BY FREDA MIKLIN
Proposition HH, which will appear on Coloradans’ ballots in November, will undisputedly reduce homeowners’ property taxes from what they would have otherwise been, for the next 10 years, if it is passed.
It also allows the state to retain money that may have been returned to taxpayers as TABOR refunds.
Most homeowners will see their 2023 property taxes (payable in 2024) go up even if Prop. HH passes, because of how much the market value of their property went up between June 2020 and June 2022.
This ballot initiative is the result of SB23-303, passed at the eleventh hour of the 2023 legislative session, to mitigate the impact of increased property values homeowners saw on the notices they received from county assessors in the mail in early May.
Across the metro area, median values rose from 33% in Denver County to 47% in Douglas County. Arapahoe County home values rose an average of 42%.
When the Gallagher Amendment, which was passed in 1982 and kept residential property taxes below market value for decades, was repealed in 2020, the legislature crafted a plan for a slightly softer landing for homeowners whose taxes were going to go up eventually, by enacting a law that reduced actual values for tax purposes by $15,000 and kept the assessed value rate at 6.765% of actual value for 2023.
That plan did not anticipate the 35% to 45% market value increases that were coming.
SB23-303, aptly named Reduce Property Taxes and Voter-Approved Revenue Change, did more than provide a way to lower property taxes. It also gave permission to the state to “retain and spend revenue” from 2023 to 2032 at a level in excess of what would have been permitted by the regular application of the 1992 Taxpayer Bill of Rights (TABOR). Funds retained by the state pursuant to Prop. HH can only be used to reimburse some small cities for lost revenue from reduced property taxes, rental assistance, and additions to the state education fund.
Common Sense Institute (CSI) has studied the financial impact of Proposition HH in depth. Their detailed report on the potential financial impacts, using multiple scenarios of future revenues and property value changes, can be found at https://commonsenseinstituteco.org/prop-hh/.
CSI’s study concluded, “The potential property tax revenue reductions under Proposition HH amount to $9.92 billion (from 2023) through 2032.”
They also concluded that, over the same 10-year period, Colorado residents could experience a “potential reduction in (cumulative) TABOR refunds totaling $9.9 billion.” They pegged the possible lost TABOR refunds at a cumulative total of $2,560 per person over 10 years.
CSI also points out that, regardless of whether Proposition HH passes, tax-levying entities, including school districts, cities, counties, fire districts, library districts, and other taxing districts will receive a windfall as a result of increased property values.
CSI’s analysis concludes that any money the state is permitted to retain under this plan, which it would have otherwise returned to taxpayers as TABOR refunds, can be interpreted as an income tax increase.
The Villager calculated the cumulative 10-year property tax savings, if Proposition HH passes, for the average home in Arapahoe County, along with two specific properties we chose at random, assuming property values and tax rates remain at current levels.
The average home in Arapahoe County, valued at $652,429, would pay $5,258 less in property taxes over the years 2023-2032 if Proposition HH passes, compared to if it fails.
A home in the southeast Aurora neighborhood of Heritage Eagle Bend that we analyzed would save $6,647 in property taxes during that same period, while a home in The Preserve at Greenwood Village valued at $2.7 million would experience $11,118 in property tax savings.
These calculations presume that the legislature takes no further action in this area during the next decade and property values, as well as mill levies for all the taxing entities that appear on one’s property tax bill, remain static.