Lower-income Coloradans will see a boost to their tax refunds next year under a new bill aimed at smoothing the passage of a property tax relief proposal that had drawn criticism for not benefiting the state’s renters.
The new bill, introduced Saturday, would flatten refunds due to Coloradans next year under the Taxpayer’s Bill of Rights, or TABOR. But even if the measure is passed by the legislature in the final days of this session, its changes are contingent on voters approving a proposed property tax relief ballot measure in November. It was introduced on the last day that a bill can be brought forward and still have time to pass before Colorado’s legislative session ends Monday.
If enacted, HB23-1311 would be similar to the policy that led to most taxpayers receiving $750 checks, or $1,500 if they filed jointly, at the end of last summer. If this proposal fails, TABOR refunds likely would return to the six-tier mechanism that returns more money to higher-income Coloradans.
This proposal would flatten TABOR refunds to an estimated $661 for all Coloradans. Joint filers would receive double that. For Coloradans earning $50,000 a year or less, that is about $200 more than under the default six-tier system, according to a nonpartisan fiscal analysis. Earners making $50,000 to $100,000 would receive about $50 more.
Under current policy, lower-income Coloradans would be refunded an estimated $454, while those earning $50,000 to $100,000 would receive about $606. For Coloradans making more than $279,000 a year, the six-tier system would return about $1,500 to them — more than double what they’d get under the new proposal.
Lawmakers passed proposals similar to two keystone pieces of this package — the cap on property tax and the flattening of TABOR refunds — as standalone bills last year. This year, lawmakers are tying the proposals to changes to how much tax revenue the state can keep, with backers arguing it’s needed to keep local services whole for the 10 years envisioned for the new property tax proposal.
TABOR bill aims for lower-income Coloradans after property tax bill takes heat for ignoring renters
The larger property tax proposal, SB23-303, has been under a microscope in the final days of the legislative session. Proponents of that plan, led by Gov. Jared Polis, argue it’s necessary for longer-term stability for property taxpayers while preserving funding for local services.
Critics, however, point to the proposal’s lack of direct help for renters and that it taps into surpluses otherwise due to Coloradans under TABOR to shore up local services.
Rep. Chris deGruy Kennedy, a Lakewood Democrat and sponsor of the TABOR and property tax bills, said he wasn’t surprised by the criticism. He said issuing flat refunds to all taxpayers was one way to provide relief to lower-income earners unaffected by — but still helping to fund — the property tax relief.
He said the property tax bill is also set to be amended to include up to $20 million to support rental aid, which has dwindled as federal pandemic-era protections wind down. Other legislators had considered amending the measure to make rent payments a tax-deductible expense, as Minnesota and Massachusetts do.
“The property tax bill as introduced was totally a giveaway from renters to homeowners because it’s paid for out of the TABOR surplus, which is owed to all taxpayers,” said Rep. Javier Mabrey, a Denver Democrat, echoing a concern of several other lawmakers and progressive advocates. “But if you’re a renter, which 40% of the state is, you’re not going to get anything from the property tax bill.”
What’s more, Mabrey said, the property tax bill was set to benefit wealthier homeowners the most.
DeGruy Kennedy said he had planned to introduce a bill this year that would flatten the TABOR refunds permanently. He said the temporary flattening was a compromise with Polis. A Polis spokesman did not return a message seeking comment Saturday.
State Sen. Chris Hansen, a Denver Democrat and cosponsor of the bill, said it would be “too simplistic” to call it a pure compromise. He cited the number of stakeholders, as well as the general complexity of the tax code.
“With the flat methodology that we’re using, this makes it much more helpful for low-income families, working families,” Hansen said. “These are the same families that are worried month to month about their rent and putting food on the table. This is an incredibly targeted and precise way to help those families the most.”
Hansen said the two bills — property tax relief and TABOR checks — work in tandem to improve “our ability to move quickly on both bills.” Sen. Nick Hinrichsen, a Pueblo Democrat who is sponsoring this year’s TABOR bill and carried last year’s as well, said he was hopeful voters would see the two pieces working together as a bigger tweak to the tax code.
“We can’t make long-term policy before the voters have a chance to weigh in,” Hinrichsen said. “I think very strongly that voters will see this and see that what we’re doing is retooling the comprehensive tax ecosystem in a way that works for working families. That is the bottom-line goal.”
Republicans criticized the bills — particularly the proposed TABOR change — for their rapid introduction and potential impacts. Minority Leader Mike Lynch, the top Republican in the House, said the bills “take the cake” for “big bills that hit us fast” this year.
Lynch voted to support last year’s temporary TABOR change. He said Saturday that he doesn’t support it now because he views it as a “political tool” used by Polis and Democrats to ensure that the property tax ballot measure is approved by voters.
Because Democrats have just two days and change to shepherd the bill through, they must carefully stage-manage its passage through the legislature.Before its first, crucial vote in the House on Saturday night, Democrats in the chamber voted to limit debate on it to one hour.
Rental assistance failed in Senate over education funding concerns
Legislative leaders said rising property values — and corresponding increases to property taxes — would be a top priority before the legislative session. At the end of April, with less than two weeks left in the session, several assessors warned of valuations spiking as much as 60% in some pockets of the Front Range.
The property tax bill and the TABOR bill were introduced in the final week of the session. House Republicans bristled over the lack of time to properly consider the measure and characterized it as an attack on the “fundamental mechanisms of TABOR.”
Those backing the property tax bill argue it will blunt the sharpest bite of looming tax increases. If passed by lawmakers, it’ll put a ballot measure to voters that will allow property owners to knock $40,000 off the assessed value and drop the assessment rate for a decade. It also would increase how much money the state can keep under TABOR to backfill local governments for lost property tax revenues. Any excess to the backfill would go to the state education fund.
However, the Special District Association of Colorado, which represents property tax-backed interests such as local fire and ambulance districts, has expressed concern that the backfill wouldn’t cover all local needs.
The House of Representatives is set to give initial votes on both bills Saturday. The state Senate passed the property tax bill on a near party-line vote Thursday, with two Democrats joining the united Republican opposition.
The closer Senate vote came Wednesday, when Sen. Barbara Kirkmeyer, a Brighton Republican, ran an amendment to set aside some of the money explicitly for rental assistance. It fell on a split vote during a recorded vote — 17 to 17, with Democrats across the party’s ideological spectrum joining Republicans. Mabrey and deGruy Kennedy, the two House Democrats, said a similar amendment is set to be added to the property tax bill Saturday.
State Sen. Julie Gonzales, a Denver Democrat who’s among the most progressive members in the chamber, called it a “weird moment” that unified her and some of the more moderate Democrats with conservative Republicans. Before casting her formal vote for the bill, without Kirkmeyer’s amendment, Gonzales noted the counter-argument that an earmark for renters would cut into a surplus that otherwise would go to education.
“As if schools are not also made up of students and teachers and workers who also rent,” Gonzales continued. She encouraged the House of Representatives to find relief for tenants.
Kirkmeyer has lambasted the bill as an education funding bill in disguise. She had put Democrats on the spot last year with an amendment to fully eliminate the so-called budget stabilization factor and return school funding to constitutionally mandated amounts.
But in this case, she argued the proposal as a whole is an attempt to hoodwink voters: that a promise of property taxes is just blunting an increase, that predictions of trickle-down savings from landlords to renters are a pipe dream that will cost the latter TABOR refunds, and that it’s about education without explicitly saying so.
“This is actually an education funding mechanism,” Kirkmeyer said before her no vote. “Which is it? Are we telling Coloradans we’re going to give them meaningful tax relief, or are we going to fund education?”
The debate, as often happens in the Capitol, put education and educators at the center. The head of the Colorado Education Association, the union for educators, has general support for the property tax proposal, although the organization hasn’t registered an official position. Educators who own homes would benefit from blunting the tax spike, and the backfill keeps local districts whole. For Amie Baca-Oehlert, the union president, the surplus going to education would be a cherry on top.
But the proposal isn’t a long-term fix to education funding, nor does it seem to do much for the educators who can’t afford to buy a home, she said. The union wasn’t involved in the bill’s drafting, Baca-Oehlert said.
“For our educators who are able to be homeowners — one of the things we find is that many of our members are not able to even afford their own homes — those that can and do are impacted by property tax relief,” Baca-Oehlert said.
It’s a similar message from Carmen Medrano, executive director of United For A New Economy, a racial and economic justice organization. She likes the emphasis on lower-income homeowners, where the $40,000 cut to the appraised value will be felt as a greater percentage than for people with multimillion-dollar homes. But the lack of a renter focus stings.
She’s pessimistic that landlords would pass their savings to renters, given how quickly rents have risen across the state, and is hopeful something like Kirkmeyer’s amendment would end up in the final version. Just like people with rising property taxes, renters have to struggle with their housing costs and paying for needs such as groceries and medical expenses, she said.
“Unless there are direct measures in the bill to help renters, we don’t believe this trickles down,” Medrano said.
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