A potential overhaul of Colorado’s property tax system is the target of a bill Gov. Jared Polis signed into law Tuesday as he took action on remaining legislation lawmakers passed during a special session to provide short-term property tax relief.
House Bill 1003 creates a commission tasked with identifying, considering, and evaluating options “for a property tax structure that protects property owners from rising tax bills and is sustainable for local governments and public schools.”
The 19-member commission, which includes state, city, county, and school officials, has until March 15 to recommend short- and long-term legislative changes to the General Assembly and governor, although a majority of its members can extend the deadline to no later than Dec. 31, 2024.
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Polis signed Senate Bill 1, which trims the residential property tax assessment rate for 2023 to 6.7% from 6.765%, last week.
The moves came amid historic growth in property values, which has led to big jumps in tax bills.
On Wednesday, the governor called on local governments, school districts, and special districts to temporarily reduce their tax levies.
“With the historic rise in property values, most districts can make significant rate cuts and still maintain strong revenue growth at or above the rate of inflation,” he wrote in letters to officials. “I urge you to consider this and reduce your mill levy as much as possible.”
The special session that began Nov. 17 was ordered by the Democratic governor after a complicated property tax relief measure was defeated by voters Nov. 7.
Proposition HH would have enacted a statute allowing the state to spend revenue in excess of its current cap, make temporary assessment rate reductions for residential property, incrementally reduce the assessment rate for commercial property, and create a limit for local property taxes that excludes school districts and home-rule cities and counties.
SB 1 will tap $200 million that had been set aside for Proposition HH, with $54 million earmarked to offset reductions in local government tax revenue and $146 million for public school districts.
Republican lawmakers, who opposed the Democratic Party-supported proposition, unsuccessfully pushed a bill with a larger assessment rate reduction that included non-residential property.
Meanwhile, other property tax measures are looming.
A proposed constitutional amendment on the November 2024 ballot would create a statewide cap on local property taxes.
Business group Colorado Concern is working on a ballot measure to reset the valuation of properties that have not sold since 2020 at 2020 levels. Another potential constitutional amendment would block any statewide limit on property tax revenue.