The Colorado Legislature wrapped up a special session Thursday with the passage of a bill to avoid property tax cut initiatives on the Nov. 5 ballot that troubled the state’s municipal bond market.
House Bill 1001 incorporates a take care of Initiative 50 and 108 backers, who agreed to remove the measures from the ballot and forgo pursuing similar ones within the foreseeable future so long as state officials adhere to provisions within the agreement.
Gov. Jared Polis called the outcomes of the special session he ordered “a crucial step for Colorado to finish the property tax wars.”
Colorado Gov. Jared Polis, who ordered a special legislative session that began Monday and ended Thursday, called the outcomes “a crucial step for Colorado to finish the property tax wars.”
Bloomberg News
“I stay up for seeing the dangerous ballot measures pulled down and signing this laws into law so small businesses and homeowners can keep more of their hard-earned money,” he said in a press release.
Initiative 50, a proposed constitutional amendment to place a 4% cap on statewide property tax revenue growth that might only be lifted with voter approval, especially fearful Colorado bond market professionals.
They raised alarms about an absence of critical details on how it might be implemented if passed by a required 55% of voters. Additionally they warned the measure would raise issuer borrowing costs and spark litigation, particularly against metropolitan districts, which finance public infrastructure for housing developments through property taxes levied on the brand new tracts.
“The bill as currently drafted does meet the twin goals of lowering property taxes for Coloradans while maintaining the protections needed for special district debt that drive housing affordability within the state,” Zach Bishop, head of Piper Sandler’s special district group public finance investment banking, said in an email.
Ann Terry, CEO of the Special District Association of Colorado, which represents metropolitan, fire, health, water, and other districts, said while it was too early to find out the bill’s impact, some districts could possibly be harmed financially.
The special session began Monday with a flurry of bills, including a proposed constitutional amendment for the Nov. 5 ballot that might ensure local control of property tax changes. While that measure passed the House, it did not get out of a Senate committee on Wednesday, leaving only HB 1001 and HB 1003, which involves personal property tax exemptions for agriculture, receiving final passage.
HB 1001 expands on $1.3 billion in property tax cuts for 2024 and 2025 expected under Senate Bill 233, which became law earlier this yr, by adjusting tax revenue growth limits for varsity districts and native governments and reducing property assessment rates.
Under HB 1001, property taxes could be cut by an extra $255 million in 2025, rising to $295 million in 2026 with the state required to make up for a portion of the lost local revenue, based on the Colorado Fiscal Institute.
Amid a surge in home values, state lawmakers have been attempting to rein in property taxes within the absence of a mechanism to maintain them in check. The state’s 1982 Gallagher Amendment, which strived to guard homeowners from rising tax bills, was repealed by voters in 2020.
Business group Colorado Concern, which together with Advance Colorado backed the ballot initiatives, had contended the initiatives were needed “because lawmakers have did not take the state’s property tax inflation seriously.”