Property values throughout Colorado rose sharply in the course of the pandemic, inflicting a spike in how a lot property taxes are owed subsequent yr.
Proposition HH would blunt these rising property taxes in Colorado for no less than the following 10 years. It could additionally develop the state funds, place new limits on native authorities spending and rework how taxpayer refunds are distributed.
All advised, Proposition HH would restrict the rise in Coloradans’ property taxes annually by tons of of thousands and thousands of {dollars}, if no more than $1 billion. However over time, Coloradans may get billions much less in tax refunds because the state authorities redirects these {dollars} to colleges and different native businesses.
Right here’s what you have to learn about Prop. HH to forged your vote on the measure:
What the property tax aid can be
Proposition HH wouldn’t decrease Coloradans’ property taxes beneath what they at the moment pay. It could merely restrict the rise in property taxes beginning within the 2023 tax yr for what’s owed in 2024 and proceed that aid by way of no less than the 2032 tax yr.
To grasp how Proposition HH would work, it’s vital to grasp how property taxes are tallied in Colorado.
Colorado property taxes, that are collected on the native degree and fund providers like colleges, fireplace districts and parks, are calculated by multiplying the statewide evaluation fee by the worth of a property as decided by a county assessor. That quantity is then multiplied by the native mill levy fee.
The best way to calculate your property taxes
A mill is a $1 cost on each $1,000 of assessed worth. So to determine what your tax invoice is it’s best to multiply your mill levy fee by 0.001 after which multiply that quantity by the product of multiplying your property’s worth by the statewide evaluation fee. That’s how a lot you owe.
So somebody who owns a house valued at $600,000 and assessed at a 6.765% statewide residential evaluation fee in a spot the place the mill levy fee is 75 would owe $3,044.25 in taxes annually. The method to get to that quantity seems like this: $600,000 x 0.06765 x (75 x 0.001) = $3,044.25.
Property taxes aren’t rising in Colorado as a result of the statewide evaluation fee is rising or as a result of native governments are growing their mills. They’re going up as a result of house values have risen by a median of 40% statewide since 2021, the final time they had been assessed.
Right here’s how the aid beneath Proposition HH would work for householders:
- The residential evaluation fee can be decreased to six.7% from 6.765% in 2023, for taxes owed in 2024, a roughly 1% minimize. The speed would stay at 6.7%, down from 6.976% in 2024 for taxes owed in 2025, and persist by way of the 2032 tax yr.
- Observe: If Proposition HH fails, the residential evaluation fee would go as much as 7.15% beginning in tax yr 2025 as soon as a separate property tax aid measure handed by the legislature in 2022 expires.
- Along with the evaluation fee cuts, householders would get to exempt the primary $50,000 of their house’s worth from taxation within the 2023 tax yr. That exemption would drop to $40,000 for the 2024 tax yr. The break would persist till no less than the 2032 tax yr, apart from folks’s second or subsequent single-family properties, like rental or trip properties, which might cease being eligible for that profit for taxes owed in 2026 and past.
- Owners who wish to declare the $40,000 exemption after 2026 must attest to their county assessors that it’s their main residence. Mendacity about whether or not your own home is your main residence can be a Class 2 misdemeanor punishable by a jail sentence of as much as 120 days and/or a positive of as much as $750.
It’s tough to generalize how a lot any particular person home-owner would save beneath Proposition HH. That’s as a result of mill levy charges range wildly from metropolis to metropolis, and even neighborhood to neighborhood, relying on how every of the state’s 3,000-plus native districts are drawn.
The common statewide mill levy fee is about 70 mills, so if you happen to don’t know your mill levy fee — you possibly can look it up in your county assessor’s web site — you should utilize that quantity to get an thought of what your financial savings can be.
There’s one other calculator linked beneath the place you possibly can plug in your private property info to find out your potential financial savings.
Right here’s how Proposition HH would work for nonresidential property:
- For industrial properties, the evaluation fee can be decreased to 27.85% by way of 2026, down from a fee of 27.9% after a $30,000 discount in worth is exempted from taxation. (If Proposition HH fails, the speed might be restored to 29% in 2024 and the $30,000 exemption will go away.) Underneath Proposition HH, the speed will stay at 27.85% by way of 2026 and drop to 27.65% in 2027 and to 26.9% in 2029. If there’s a substantial sufficient improve in property values, that fee can be decreased to 25.9% beginning in 2031.
- For agricultural properties and properties used for renewable power, the evaluation fee can be decreased to 26.4% from 29% by way of the 2032 tax yr. For properties that fall beneath each classifications, similar to these used for agrivoltaics, the speed can be minimize to 21.9%. (Agrivoltaics is the usage of land for each agriculture and photo voltaic power manufacturing.)
Nonpartisan legislative employees estimates that the decrease evaluation charges and worth exemptions would cut back property taxes statewide by a cumulative $400 million 2024, $960 million in 2025 and greater than $1 billion in 2026.
Senior homestead exemption would turn out to be transportable
Underneath Proposition HH, the senior homestead exemption might be transferred beginning in 2025 if somebody over 65 who receives or acquired the profit strikes or has moved.
The exemption lets folks 65 and older who’ve owned their main residence for no less than 10 years exempt 50% of their house’s worth as much as $100,000 from taxation. However at the moment, the exemption is forfeited if somebody who claims the break strikes out of a property they’ve lived in for a decade or extra, similar to to downsize.
The $100,000 exemption can be along with the opposite exemptions provided beneath Proposition HH.
The reality-in-taxation provision in Proposition HH
The proposal would additionally forestall many native taxing authorities from accumulating extra property tax income annually above the speed of inflation with out holding a public listening to and passing an ordinance or decision.
Native taxing districts that don’t override the restrict should quickly decrease their mill levy fee or refund taxpayers any income collected over the restrict.
It’s modeled after an analogous system in Utah.
College districts, which account for almost all of Coloradans’ property tax invoice, and home-rule jurisdictions can be exempt from the restrict.
Making up for the cuts on the expense of TABOR refunds
To account for the cuts, Proposition HH would improve the state’s Taxpayer’s Invoice of Rights cap on authorities development and spending, which is calculated by annual development in inhabitants and inflation, by an additional 1 share level annually.
That will not sound like rather a lot, however the additional share level is predicted to permit the state authorities to spend an additional $2.2 billion within the 2031-32 fiscal yr. The TABOR cap development proposed beneath Proposition HH is predicted to let the state preserve a further $170 million within the present fiscal yr, which started July 1, and $360 million within the subsequent fiscal yr.
Since any cash collected over the cap should be refunded to taxpayers, the change would cut back the sum of money out there for refunds in years wherein the cap is exceeded. It additionally could forestall the cap from being exceeded altogether, which means no refunds in any respect.
The additional income made out there by growing the cap can be distributed to native governments, primarily colleges, to make up for all or among the cash they might have acquired had Proposition HH not blunted the rise in property taxes throughout the state.
Right here’s how the {dollars} can be distributed:
- Colleges can be reimbursed for the entire income misplaced as a result of reductions in Proposition HH.
- Ambulance, fireplace and well being districts can be utterly reimbursed for his or her income reductions till their space assessed property values rise greater than 20% above their 2022 ranges. After that threshold is reached, the state will solely reimburse half of their misplaced funding.
- All different native districts funded by property taxes can be utterly reimbursed till their space assessed property values rise greater than 20% above their 2022 ranges, the repayments from the state cease. (In 2023, nonetheless, all districts will obtain reimbursement for separate property tax reductions adopted by the legislature in 2022 even when their property values develop by greater than 20%.)
- County governments with greater than 300,000 folks will solely get partial backfill except their areas assessed property values develop by lower than 10%.
What’s TABOR?
The Taxpayer’s Invoice of Rights, or TABOR, is a 1992 constitutional modification that requires voter approval for all tax will increase in Colorado. It additionally caps authorities development and spending, mandating that tax income collected in extra of the cap be refunded to taxpayers. The cap is calculated utilizing inflation and inhabitants charges.
Learn extra right here.
If there’s cash left over after the funds to colleges and native districts are made, it will be despatched to the state schooling fund to function a wet day pool of cash in case of a future financial downturn. If the TABOR cap isn’t exceeded in a given yr sufficient to backfill colleges, nonetheless, the opposite districts affected by the Proposition HH aid can be minimize out of the reimbursements.
The TABOR cap is predicted to be exceeded by greater than sufficient to cowl the reimbursements in no less than the following three fiscal years.
Even with the reimbursements, Proposition HH is estimated by nonpartisan legislative employees to value native districts no less than $240 million in 2024, $510 million in 2025, and $650 million in 2026.
Lastly, Proposition HH would finally put aside as much as $20 million annually to go towards a state renter aid program. These {dollars} can be directed towards serving to renters cope with any property tax will increase their landlords go on to them.
Proposition HH would have an effect on your TABOR refunds in one other manner
If Proposition HH passes, it will set off a invoice state lawmakers handed within the remaining hours of the 2023 legislative session altering how TABOR refunds are distributed subsequent yr for the $3 billion-plus in income above the TABOR cap collected in the course of the 2022-23 fiscal yr, which ended June 30.
Underneath the default system, refunds are distributed primarily based on six revenue tiers, with larger earners receiving greater refunds (about $1,850 for single filers within the prime tiers) and decrease earners getting much less (about $580 for single filers within the lowest tiers). If Proposition HH passes, nonetheless, each Colorado taxpayer would obtain checks of $832 for one yr, no matter their revenue.
The quantities are doubled for joint tax filers. The precise sums may nonetheless shift barely relying on the state’s accounting strategies for tax income collected within the 2022-23 fiscal yr, which ended June 30 and on which the TABOR refunds are primarily based. The checks might be despatched out subsequent yr after folks file their 2023 tax returns.
For those who make $99,000 or much less — which is 62% of Colorado taxpayers — your TABOR refund might be bigger if Proposition HH passes. For those who make greater than $99,000, your refund might be a lot smaller. The checks are set to be mailed out in April after folks file their 2023 tax returns.
This chart breaks down how large your refund can be whether or not Proposition HH passes:
*Observe: The numbers listed below are completely different than those within the state poll information — often known as the blue guide — as a result of the quantities modified after the information was printed. These replicate probably the most up-to-date refund estimates from nonpartisan Legislative Council Workers.
Needless to say the change within the refund technique can be for one yr solely.
Will Proposition HH really save me any cash?
The precise affect in your pockets is dependent upon how a lot cash you make, if you happen to personal a house, how a lot that house is price and the place you reside. It additionally is dependent upon whether or not your native taxation authorities vote to exceed the brand new inflationary cap on property tax income. Different native districts could quickly minimize mill levy charges to offer extra tax aid.
For those who’re a wealthier Coloradan who owns a house, the initiative may very well value you much more cash in its first yr. That’s as a result of whereas your property taxes can be lowered, the TABOR refund quantity you obtain in 2024 would shrink.
For those who’re within the prime tier and a joint filer— making greater than $278,000, which is 7% of Colorado taxpayers — that discount in TABOR refunds might be about $2,000. The property tax aid you obtain over the ten years of the measure, pared with the long-term discount in TABOR refunds as a result of the TABOR cap is being raised, could not make up for that preliminary loss.
For those who’re a Coloradan who makes $99,000 or much less and doesn’t personal a house, you’ll get an even bigger TABOR refund beneath Proposition HH within the first yr the measure is in impact. That being stated, your refunds will shrink over the following 9 years.
The nonpartisan Legislative Council Workers created this calculator that can assist you decide how Proposition HH would have an effect on your pockets: https://hhcalc.apps.coleg.gov/calculators
Observe that your precise property taxes could also be decrease — and thus your financial savings larger — than what the calculator exhibits. That’s as a result of the calculator doesn’t account for the truth-in-taxation provision in Proposition HH. It assumes that native governments received’t override the inflation restrict.
What occurs when the ten years are over?
Proposition HH expires after 10 years, however the legislature can lengthen the coverage indefinitely with a easy majority vote.
Who’s supporting and opposing the poll measure?
Proposition HH was positioned on the poll by Senate Invoice 303, laws that was drafted by Democrats within the legislature with enter from Gov. Jared Polis’ workplace. Republicans on the statehouse fought the invoice, arguing that any property tax aid shouldn’t be tied to any TABOR adjustments.
Property Tax Reduction Now’s the group supporting Proposition HH. It had raised greater than $1.1 million by way of Sept. 27, a lot of it from an schooling group and a nationwide lecturers union.
Training Reform Now Advocacy Inc. has given $300,000 to Property Tax Reduction Now, whereas the Nationwide Training Affiliation, a nationwide lecturers union, has given the committee $200,000. The Colorado Training Affiliation, the state’s largest lecturers union, has given $50,000.
Boldly Ahead Colorado, a nonprofit related to Polis, has given almost $70,000 to Property Tax Reduction Now, whereas Gary Advocacy LLC, an area philanthropy group, has given $250,000. The committee has additionally acquired $100,000 from Colorado philanthropist and Democratic donor Pat Stryker and $60,000 from the Sixteen Thirty Fund, a nationwide, liberal political nonprofit.
The Colorado Solar refers back to the Sixteen Thirty Fund and Training Reform Now Advocacy as dark-money teams as a result of as political nonprofits they don’t should reveal their donors.
Bought a query about Election 2023 in Colorado?
Submit your inquiry about this yr’s November poll to The Solar’s politics staff. We’ll be answering them by way of election season at our election information right here.
No on HH is the group with the deepest pockets combating the poll measure. It had raised greater than $1.5 million by way of Sept. 27. Virtually all of its cash has come from two conservative political nonprofits — often known as dark-money teams.
Advance Colorado Motion has donated $1 million to No on HH, whereas Defend Colorado has given $500,000 to the committee.
The Colorado department of People for Prosperity, a nationwide conservative dark-money group, created a difficulty committee to struggle Proposition HH which has spent greater than $200,000 combating the measure to this point.
The measure is opposed by the Colorado Municipal League, Colorado Counties, Inc., and the Particular District Affiliation of Colorado, which signify native governments throughout the state, in addition to the Colorado Affiliation of Realtors and the state department of the Nationwide Federation of Impartial Companies.
Proposition HH is supported by AARP Colorado, the Colorado Affiliation of College Boards, Colorado Skilled Firefighters and Colorado Concern, a nonprofit made up of CEOs within the state.