The 2024 Legislative Session’s Last-minute Property Tax Fix

Kristi Pollard

The issue of property tax has been a persistent one since Colorado voters repealed the Gallagher Amendment in 2020. That repeal, with no permanent mechanism to replace it, resulted in residential property assessments increasing dramatically – between 2020 and 2022 assessment rates rose by anywhere from 20% in some rural counties, to an average of 50% in Douglas County, to as much as 100% in mountain resort towns.

Following the failure of Proposition HH at the ballot last year, a special legislative session was called to attempt to fix the issue. A number of temporary measures were put in place, but everyone acknowledged that what happened last fall was not a permanent solution.

One thing that was accomplished during the 2023 legislative session was the creation of a Property Tax Commission to study the issue and make recommendations for legislation to create that long-sought permanent fix. The commission consisted of a bi-partisan team of legislators, and representatives from the Colorado Chamber, Bell Policy Institute, local governments, and other stakeholders.

In the waning days of the 2024 session, which ended May 8, that commission’s efforts bore fruit in the introduction of Senate Bill 24-233, sponsored by Senator’s Chris Hansen (D-Denver), and Barbara Kirkmeyer (R-Greeley), along with Representatives DeGruy Kennedy (D-Lakewood) and Lisa Frizell (R-Castle Rock). The bill is touted by its proponents as the largest property tax reduction in two decades, and who say it is expected to cut taxes by $1.3 billion in its first year, while minimizing the impact on local governments which rely on that revenue.

SB 233, broadly speaking, does four things:

1) It lowers assessment rates for both commercial and residential properties – for commercial properties, it reduces rates from 29% to 25 % over two years, and for residential it sets rates the first year at 6.7%, minus $55,000 or the amount that reduces assessed value to $1000, down from 6.8%.

2) Starting in the 2025 property tax year it bifurcates residential assessments for school districts and non-school local governmental entities, setting rates for those separately – for school districts, the rate is set at 7.15%; for other local governments is set at 6.95% minus 10% of the property’s actual value.  

3) It caps property tax revenue growth for local governments at 5.5% annually, indexed to the local government’s 2023 tax year collection (with several exemptions, including revenue from oil and gas and mining operations, new construction, previously tax-exempt property that becomes taxable, revenue diverted for bonds and contractual obligations, and revenue from mill-levy increases approved by voters after 2025.

4) Finally, it provides for reimbursement to local governments for lost revenue by creating the Local Government Backfill Cash Fund, which will be financed by a $10.3 million transfer from the Sustainable Rebuilding Program Fund. Reimbursements will be based on the actual decline in assessed values, and the local government’s 2022 mill levy, minus mills set aside for bonds and contractual obligations.

While proponents say this is a long term solution and provides real tax savings, some who oppose the measure say it does not go far enough, and in effect only reduces the amount of the projected property tax increase. Finalized and expected ballot measures this fall ensure the property tax question will continue to be front and center in the coming months.

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