IN-DEPTH: New Colorado Law Set to Take Away Taxpayer Rights, Voters to Decide

Colorado Governor Jared Polis speaks before signing a bill. Sen. Julie Gonzalez (R), Rep. Meg Froelich (C), and House majority leader Daneya Esgar (L), look on with guests and other lawmakers at the signing. (David Zalubowski/AP Photo)

Colorado residents used to enjoy low property taxes, thanks in part to the Gallagher Amendment—passed in 1982 after pressure from residents tired of skyrocketing residential property taxes. Gallagher required that the state’s total property tax burden be divvied up, with 45 percent collected from residential property and 55 percent from commercial property.

But in the November 2020 election, Colorado voters approved Amendment B, which repealed Gallagher. At the time, proponents of Amendment B successfully argued that repealing Gallagher would help fund schools and local governments. However, opponents argued that it would lead to a significant increase in property taxes.

Fast forward to today, and Colorado residents are again up in arms over skyrocketing residential property taxes, as county assessors across the state warn homeowners to expect a historic jump of anywhere between 30 percent to 70 percent in 2024.

“When [Democrats] asked for Gallagher to be stripped a couple of years ago in 2020, they said, ‘Without raising the tax rate, would you like all of these other things to be funded?’” Colorado state Rep. Stephanie Luck, a Republican, told The Epoch Times.

“And people of Colorado were like, ‘Yeah!’ Thinking they wouldn’t get charged more taxes. But it was a bait and switch. When you remove Gallagher, you remove that limitation. And then you’re seeing the consequence of it.”

A 1040 form used by U.S. taxpayers to file an annual income tax return in a file photo. (Joe Raedle/Getty Images)

To address the rising cost of property taxes, on May 25, Democratic Gov. Jared Polis signed Senate Bill 303, “Reduce Property Taxes and Voter-approved Revenue Change,” into law.

“This proposal will cut the average homeowners’ tax increase in half and deliver long-term relief to protect people, especially seniors on a fixed income, from being priced out of their homes. I appreciate the legislature’s partnership to provide real relief on property taxes and save Coloradans money,” Polis said in a May 1 press release.

Before it can go into effect, however, voters must approve the measure at the ballot box in November—thanks to a state constitutional amendment that requires voter approval for tax increases, known as Colorado’s Taxpayer Bill of Rights, or TABOR.

On the ballot, the proposition will read, “Shall the state reduce property taxes for homes and businesses, including expanding property tax relief for seniors, and backfill counties, water districts, fire districts, ambulance and hospital districts, and other local governments and fund school districts by using a portion of the state surplus up to the proposition HH cap as defined in this measure?”

But Luck is warning that SB 303, now called Proposition HH, is another bait and switch because “state surplus” is the excess money owed to taxpayers thanks to the TABOR safeguards.

“It’s a ballot initiative that would ask the people of Colorado to basically give up their TABOR refunds indefinitely in exchange for a very small decrease over a very small amount of time in their property taxes,” Luck said.

Currently, TABOR caps the amount of taxes the government can take “but if they take more than that, they either have to ask our permission to keep it or give it back. And it restricts the growth of government in Colorado,” she said.

“SB303 would be the final death knell to TABOR.”

Gutting TABOR

Democrats have a historic majority in the Colorado House, a supermajority in the Senate, and control the governorship. As such, all bills that passed in the latest legislative session, passed with Democrat support—and more often than not, over Republicans’ vehement objections.

Describing SB303 as a “bribe” to get rid of TABOR for a marginal property tax decrease, Colorado House Republicans walked out of the chamber in protest and refused to vote on SB303. The measure passed with 44 Democrats voting for it, and two Democrats voting against it. The bill then passed the senate with one Republican voting in favor and 12 Democrats voting against it.

Democrat state Senator and prime sponsor of SB303, Steve Fenberg, stated, “Coloradans are about to get hit with painful property tax spikes, which is why we’re taking action now to meet the moment and provide real relief for Colorado families.

“This transformative proposal delivers long-term reductions in property tax rates while providing immediate savings on this year’s property taxes, so we can better support our schools and our communities and build a Colorado everyone can afford to love.”

Democratic state Rep. Chris deGruy Kennedy, also a prime sponsor of SB303, stated, “We recognize that property tax reductions cannot be considered without also accounting for the impacts these cuts will have on local governments.

“This bill makes responsible reductions, unlike those proposed in recent ballot measures, and includes provisions to ensure we’re protecting school districts, fire districts, and county child welfare offices while we pass this important measure to help Colorado families keep up with the cost of living in our beautiful state.”

A "For Sale" sign is posted outside a residential home in the Queen Anne neighborhood of Seattle, Wash., on May 14, 2021. (Karen Ducey/Reuters)

In addition to requiring voter approval for tax increases, TABOR caps the amount of revenue Colorado can retain and spend and requires that anything collected in taxes over that limit be refunded to Colorado taxpayers. If the government wants to increase that cap, it has to get voter approval, and as a result, TABOR has kept taxes low in Colorado.

If voters pass Prop HH in November, it will increase the amount of money the state of Colorado can keep by $166.6 million in the budget year 2023-2024, $358.6 million in 2024-2025, and by more significant amounts from 2025 on, according to Legislative Council Staff, a nonpartisan service for Colorado’s legislature.

In return, Colorado residents will receive a temporary property tax reduction of 0.035 percent in the first year, 0.1 percent in the second year, and 0.45 percent from 2025 through 2032. The tax reduction expires in 2033.

Legal Action

Polis said in his press release that Prop HH and other reductions already passed would cut the upcoming tax increase by half, reducing it by an estimated $1,264 on average over two years.

Polis didn’t specify how much Prop HH alone would reduce the increase, and opponents of Prop HH, like Advance Colorado, are quick to point out that it’s marginal and will ultimately cost Colorado taxpayers significantly more than what they'll save.

“Seventy percent of Colorado believes TABOR should stay,” Kristi Burton Brown, senior policy advisor for Advance Colorado, told The Epoch Times. “They like our Taxpayer Bill of Rights here in Colorado and the fact that there’s a limit on how much money the state can spend.

“The state’s trying to add one percent—and a compounding one percent—that they can keep on top of their budgetary limits every year. And voters should know they would take $10 billion from voters and taxpayers in 10 years. …. If you read Proposition HH, voters may not know that the government is asking them to give them their TABOR refunds.”

Dr. Joshua Dunn, a professor of political science at the University of Colorado in Colorado Springs, agrees that TABOR is “really popular” with the public.

“Whenever Democrats have tried to get rid of it, they’ve failed,” Dunn told The Epoch Times.

“And in some ways, that prevents the Democrats in the state legislature from doing more things that probably many suburban voters wouldn’t like. And yeah, I can guarantee—look at the legislature right now—if they could just raise taxes, they would. And it'd be significant. But they can’t [thanks to TABOR].”

Advance Colorado has filed a lawsuit against Prop HH, alleging the language to go on the ballot violates the “single-subject” and “clear-title” requirements. The group is joined by 17 Colorado counties, multiple county commissioners, and local elected officials.

U.S. Secretary of the Treasury Janet Yellen (L) and Colorado Gov. Jared Polis (R) meet with women entrepreneurs while visiting Mi Casa Resource Center in Denver, Colo., on March 11, 2022. (Jason Connolly/POOL/AFP via Getty Images)

The Colorado state Constitution requires ballot propositions to contain a single subject and for the title to clearly reflect the measure, Brown said.

The lawsuit alleges Prop HH contains five different subjects.

“Probably the most notable among those five subjects is that it does seem to completely change our Taxpayer’s Bill of Rights in Colorado and permanently take away the refunds our taxpayers would get,” Brown said.

“And that leads into how the bill title is misleading because it doesn’t acknowledge that at all. And there’s also no information in the ballot title for how small the property tax decrease is—it’s six hundredths of a percent—and there’s no acknowledgment of that.”

On June 9, a judge dismissed Advance Colorado’s lawsuit, stating that the legislature can exempt itself from constitutionally-mandated ballot requirements. Advance Colorado plans to appeal.

“I think one of the most disturbing things about what the legislature did with SB303 and property taxes is they’re pushing it off on voters and telling voters, ‘The only way you’re gonna get a property tax decrease is if you give up your TABOR refunds.’ When in reality, the legislature could have capped property taxes all on their own. The legislature 100 percent could have capped property tax while they were in session,” Brown said.

“They’re literally preying upon people’s desire to lower property taxes, and making it very unclear on the ballot just what a small decrease this is. And they’re not being honest with people that they’re taking their TABOR refunds in order to do it. I think that’s what they have wanted to do for a very long time.”

Polis did not respond to The Epoch Times’ request for comment about the impact SB303 would have on TABOR.

Neither Fenberg nor deGruy Kennedy responded to The Epoch Times’ request for comment on why they didn’t cap property taxes during the legislative session or on the impact SB303 would have on TABOR.