Prop 120 will lower property taxes – at least for some
Colorado’s residential property taxes are already among the lowest in the country, but a measure on the 2021 statewide poll would lower them even more – for some.
Proposition 120, if approved by voters, would reduce property tax assessment rates for multi-family dwellings to 6.5% from 7.15% as of 2022. If you owned an affected property worth $ 300,000, you would pay $ 1,950 per 100 mills (one mill is a $ 1 payment on every $ 1,000 of assessed value) versus $ 2,145.
The rate would also be reduced under Proposition 120 for accommodation properties from 29% to 26.4%. If you owned an affected property valued at $ 300,000, you would pay $ 7,920 versus $ 8,700.
Supporters of the measure say a reduction in the property tax for multi-family dwellings could lower rents and encourage investment to alleviate the state’s housing shortage. Lowering property taxes for accommodation can allow businesses to grow and hire more employees.
âReal estate values ââare skyrocketing right now,â said Michael Fields, who heads Colorado Rising Action, the conservative budget policy nonprofit behind the ballot measure. âPeople don’t have the money in their pockets to pay higher property taxes.
Fields called Proposition 120 “the first step in ensuring that people can stay in their homes.”
Conversely, opponents argue that lower property taxes can lead to cuts in local government, including for schools and fire departments that depend on property tax revenues to operate.
Scott Wasserman, who heads the nonprofit Bell Policy Center for Liberal Tax Policy, expressed concern about the permanent nature of the cuts and how they fail to take into account the financial needs of local governments.
âWe continue to set assessment rates statewide, regardless of the impact on individual counties,â he said.
In the dying days of Colorado’s legislative session in 2021, a bipartisan measure was passed that mitigated the effects of Proposition 120.
Senate Bill 293 created new sub-categories of residential and commercial property in an attempt to limit the effects of the ballot measure. He then lowered the assessment rates for these new categories, but not as much as Proposition 120 would have done.
Single-family properties are taxed on 6.9% percent of the estimated value, compared to 7.15%
Multi-family properties are taxed at 6.8%, compared to 7.15%
Farm ownership rate fell to 26.4% from 29%
Real estate used to produce renewable energy is taxed at 26.4% of the assessed value, compared to 29%
There is, however, a big catch.
The rate cuts provided for in Senate Bill 293 only apply to tax years 2022 and 2023. After that, state lawmakers will have to decide whether they want to keep the lower premium rates or raise them. at their previous levels.
Since Senate Bill 293 was passed after the Colorado Secretary of State’s office approved Proposition 120 for the signature collection process, the wording on your ballot will ask if all rates d property and commercial taxation must be abolished. Don’t be confused. This is not the case.
Non-partisan legislative staff estimate that the assessment rate cuts would reduce Colorado local government property tax revenues by $ 46 million in 2022 and $ 50.2 million in 2023.
The decrease in income is expected to be even greater in the coming years due to an expected increase in the assessment rate for multi-family dwellings in 2024.
Because property taxes fund schools, Colorado’s education system could be affected. The impact will vary from district to district as different districts impose different mill take-off rates. The state legislature can make up for some of the losses.
Again, don’t be confused by the wording on your ballot, which warns of a $ 1 billion hit in government coffers. This estimate was created before Senate Bill 293 was passed and Proposition 120 was effectively reduced.
Proposition 120 would also allow the legislature to keep $ 25 million above the state Taxpayer Bill of Rights cap to be used to fund existing refunds to local governments for the property tax exemption on the state. family property.
Seniors and veterans with a service-related disability qualify for the exemption, which allows those who qualify to exempt 50% of the first $ 2,000 of residential property taxes from property taxes. In 2020, the average exemption was $ 584.
Here is more useful information from the non-partisan staff of the legislature: âIn years when the exemption is available, the state reimburses local governments for the reduction in revenue resulting from the exemption from property tax. The state spent $ 157.9 million on local government reimbursements in the 2020-2021 fiscal year. In some years, the state legislature made the exemption temporarily unavailable as a budget balancing decision. The last year when the exemption was not available was in 2011. “
There’s one more thing voters might want to know: Fields has pledged to take legal action to strike down Senate Bill 293 if Proposition 120 passes.
âThey cannot kneel down or adjust our voting initiative when it is already over,â Fields said in explaining his legal argument against Senate Bill 293.
If the lawsuit is successful, it is not clear whether Proposition 120 would then lower assessment rates for all property and residential taxes in Colorado. However, this is what the Common Sense Institute thinks would happen.
âThis is a serious concern,â said Wasserman, of the Bell Policy Center.
Wasserman fears the trial may serve as a slippery slope affecting future legislatures and future voting problems.
âJust because you take a ballot away doesn’t mean you have the opportunity to have an exclusive conversation about an issue in Colorado,â he said.
This story is from the Colorado Sun, a Denver-based reporter owned outlet covering the state. To learn more and to support The Colorado Sun, visit coloradosun.com. The Colorado Sun is a partner of the Colorado News Conservancy, owner of Colorado Community Media.