’t worry, we’ll get it right this time.”
I don’t understand why this is so complicated, or what it is I just don’t understand. I’ve always believed that assessors attempt to match market value with assessed values. Assessed value will lag market value in a rising market, and I have experienced plenty of instances where assessed value literally exceeded market value in a falling market.
Really we should be arguing about nothing more complicated than the mill levy rates. How hard is it to calculate the desired real estate tax revenue at county levels, and set the mill levy to accomplish that goal? Especially when the answer is lower mill levy rates, how is TABOR standing in the way of getting this done? Let’s vote on THAT if necessary, and by special election if THAT is necessary.
” How hard is it to calculate the desired real estate tax revenue at county levels, and set the mill levy to accomplish that goal?” You nailed it! If the assessed value of a property goes up (mine is 55% higher) then the property tax collected (at present mil levies) goes up. IE if your (example: school) budget is $100,000 (even number example), having done absolutely nothing (voted greater mil levies), your revenue and next budget can be $155,000. There was never any reason or need to touch TABOR; nothing getting their revenue from property taxes was going to get shorted by cutting 40k of assessed value.
It’s stupid system to begin with. Re-assessing property values every two years is way too short a window to react to a cycle market. Obviously property values, currently experiencing this “bubble” and soaring, are going down. Assessments should be every ten years. Even better, property tax assessments should be locked at the selling/purchase price of homes and property.
Which is exactly how it should be. You buy a property/home and you know the exact amount of property taxes you’ll pay until you sell said property/home (and the next buyer knows as well at that point). Then as a property owner and voter being asked to increase mil levies you can make an educated decision on your vote of whether the “need” justifies paying more property taxes. Otherwise, as it is, our votes as property/homeowners are meaninglessly at the whim of the market and county assessors.
Forget the will of the people, the sentinel knows better. Cry some more sentinel, HH lost and by a ton. Your propaganda isn’t tricking enough people.
I can hardly wait until the actual increase in home property taxes come to the public’s view in the next few months. It, I predict, will be heard even by Democrats on the highest floor of the State Capitol Building. Will not be pleasant especially for the Democrats in 2024. At this time, I don’t believe the voting, home owning public has a clue how big a deal this will be. Time will tell, shortly.
If you’re referring to the amounts collected by mortgage lenders as escrow funds to cover property taxes, yes people without ARMs and ignorant that their monthly payments include taxes and (increased certainly) insurance premiums may be shocked. Thing is, mortgage lenders are already covering these (or they’re fiscally ignorant and negligent). Better to assume most people already connected the dots between their assessments and impending tax liability. Hope so, because the state legislature needs to feel that heat before Dec 31st. This homeowner, who has no mortgage, has self-escrowed since January 2023, where whatever HH would have done or the legislature may do, only stands to refund myself or rollover to 2024 for 2025. Assuming good fiscal policy for mortgage lenders and intelligent consumers (well, no… given people splurging on and celebrating income tax refunds that are in fact their overpayment (interest free loan to the federal government) of taxes), the people actually hit hard will be renters at their next lease signing.
Do you really think that the hypocrites that don’t want to pay higher taxes on their property that has been over valued wouldn’t want to sell for the new property value.
Ridiculous. Sure they are overjoyed that their property value has increased.
They would sell and not look back.
Hypocrites. They don’t want to pay the true value of the property but will sell for the increased value. I don’t get it !