Measure seeks to stabilize property tax increases over the next decade with assessment rate reductions that extend through 2032.
As residential properties in Routt County are seeing unprecedented surges in valuation, Gov. Jared Polis and Democrats in the legislature unveiled a plan Monday that — with voter approval in November — hopes to slow the growth of property taxes over the next decade.
Under this proposal, combined with steps already taken by the legislature, a home valued at $600,000 would see a reduction of roughly 60% in the increase to their property taxes that is coming, according to a summary of the plan obtained by The Yampa Valley Bugle. This equates to an average increase in taxes of just over $400 compared to an increase $1,038 on average.
The proposal seeks to slow the growth in property taxes over the next decade, with reductions to rates of assessment for residences extending through the 2032 tax year.
The proposal would cap new growth on property tax revenues for local taxing districts to a rate of inflation, though these entities could hold a public meeting and vote to retain those additional revenues.
The proposal also incorporates a backfill for taxing entities that would be funded by the state retaining more of the Taxpayer’s Bill of Rights surplus. This would allow the state to keep about $167 million in 2024, which lowers the average TABOR refund by $46.
“We are deeply committed to providing property tax relief for homeowners so nobody’s priced out of where they live,” Polis told The Colorado Sun on Monday.
Routt County Commissioner Tim Corrigan, who has been focused on legislative measures this year, said he learned the details of the proposal in a meeting at 8 a.m. on Monday. While bill sponsors say they are open to amendments, there isn’t much time left in the session for that.
“Overall, I think this is a pretty decent effort to thread the needle between providing relief [and] not creating big losers among certain counties depending upon their specific situation,” Corrigan said, adding that he had not seen the bill text and was relying on the summary shared with local leaders.
The proposal comes as residential properties in Routt County are seeing a median 82.5% increase in valuation, with homes in Steamboat Springs seeing a higher median of 87%, according to previous reporting from The Bugle. With increases in valuation that steep, some property owners could have been facing as much as a 50% increase in property taxes when bills come due next year.
The property tax issue has been brewing since the 2020 repeal of the state’s Gallager Amendment, which worked to slow growth in residential property taxes. With that gone, the legislature has known this steep increase was coming, but had failed to make significant changes to the system. Instead, they addressed property taxes with what some have called “Band-Aid” fixes.
“I would say it’s a larger Band-aid,” Corrigan said. “Well, it’s really meaningful in particular, because the way we understand it now… none of this happens without a referred statutory amendment to voters in November.”
For the proposal to go into effect, it needs to be approved by the legislature before the end of the session on May 8 and then approved by voters with a simple majority in November.
The residential assessment rate would drop to 6.7% for 2023 and 2024, down from 6.765% and 6.976% in those years respectively. The reductions would continue from 2025 to 2032, setting the residential assessment rate at 6.7% for owner-occupied homes and multi-family properties over those years, compared to 7.15%. That would exclude second homes, which would see rates of assessment drop to a lesser degree, from 7.15% to 7.1%.
The proposal would make changes to commercial assessment rates as well, lowering the non-residential assessment rate to 27.85% from 29% through 2026 with more reductions planned in future years.
Another facet of the proposal would help seniors who currently are receiving the state’s Homestead Exemption. It would allow for a larger, $140,000 reduction in valuation and they would be able to use that exemption even if they move from their current home.
Assessment rates on agricultural or renewable energy properties would decline as well, to 26.4% from 29%. If a property meets both of those classifications, the rate would further reduce to 21.9%.
All of this is paid for by the state retaining more of the annual TABOR surplus, which is required to be returned to taxpayers. Should it get voter approval in November, the surplus is projected to decrease from $2 billion to $1.8 billion.
There are other property tax-related measures aiming to be on the ballot as well, and it is unclear what happens if several of them would pass.
Routt County itself is TABOR limited, so its growth in revenue is already limited to new construction plus inflation. This means the measure doesn’t change much for county finances.
Corrigan said an interesting thing to watch will be what local taxing entities opt to do. For one, they will need to craft budgets to account for what revenues they may earn with and without the measure in place, as it passage won’t be known until November. They will also need to decide whether to stay under the inflationary cap outlined in the proposal or if they should vote to keep the additional revenues.
“Most everyone has a choice to make,” Corrigan said, referring to local taxing entities. “They are going to have to say, hey we really need this money because of our needs in spite of the impact on the taxpayers or no, we hear your problems taxpayers and we’re going to limit ourselves to a certain amount of growth.”
The bill had not been introduced as of Monday afternoon, though it is expected soon. The legislative session ends on May 8.