Colorado lawmakers gaveled in Friday morning for a pre-Thanksgiving feast of tax policy as they try to tamp down the worst of spiking property taxes.
Much more will be on the agenda during the special session, which begins at 9 a.m. and is expected to last at least three days. The Democratic-majority General Assembly has outlined proposals to reduce elements of the property tax formula to provide relief, to flatten tax refunds due under the Taxpayer’s Bill of Rights so that all taxpayers receive an equal amount, to increase tax credits for low-income households and to provide more money for the state’s emergency rental assistance program.
This story will be updated throughout the day.
Updated at 9:56 p.m.: The Senate’s early adjournment tonight will result in a delay because of even the expedited legislative rules. Lawmakers now face a four-day session that will last at least through Monday.
Updated at 9:23: The Senate adjourned for the night a few minutes ago, with leaders deciding against more action on the floor.
As the Senate descended into chaos earlier, the House was in familiar territory: its majority Democrats watching, snacking and chatting as Republicans railed at length against Democrats’ priority bills.
Steadily, though, the Democrats advanced their planned changes to the earned-income tax credit, plus a small bill to pay for more staffing in the state Department of the Treasury. Still left to pass before midnight were bills to create a property tax task force and to direct $30 million in rental aid to tenants through the first half of next year.
Updated at 8:52 p.m.: The appeal vote requested by Republicans of the prior voice vote — which Democrats claimed had passed — failed on the floor. Senate Democrats signaled that they planned to forge ahead on the intended timeline, but it’s possible that timing will continue to be a focus of discussion between the parties.
Updated at 7:51 p.m.: In a second special-orders vote that would allow for the fast-tracking of bills, Senate President Steve Fenberg pressed ahead with a voice vote — and then declared that the motion, which requires a two-thirds majority, had passed.
This has sparked protests from Republicans. It’s unclear what will happen tonight, with Democrats trying to move forward under this disputed second vote — while Republicans request an appeal on that vote, something that would go to the floor. This time, senators would vote under a normal majority-rules threhold to decide whether to uphold the vote.
“If you break the norms, the norms are broken,” Fenberg said to Minority Leader Paul Lundeen, referring to the usual procedures for special sessions.
Updated at 7:39 p.m.: In a 23-12 party-line vote, the Senate failed to clear the two-thirds majority needed to allow for the fast-tracking of legislation in that chamber during the special session. Without a change from normal requirements, via a motion for a special order, it’s likely the Senate’s work will extend into Monday or even Tuesday, well beyond the intent to wrap up by Sunday night.
The threshold for the motion to suspend rules was 24 votes. A re-vote is possible tonight, but with little prospect for a different outcome.
Before the vote, Senate President Steve Fenberg said on the floor: “This isn’t about time. It’s about political theater. And it’s exhausting. If you think people want property tax cuts, then lets give them property tax cuts and go home. It’s irresposible (to delay), and I think it’s dishonest to the people of Colorado.”
Updated at 6:38 p.m.: A procedural fight in the Senate threatens to push the special session onto the verge of chaos tonight, as Senate Republicans allege their Democratic colleagues in the majority didn’t follow certain rules to fast-track legislative work. At risk is whether the Senate can finish its work by Sunday.
Since the minority Republicans are pressing the issue, the Senate needs a two-thirds majority to put a special order in place. Otherwise, their work will be pushed into early next week. Democrats are one seat shy of that two-thirds threshold — meaning they need a Republican to support their motion. Senate President Steve Fenberg said he thought the vote would pass and argued that any further delay would hurt county assessors, particularly in rural counties.
But Senate Republicans have said they want concessions on the Democrats’ primary tax bill, which the Democrats have been unwilling to give. Fenberg reiterated that concessions wouldn’t happen.
Updated at 5:20 p.m.: After legislators cut the slate of bills under consideration by half during the day, lawmakers milled about early this evening and waited for final committee votes on the seven Democrat-backed bills.
All seven are virtually assured to clear that last hurdle tonight.
From there, three will advance to the full Senate, and the other four to the House floor. The rushed schedule then calls for the chambers to take a first full vote on their bills tonight, with the final-reading votes set for Saturday. After that, each bill will cross over to the other chamber for consideration, a step that marks the halfway point in the process and is likely to occur Saturday afternoon.
Legislative staffers predicted that today’s proceedings, however, would stretch well into the night.
Updated at 2:59 p.m.: Republicans’ final big property tax bill was just killed in the Senate Local Government and Housing Committee on a party-line vote. It would have changed the property tax formula and compensated local governments for some forgone revenue with reserves from the state budget.
Democrats rejected the idea of tapping into reserves but otherwise had kind words for Sen. Barbara Kirkmeyer, the Republican sponsor. The three Republicans on the committee all voted “for the people, aye.”
Another Republican bill, which would put a hard cap on property tax increases, is now being heard. But it was not part of the package touted by GOP leadership.
Updated at 1:29 p.m.: Democrats’ main bill to provide property tax relief, by raising the deduction on valuations and adjusting the assessment rate downward, passed the Senate Finance Committee on a party-line vote. (See the original story below for details on what’s proposed.)
“We’re trying to make lemonade here, and we’re trying to provide as much relief as we can,” said committee chair Sen. Kyle Mullica, a Thornton Democrat.
Updated at 1:25 p.m.: All the House bills with Republican sponsorship died in committee by about 1 p.m. That includes the caucus’ proposal for property tax formula changes, a task force to look at a tax code overhaul, and a bipartisan proposal to increase the homestead exemption for qualifying seniors and veterans.
Another proposal from a Republican senator dealing with homestead exemptions failed in committee. It would have expanded that exemption to apply to seniors who moved due to medical emergencies.
In the Senate, the main Republican proposal on property taxes was still being heard in a Senate committee, where Democrats also hold a majority of votes.
Updated at 12:02 p.m.: Democratic legislators gave initial approval Friday to set aside $30 million in rental assistance through the first six months of 2024. The money would go to lower-income earners who are at immediate risk of eviction across Colorado, expanding a state program currently budgeted at $35 million.
“People across our state are living on the brink,” Rep. Mandy Lindsay, an Aurora Democrat, said. “… We can do something about it, and I’m here to do something about it.”
The bill was approved by a party-line 8-4 vote, with the House’s Transportation, Housing and Local Government Committee’s four Republican members opposing it.
Rep. Don Wilson, a Monument Republican, asked Lindsay and fellow sponsor Rep. Leslie Herod if there would be controls to ensure aid recipients don’t spend their money on drugs. The Democrat-dominated committee bristled, and Lindsay replied that the money was vital to help communities facing evictions — not because they were using cocaine.
Updated at 11:35 a.m.: A Senate committee advanced a bill that would flatten TABOR refunds for all Coloradans next year. Sen. Janice Marchman, a Democrat co-sponsoring the measure, said that would mean that nearly 90% of single-filers in Colorado and 50% of joint-filers would receive a larger refund next year than under the current, income-based setup.
The bill passed on a party-line 3-2 vote and will be considered by the full Senate later today.
Fellow sponsor Sen. Nick Hinrichsen said TABOR refunds would be equalized at $847 for every taxpayer, though he cautioned the figure may change depending on the impact of other bills passed during the special session.
Republican Sen. Larry Liston said the failure of Proposition HH, which similarly aimed to flatten refunds, was proof that voters didn’t like the idea. Hinrichsen countered that he’d seen polling showing flattened rates were popular and reiterated that it would benefit most Coloradans.
Updated at 11:25 a.m.: Technical issues hampering the publishing of bills online and the availability of online testimony is delaying what many lawmakers hoped would be a smooth process. Those delays affected the starting times for separate Senate committees where the two primary, dueling property tax proposals — one from Democrats, one from Republicans — were set to be heard roughly simultaneously.
The Republican proposal’s hearing just began, and the hearing on the Democratic proposal is expected to begin soon. The majority Democrats have the numbers on both committees to pass and kill what they like.
Earlier, before the delays, legislative staff were predicting an adjournment today at 11 p.m. or later.
Updated at 9:56 a.m.: Opening the House session, Speaker Julie McCluskie reiterated what many House Democrats have said since Proposition HH went down: “Our agenda is made up of proven solutions, policies which have received bipartisan support these past few years.”
“These solutions are aligned deeply with our values to provide the most relief to the people feeling the brunt of our cost of living crisis,” she continued. “That means targeting our support toward working people, renters and middle-class homeowners.”
McCluskie also called for bipartisanship and civility — a point aimed both at the cross-party divide as well as disagreements within her own party. “I encourage us to work together, not fight each other,” she said. “History has proven that we achieve more and we are stronger when we strive for the same goals and collaborate as a team.”
Updated at 8:59 a.m.: Shortly before the 9 a.m. gavel, House Republicans held a pre-session news conference to draw contrast between their plans and those of the Democrats. Their plan calls for using reserves and state budget-tightening to cut property tax rates, but Democrats have said tapping into reserves would be fiscally irresponsible.
Republican House Minority leader Mike Lynch said the few Democrats they heard from responded with “thanks, but no thanks.” As it stands, he said his caucus will have “a very hard time getting behind what we believe is a disingenuous effort to bring true property tax relief to folks.”
But the caucus has no plans to resort to the drastic protest that marked the end of the last legislative session, when House Republicans walked out of the building.
“We’ve done the work. The people on the ground know we’ve done the work,” Lynch said of Republican plans around property tax relief. “The relief that comes out of this is squarely on the back of the Democrats, the people that are in charge here. … We’re not planning any shenanigans.”
Original story: Property tax bills due early next year will reflect increases driven by a median 40% rise in property values across the state. Gov. Jared Polis called the special session late last week in response to voters’ overwhelming rejection of Proposition HH in the Nov. 7 election, charging lawmakers with approving tax reforms and programs that will apply only for a year.
Among the highlights of plans outlined by legislative leaders:
- Proposed cuts in the formula used to determine residential property taxes, with the deduction from a property’s value for tax purposes rising from $15,000 to $50,o00. The assessment rate, which is applied to determine the assessed value, or what’s taxable, would be reduced from 6.765% to 6.7%.
- Increasing the maximum value of the homestead exemption granted to seniors, disabled veterans and surviving spouses of disabled veterans.
- Sending out equal tax refunds to all Colorado taxpayers, a temporary change — also implemented last year — from the normal income-based system in which higher-income Coloradans receive more money back. The amount each taxpayer will receive is unclear, but earlier the state estimate under the now-defunct Prop. HH was $898.
- Doubling the state’s 25% matching credit provided to recipients of the federal Earned Income Tax Credit. The EITC sends money directly to low-income taxpayers, with more going to those with dependents.
- Adding $30 million to the state’s emergency rental assistance program, which is currently budgeted at $35 million, to help renters who are at risk of eviction — with the caveat that it must be spent by June 30, when the state’s fiscal year ends.
Why does much of this sound familiar?
The property tax relief proposed by Democratic lawmakers is largely copied from Proposition HH, including the figures for the changes to the property value deduction and the assessment rate.
Unlike Prop. HH, the legislative proposal does not address commercial property rates. Prop HH would have lowered their assessment rates by .05 percentage points this year.
What does this mean for homeowners?
The aid likely won’t scale back the entire property tax increase facing many homeowners, and the effect will vary somewhat because of the formula changes. Each bill also will depend on mill levies that local governments control — the tax rates — and how much money a property is worth.
Lopping off a chunk of property value for tax purposes will have a bigger effect for lower-value properties.
According to an analysis by the liberal Colorado Fiscal Institute ahead of the fall election, without any changes, the owners of a $300,000 home whose value had increased to $405,000 from 2022 to 2023 would see their property taxes rise by about $415 next year. With the proposed formula changes under HH — identical to what’s proposed now — the bill would increase by about $100 instead.
How would this affect local governments?
The big changes in the new legislative package compared to Proposition HH are that its provisions would kick in only for a year, and there is less money to hand out as compensation to local governments that rely on property taxes to fund local services.
Any cuts to property tax collections will affect the budgets of local governments — though critics of the Democrats’ approach argue that they should make do with what in many cases will simply be a smaller increase in revenue.
The Democrats’ proposal would funnel state money to school districts and fire districts to make sure they get all the money that would be due to them if property tax rates were left unchanged. Lower-growth areas, which haven’t seen surging property values, also would receive state money to make up for the revenue loss caused by rate cuts.
Counties that experienced growth in property values of 13.5% or more — and thus will see the greatest potential boost in their property tax base — would be left out of the “backfill.”
How do lawmakers propose to pay for this?
Legislative leaders are looking to lean on $200 million set aside already in the general fund for property tax relief.
Gov. Jared Polis said Thursday morning that he’d also be willing to draw down the state’s 15% reserve by up to 1 percentage point, which amounts to about $150 million.
It’s unclear if that will happen. Legislative Democrats have lambasted Republicans’ proposal to tap into reserves to pay for property tax relief as irresponsible, but they didn’t answer when asked if it was completely off the table.
Lawmakers can also tap into the state’s budget surplus, or tax money collected over the cap set by the Taxpayer’s Bill of Rights. In a call with reporters Thursday afternoon, Democratic leaders said they were looking at the surplus for some direct tax credits primarily, such as the EITC credit match increase.
Those potentially would be in the $150 million range, which they predicted would have a minimal impact on total direct TABOR refunds that are estimated to top $3.2 billion. The roughly nearly $900-per-taxpayer refund estimate would hold if the surplus is left relatively untouched.
What’s the Republican alternative?
Republicans have launched their own plan to cut property taxes rates even more deeper, but with less money provided local governments to compensate for the effect on their revenue — and without touching the TABOR surplus.
The GOP lawmakers have aimed instead to use money from the state’s reserves. But the party is at a historic low point of representation in the Capitol, limiting its members’ influence.
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